His conviction about gold puts him in the company of such celebrated figures as George Soros and John Paulson, both of whom have been betting heavily on the yellow metal (and have invested alongside Kaplan in Vancouver-based mining company NovaGold Resources (NG)). It's not riots in the streets he envisions, but a more fundamental case of demand outstripping supply as gold becomes a currency in its own right.
Variations on this view have become so popular in recent years that gold has gone from being an obsession of conspiracy theorists and kooks to a fully respectable investment idea that gets promoted at PTA meetings. Kaplan is not content to merely run with this crowd. To maximize his returns, he has engaged in the much trickier task of digging fresh gold out of the ground. But mining is a double risk—there's the cost, hassle, and uncertainty of extraction, and then there's the volatility of the market. The financial risks of mining show up in their stocks, especially compared with gold prices. While gold rose 13 percent this year, the Bloomberg World Mining Index dropped 9.7 percent. And gold is no more of a certainty than anything else. Before its recent ascent, it was stuck in a bear market for two decades. What if the threat of hyperinflation never materializes? A mere uptick in confidence about global growth could put gold right back in the doldrums.
Kaplan doesn't see that happening, and that's why he has fallen in love with the leafy green hills of Transylvania in central Romania. He owns an 18 percent stake in a Canadian company called Gabriel Resources that is attempting to reopen what is widely believed to be Europe's largest gold deposit, an estimated 10 million ounces, worth more than $12 billion at today's price, as well as 47.7 million ounces of silver. There's one problem: Some residents of the economically ravaged area, where unemployment is 80 percent, are fiercely contesting the project on environmental grounds.
Despite the opposition, the potential windfall has attracted investors, including Paulson, of whom Kaplan is an unabashed admirer. "If he sticks to his conviction on gold, he may yet become the richest man in America," Kaplan says, "and I'd love to see it happen." Kaplan would do well, too.