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Why Kyle Bass took delivery of Univ of Texas $1 BILL in gold
roadrunner
Posts: 28,303 ✭✭✭✭✭
Bass link interview
Yeah, I know gold has taken a beating the past 3 years. But the reasons behind having it in your own vaults still applies....at least as he says in this video. They owned at one time some 20 tonnes ($768 BILL at today's price)....but since reduced a bit by selling off some bars in 2013 to buy equities and gold futures. They are break even or down some, all of this was bought from 2009 onward. Average purchase price by 2011 was around $1150/oz. I suspect average price today is in the $1200's to $1300's/oz.
My only concern for them is what NY vault do they have it in? One reference says it's the HSBC vault. Uh-oh. Those are the same guys who run the GLD fund. The gold exposure represents 2-3% of the UTexas endowment. That's like a small insurance contract of sorts. Governor of Texas wanted to bring that gold back to a Texas vault. Don't know if that ever materialized. You can bet the NY Boyz would do everything in their power to prevent that. Heck, Germany couldn't even get a tiny amount of the 200-300 tonnes due them from the NY vaults.
Edited to replace the UTube Bass interview link....which worked fine yesterday. And as OPA points out later....it should be $768 MILL. There are too many zeroes after the decimal on my calculator. It's time to update to an old fart's 8" version.
Yeah, I know gold has taken a beating the past 3 years. But the reasons behind having it in your own vaults still applies....at least as he says in this video. They owned at one time some 20 tonnes ($768 BILL at today's price)....but since reduced a bit by selling off some bars in 2013 to buy equities and gold futures. They are break even or down some, all of this was bought from 2009 onward. Average purchase price by 2011 was around $1150/oz. I suspect average price today is in the $1200's to $1300's/oz.
My only concern for them is what NY vault do they have it in? One reference says it's the HSBC vault. Uh-oh. Those are the same guys who run the GLD fund. The gold exposure represents 2-3% of the UTexas endowment. That's like a small insurance contract of sorts. Governor of Texas wanted to bring that gold back to a Texas vault. Don't know if that ever materialized. You can bet the NY Boyz would do everything in their power to prevent that. Heck, Germany couldn't even get a tiny amount of the 200-300 tonnes due them from the NY vaults.
Edited to replace the UTube Bass interview link....which worked fine yesterday. And as OPA points out later....it should be $768 MILL. There are too many zeroes after the decimal on my calculator. It's time to update to an old fart's 8" version.
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Comments
"back in 2011 Bass had the university take delivery on ~$1 billion dollars worth of physical gold."
However, back in early 2013 University’s Endowment fund liquidated $375 million of its physical gold position, and plowed the proceeds…back into the PAPER GOLD FUTURES MARKET.
Gold conversion to $ calculator
<< <i>Bass linkie no work >>
corrected link
<< <i>Your math is wrong. 20 metric tonnes = $770,192,880.00 based on today's price
"back in 2011 Bass had the university take delivery on ~$1 billion dollars worth of physical gold."
However, back in early 2013 University’s Endowment fund liquidated $375 million of its physical gold position, and plowed the proceeds…back into the PAPER GOLD FUTURES MARKET.
Gold conversion to $ calculator >>
This is too funny. Just this past week OPA posted that Russia's gold reserves were >12,000 tonnes....when if fact they are about one tenth that amount (<1200). He didn't have a clue what he was posting about. Then calls me out for a math error where I spaced out on MILL to BILL. The thread was about "why" they took delivery. Nice touch posting a calculator link. Wouldn't have helped though as I still would have had to count the zeroes the same way.
Read, my post again. I already mentioned that they owned that amount of gold at one time and traded some into futures and equities in 2013. I read that same article you linked....before I posted....and before you linked it. Did you read the entire thread?
<< <i> Feel free to critique me when I'm 10X off. >>
Per your request.
They owned at one time some 20 tonnes ($768 BILL at today's price)
big difference between 768 billion and 768 million
<< <i>
<< <i> Feel free to critique me when I'm 10X off. >>
Per your request.
