By Andrey Dashkov, analyst, Casey Research
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In 2022, Bill Gates is still the largest farmland owner in the U.S.
Gates owns over 269,000 acres of farmland. In total, that’s over 18 Manhattans’ worth of land area. And based on the average price of farmland in the U.S., that land is worth over $1 billion.
Gates owns this land through his investment firm, Cascade Investment – which holds over half of his fortune.
But why would the tech wizard worth over $102 billion buy so much land?
Some of you may know that Bill and his ex-wife Melinda have a foundation that works to improve the sustainability of farming. So this land could serve as grounds for research and experimental farming that aims to be less harmful to the environment.
But there’s more to it than that…
Why Would Bill Gates Be Buying Land?
For the past five years, land has been rising in value.
Since September 2017, farmland prices have increased by over 66%, as measured by Creighton University’s Farmland Price Index. Over the same time frame, the S&P 500 gained only 45%.
And the total value of U.S. farmland is about $2.7 trillion. This means the market has enough liquidity, even for large institutional investors like Cascade.
Simply put, land is a great store of value. I think Bill Gates knows this. And I believe that’s why he put over $1 billion of his net worth into it.
At the end of the day, it’s a smart strategy. Gates can research sustainable farming for his foundation… and profit from the appreciation of the land he owns. It’s a win-win.
But what if I told you there’s another asset that holds value just as well? It’s one of our favorites here at the Dispatch. And I think it’ll be Bill Gates’ next big investment target…
The Golden Constant
Regular readers know gold is a store of value. That’s why we recommend everyone hold some in their portfolio.
And gold holds its own when measured against other value-holding assets. Land is no exception.
An ounce of gold can buy as much land now as it did 50 years ago. For example, in 1973, you’d need about 2.3 ounces of gold to buy one acre of U.S. farmland on average. According to Bloomberg, that average has pretty much stayed the same for almost five decades. The number for 2022 is… 2.3 ounces.
This shows how gold holds its purchasing power – even over long periods of time.
On top of that, gold has been on an uptrend over the past five years. Its price is up over 27% since September 2017 – despite the recent weakness.
It’s also the most liquid monetary metal. According to one estimate by the World Gold Council, the total value of physical gold held by investors and central banks is about $3.7 trillion. It could be even larger.
Which means the gold market can also accommodate large investment firms – like Cascade, which has been gobbling up U.S. farmland on behalf of Mr. Gates.
Other high-profile investors have started looking favorably at gold. Warren Buffett, who famously disliked gold as an investment, bought over $500 million in shares of miner Barrick Gold in August 2020.
That’s why investors like Bill Gates will start taking a serious look at gold. And you should, too.
How to Profit Off Gates’ Next Value Trade
The easiest way to own gold is through shares of the SPDR Gold Trust (GLD). Its shares are backed by physical bullion. It’s a great store of value… and will benefit should Gates and other billionaires pile into the precious metal.
As for land, Gates’ current wealth protection of choice, owning it is expensive and impractical for many investors.
An easier way to get exposure is through real estate investment trusts (REITs). REITs are publicly traded companies that own, operate, or finance real estate.
REITs invest in many real estate property types, like hotels, offices, medical facilities, apartment buildings, data centers, warehouses, and more.
They provide diversification, have predictable earnings, and are required to return most of their earnings to shareholders through dividends.
Plus, they’ve historically been a great inflation hedge. In the late 1970s, REITs performed 3x better than other stocks, even when inflation spiked over 10% and interest rates increased by 8.5%.
That’s the same opportunity we’re seeing with them today. And all it takes is a buying a few shares.
Just remember to position size accordingly, and never bet the farm on any trade.
Good investing,
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Andrey Dashkov
Analyst, Casey Research