Earlier this year, two of the world's biggest investors, George Soros and John Paulson, piled into a company with next to no revenues, and which had lost $352m in three years, says Forbes. Why did they bet a combined $175m on a Vancouver miner with an unimpressive history? They were following Thomas Kaplan, a little-known billionaire, renowned for his obsession with big cats. He is also becoming Wall Street's most prominent "bull of bullion".
A commodities magnate, with an Oxford doctorate in British colonial history, Kaplan, 47, has staked most of his fortune on the ongoing gold rush. His Tigris fund now has $2bn invested globally, says The Wall Street Journal. With a history of winning on big, bold bets, Kaplan is an unabashed gold evangelist. "We haven't yet begun the real bull market," he says. The fundamentals suggest a sustained surge (see below). "Not since BusinessWeek proclaimed the 'Death of Equities' in August 1979 has such a bell been rung."
With his "unplaceable but alien accent", Kaplan is an intriguing figure, says Bloomberg BusinessWeek. Born in the US, but educated in Switzerland and Britain, as a student he earned extra money analysing Israeli companies listed on US stock exchanges, before moving to New York to begin trading in earnest. Kaplan credits Marc Faber the trader behind the Gloom, Boom & Doom Report with inspiring his move into natural resources. In 1993, he made his "first defining deal", launching Apex Silver Mines to dig for silver in Bolivia; Soros was an early backer. More recently, says Forbes, Kaplan's "personal gold mine" has been natural gas. In 2003, he made a $2bn killing selling his outfit, Leor Energy, to Canada's Encana Corp."I am a businessman because I am good at business," says Kaplan. "But big cats are my first love."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
When Kaplan starts talking tigers, "it could be a schoolboy speaking", observes The Daily Telegraph. But "where others wring their hands, he takes action". His charity, Panthera, aims to boost the world's tiger population by 50% within ten years. He plans a series of "corridors" across Asia and Africa so cats can move freely between their natural habitats. "It is a colossal, visionary undertaking" for which he'll need all of his negotiating flair.
He's no stranger to controversy. He became embroiled in a titanic legal battle with his nephew, Guma Aguiar, over the proceeds of one energy deal. And last December, he was caught up in an embarrassing scandal when the rabbi of an orthodox Jewish charity he co-founded was found to have been soliciting sex from would-be converts. But his most pressing ethical dilemma is reconciling his "passion for conservation" with the urge to expand his mining empire "an industry long associated with extreme environmental degradation", says BusinessWeek. He says it's a no-brainer: the environment will always win. But can he keep to his word?
Why Kaplan believes the gold bull has legs
Kaplan has already made a tidy profit after piling into gold at the start of its current upswing in 2000. So what makes him quite so certain that such a lengthy run still has legs?
"My construct remains simple," he wrote in Forbes in April. Even without current geopolitical tensions or the global financial crisis, "the primal forces of economics, supply and demand are arguing for an upward revaluation". Not only are investors seeking currency diversification and capital appreciation, but for the first time in decades central banks "have moved from lending or selling gold to competing for it... a potent trend accentuated by stagnant mine supply".
Kaplan makes a point of avoiding the office and the noise of the crowd. Indeed, he retains a "karmic calm" when it comes to investment decisions, says BusinessWeek. Even so, he's throwing everything he's got into digging fresh gold out of the ground. As well as his investment in the Canadian NovaGold Resources, he owns an 18% stake in Gabriel Resources. It is attempting to reopen what is widely believed to be Europe's largest gold deposit in Romania. The potential prize is huge: an estimated ten million ounces worth more than $12bn, as well as 47 million ounces of silver. But local residents are fiercely contesting the project on environmental grounds.
When Kaplan faced a similar problem mining silver in Bolivia, he spent millions moving an entire village including the church, which was rebuilt "brick by brick" out of his path. He sees no reason why he cannot replicate the strategy in Romania. But then he's always been prepared to think big to get what he wants, notes The Daily Telegraph. He recently bought several huge cattle ranches in Brazil, ostensibly to protect the habitat of local jaguars. "Who would have thought it? Me, a vegetarian, buying 8,000 head of cattle?" No doubt he also realises the investment could prove a very useful hedge.