They owned at one time some 20 tonnes ($768 BILL at today's price)
big difference between 768 billion and 768 million >>
Touche. 20 tonnes is still 20 tonnes. That's what I get for skipping from MILL to BILL (6 vs. 9 zeroes). Most everything I post these days is with BILL, TRILL, and even QUADRILLION. The days of MILLIONs are nearly gone in large financial markets. Guilty of $Billions on the brain. Happens a lot with older age....nearly every day now. Getting old stinks.
Your 10x Russian error was critiqued considering that your 4 years of Russian gold supplies matched the 12,000+ tonne figure you gave. That was no math error. That was a gross conceptual error as we call it in the engineering world. I made a decimal error. I'll live with it. Good that you picked up on that. But, I'd still love to know how you came up with 12,000 tonnes for Russia's central bank reserves.
<< <i>
<< <i>Bass linkie no work >>
corrected link >>
Thank you.
Interesting tape. Physical is always better than paper.
Wow, that's a lot of concern to have. Heavy is the head that wears the crown.
Liberty: Parent of Science & Industry
<< <i>Most everything I post these days is with BILL, TRILL, and even QUADRILLION.
Wow, that's a lot of concern to have. Heavy is the head that wears the crown. >>
Don't be worried Baley. I have strong shoulders and can handle that crown. Tin foil isn't as heavy as you think.
I'll need some help from you though..... if and when we get to $QUINTILLION. But when currencies become worthless the zeroes come on with amazing speed. 1923-1924 Germany made it to SEXTILLION. They lopped
12 zeros off when shifting from marks to rentenmarks.
Quadrillion has 15 zeros
Quintillion has 18 zeros
Sextillion has 21 zeros
Septillion has 24 zeros
Octillion has 27 zeros
Nonillion has 30 zeros
Decillion has 33 zeros
Undecillion has 36 zeros
Duodecillion has 39 zeros
Tredecillion has 42 zeros
Quattuordecillion has 45 zeros
Quindecillion has 48 zeros
Sexdecillion has 51 zeros
Septendecillion has 54 zeros
Octodecillion has 57 zeros
Novemdecillion has 60 zeros
Vigintillion has 63 zeros
Googol has 100 zeros.
Centillion has 303 zeros (except in Britain, where it has 600 zeros)
12 zeros off when shifting from marks to rentenmarks.
And there it is, the reference to Weimar, now we just need someone to compare the USA to Zimbabwe, Argentina, or even Mexico.
How many times has the Dollar lopped off any zeroes in the past 200+ years? None. And how many will there be in your or mine or our kids kids lifetimes?
None
Liberty: Parent of Science & Industry
Liberty: Parent of Science & Industry
<< <i>I'll need some help from you though..... if and when we get to $QUINTILLION. But when currencies become worthless the zeroes come on with amazing speed. 1923-1924 Germany made it to SEXTILLION. They lopped
12 zeros off when shifting from marks to rentenmarks.
And there it is, the reference to Weimar, now we just need someone to compare the USA to Zimbabwe, Argentina, or even Mexico.
How many times has the Dollar lopped off any zeroes in the past 200+ years? None. And how many will there be in your or mine or our kids kids lifetimes?
None >>
Who said anything about the USA? Oh, I forgot. The financial systems have "safeguards" these days to prevent any more hyper-inflationary (or hyper-deflationary) events to ANY industrialized nations.
No hyperinflation of the dollar (by standard definition of hyperinflation).
Just steady long term trend punctuated by relatively small movements in both directions away from the trend line, and then back towards it.
Liberty: Parent of Science & Industry
<< <i>How many times has the Dollar lopped off any zeroes in the past 200+ years? None. >>
The dollar has lopped off 19+ nickels since 1913. Good new is it can now only lop off pennies from it's 1913 value.
Slow destruction is much less obvious and helps avoid runs on the bank.
