One Billion in Gold Bullion for the University of Texas

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Recently by Robert Wenzel: How Fed Buying of Long Term Assets Could Lead to Wild Inflationary/Deflationary Swings and Perhaps Fed Bankruptcy


This is going to cause a few more people to take a look at gold as an investment. (And make overseas investors even more nervous about the dollar)

The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board, reports Bloomberg.

The decision to turn the fund’s investment into gold bars was influenced, according to Bloomberg, by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said yesterday at its annual meeting. Bass made $500 million on the U.S. subprime-mortgage collapse.

“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said today in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”

The fund, whose $19.9 billion in assets ranked it behind Harvard University’s endowment as of August, according to the National Association of College and University Business Officers, last year added about $500 million in gold investments to an existing stake, said Bruce Zimmerman, the endowment’s chief executive officer. The holdings reached about $987 million yesterday, as Comex futures closed at $1,486 an ounce.

The endowment, which oversees funds held by the University of Texas System and Texas A&M University, has 6,643 bars of bullion, or 664,300 ounces, in a Comex-registered vault in New York owned by HSBC Holdings Plc, the London-based bank, according to a report distributed at yesterday’s meeting in Austin.

Contrast this investment against the trades made by Harvard under the then-guidance of former Obama advisor Larry Summers, where Harvard’s derivative trading resulted in billions in losses.

Reprinted with permission from the Economic Policy Journal.

2011 Economic Policy Journal

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