Buying high and holding on with Mexico's bargain-hunting billionaire...
Carlos Slim Helú has a lot of money. Or rather, he owns a lot of assets. More than $73 billion-worth, according to Forbes magazine.
That pile makes Slim a key figure for self-help and business books in his home country, Mexico. And at Forbes' last count in March, the telecoms mogul was also the world's richest person for the 4th year running.
Bill Gates of Microsoft sneaked ahead of Slim in May, or so Forbes magazine gushed , thanks to a slump in the Mexican stock market. (Forbes really seems to care about such things. Perhaps because poor publisher Steve has only $430m, not even enough to make his own list.) But the Bolsa has since bounced back. And judging from Slim's art collection, which I saw last week in Mexico City, he's got little to worry about in the retirement he refuses to take.
Named in honour of Slim's late wife, the Soumaya Gallery is a purpose-built warehouse, slap-bang in Polanco, a fast-rising shopping and business district. With a purpose-built TelCel office block next door, it's also very convenient for Slim to undermine his name with lunch in one of the Sanborn cafes he owns, too. No amount of money could beat their burritos with cochinita pibil, after all.
The Soumaya is stuffed like a tightly wrapped burrito, too. It houses 66,000 objects over six floors, which is a real squeeze when you see how tight the space looks from outside. Slim's art collection include a massive Mexican coin hoard, three Van Goghs, a clutch of Miros, Cranach's Adam & Eve (plus his portrait of Martin Luther), a Picasso sketch, lots of Diego Rivera but much more David Alfaro Siqueiros, and way more Chinese ivory carvings than anyone could ever wish to clap eyes on.
The top floor takes the biscuit, however. Packed with bronze casts, one half is devoted to Salvador Dali, the other to Rodin. And here Slim's art collection secret, if not the secret of how he amassed it, is laid bare. Because money doesn't buy taste or discernment. Not that Slim's collection lacks them. But it can buy a glut, and a glut that plainly cost a lot but doesn't count as investment. Because when would Slim ever sell this collection? And where would a financial return come in the meantime? The richest man in the world had to build a museum to enjoy his own art collection. Sharing it with the Mexican people - for free - is just about the only commercial bonus, and only in PR terms too.
Now, whether Slim owns a lot of physical gold and silver is a secret to me. But he's got a big stake in Mexican miner and explorer Minera Frisco, busily expanding his gold mining investments in 2010 and again in late 2012. And his public statements on money and wealth certainly chime with most physical gold bugs I know.
His vast wealth? "It's only paper money, not real value," as he told the Wall Street Journal in 2007.
How to manage a business? "Maintain austerity in the good times, to avoid lay-offs in the bad..."
And Carlos Slim's top tip for investing? "There are times when things are very low in price which normally are expensive...I learned from my father that you keep investing and reinvesting...during a crisis."
This last approach only adds to the claims that Slim is a modern "robber baron", investing heavily when prices are low to amass productive assets. Hoovering up valuable companies during Mexico and Latin America's repeated currency crises of the 1980s is one of the "secrets of the world's richest man" according to those self-help books in the Soumaya Gallery's gift shop.
So if Slim does like bullion (he certainly likes coins) this spring's sell-off would have appealed. So might today's slump after the much-awaited US Fed policy minutes, too. But you don't need to make the Forbes' Rich List to see the sense in buying cheap. Here at BullionVault, Paul Tustain tells a similar story - of a businessman snapping up productive businesses at knock-down prices - during the 1970s and early '80s wipe-out in Portugal's economy. You hardly need a self-help guide to see the value in value. For most investors, however, splurging a chunk of it on a must-have art collection will have to wait, even if it comes to look good value in hindsight.
One secret we did learn however on getting back into the market after the summer vacation was that billionaire hedge-fund manager John Paulson slashed his gold position in half between April and June. That was a big sale - some 1.1 million ounces - revealed by his statutory 13F filings to US regulators. It's big news too.
Paulson began building his gold investment position ahead of the US housing crash, when he also made big bets against the US property bubble. Gold became such a big theme for him, Paulson backed shares in his hedge funds with shares in the giant SPDR Gold Trust (ticker: GLD) listed in New York.
Sinking gold prices meant big losses for Paulson clients, so the sale of SPDR shares was to be expected. Customers withdrawing their money had to be paid from somewhere. And that helps explain the shrinkage of the giant gold ETF in the second quarter, as well as some of the slump in gold mining shares which Paulson also sold.
Word is, however, that Paulson didn't quit gold. Instead he opened "swap" positions in the physical market, buying back the same $1.5 billion position sold from the GLD but at lower costs according to "a source" quoted by the Financial Times.
Not quite a rich man's secret, then. But with gold recovering almost all of June's slump - and silver touching 14-week highs - the rise in bullion prices from two and three-year lows has become plain for all to see anyway. The secret was knowing to buy or stick with it amid the sell-off.