University Of Texas Shifts Gold Exposure [UPDATED]
Kyle Bass advised the University of Texas to buy $1 billion in gold, the University is now getting out of solid gold, and into gold futures in order to free up cash for equity investments.
Back in 2011, the University of Texas followed the advice of one of its wealthiest alumni, Kyle Bass. The University increased its holding of gold to $1 billion in gold bars in a New York vault back in April 2011, when gold was trading at $1,486 an ounce. Now the University has begun to convert that stake into gold futures.
According to a report in Bloomberg, The University of Texas fund sold around $375 million of gold bars. However, the University reinvested the money in gold futures and in equities. The University of Texas fund made the trade in the three months leading up to February 28, meaning that it avoided the large fall in the price of gold earlier in April.
Oil companies, refineries, agricultural companies, airlines, etc., employ investment banks to help hedge/manage their business costs, etc., using futures. The problem comes when the said investment/shadow banks trade futures against their own clients to build their own respective stocks.
Following the financial debacle, now we see commercials of these banks/shadow banks, saying, "Clients first"!
Markets need diehards to keep buying on the drops until they can't buy anymore, then there's a bottom, panic and finally demand. There's a message in that story you posted and many will decipher it differently. In the final analysis, we will know.
UT is hedging/diversifying. Using futures to liquefy gold bars. Back in the 1980's the market wasn't very liquid and some people bought gold and held it in the $800 range and felt stupid for the next 2 decades as gold dropped in the $200 range. Back in the 1980's, everybody thought economic growth was dead for life and inflation was forever without along with very high interest rates. Ever since to this date, there were war like calls of inflation since the 1980's as mortgage interest rates peaked from over 20% to under 4% for 30 year fixed now. Back in the 1980's you could get a CD for over 10% and today, 1% and under.
Take into account the internet was slowing building out from the 1980's along with mobile but most people didn't know and what we see today had been building up to date and making marked improvement in worker productivity, hence less people needed to do same work.
For those thinking INFLATION is still about to JUMP, show where 1980's style under the surface multi trillion$$$$ innovation is in the works today? Not in financial engineering, especially since we just went through that with CDS derivatives naked bets to burst bubbles and hence implosion of said financial engineers in the financial system.
Growth is supposed to come from emerging markets, not from overly mature industrial nations headed by the USA & Europe. Law of the jungle rules suggest the financial engineers have to stop destroying self and instead help rebuild what they over confidently diminished recently.