Keep an open mind, or get financially repressed -Zoltan Pozsar
<< <i> The dollar has lopped off 19+ nickels since 1913.. >>
No, it' hasn't. The dollar is still a dollar. It's the price of everything else that has changed.
Liberty: Parent of Science & Industry
<< <i>The dollar has lopped off 19+ nickels since 1913. >>
No, it hasn't. This is a fundamental misunderstanding. A dollar is still a dollar and will be a dollar for anyone here's lifetime. It's the value of everything else, reckoned in dollars, that's constantly changing.
Liberty: Parent of Science & Industry
And why do these Universities have so much money? Shouldnt they be investing in education rather than gold?
Knowledge is the enemy of fear
<< <i>I like Kyle Bass, but he really let his emotions and politics dictate his investment decisions on this.
And why do these Universities have so much money? Shouldn't they be investing in education rather than gold? >>
So in a $30+ BILL endowment you don't think that money is regenerating to provide an education for students? Is it wrong in diversifying 2-3% of those funds? Wasn't nearly every financial advisor on the planet advocating a minimal 5% allocation to precious metals back in 2009-2013? Has the world changed that much since? I would suspect you too own some gold and/or silver. Why aren't those assets being sold off to fund more useful endeavors for your family/friends? What about your coin collection? The bottom line is that everything in the UTexas endowment is invested to "try" and fund education. How about hundreds of millions in derivatives that Harvard and Yale were saddled with a few years back? Harvard was sucked into those by President Larry Summers. Those certainly weren't funding anyone's education once they crashed. During the 2008-2009 and then 2011 stock market crashes lots of these universities were wondering why they had so much $$ tied up in the stock markets. Markets do cycle. How often have you preached that? So the solution now is to sell off any cheap assets that have been pummeled, especially hated gold. And what? Buy only assets that have gone to the moon?
These guys help to manage endowments. It doesn't mean they always get it right. If UTexas still has PMs 3-5 years from now let's revisit how they're doing. Bass was buying gold from 2009-2011. How was that emotional considering he purchased nowhere near the 2011 peak? Certainly one flaw was not selling off about 1/3 of it in Aug/Sept 2011...or even in Sept 2012 ($1790 gold).
My own school has a $650M - $1BILL endowment. That covers a 174 acre campus and 2900 students, approx 1/3 who receive school-supplied financial aid. Even at 5% gained per year that covers less than a year's operating expenses.....$41 MILL/yr given out in scholarship aid. Total op expenses are $147 MILL/yr. It's not cheap to run a city. UTexas has 50,000 students, 24,000 faculty and staff on 423 acres. No surprise to me that their endowment is approx 20X to 30X the size of my school. No endowment....no education. I suspect that UTexas gold from 2009-2013 was doing just fine in funding education.
<< <i>I like Kyle Bass, but he really let his emotions and politics dictate his investment decisions on this.
And why do these Universities have so much money? Shouldnt they be investing in education rather than gold? >>
An endowment is a permanent investment in the future of a University. Endowed funds are invested, rather than used as cash for immediate needs. A portion of the earnings from an endowment is distributed to the University. The remainder is added back into the principal, ensuring steady growth of the endowment.
Knowledge is the enemy of fear
<< <i>Im wondering why they have $30 billion in the first place. Seems to me that money should have been invested over all these years into humans, not gold. >>
scroll down to assets
How they got their wealth
<< <i>
<< <i>Im wondering why they have $30 billion in the first place. Seems to me that money should have been invested over all these years into humans, not gold. >>
scroll down to assets
How they got their wealth >>
I understand how and why they have it, thats not my point.
Knowledge is the enemy of fear
Maybe their current expenses have been covered and they already have enough new buildings and tenured professors.
I knew it would happen.
And should be added as a "Loser" to the "Winners and Losers" thread regarding $50 oil.
The money is well invested in mid level administrators salaries . People that neither teach nor learn are the fastest growing budget item at most colleges.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
University of Texas Investment Management Co., revealed that 5% of its $19.9 billion endowment(it handles Texas A&M as well) was in actual bars of gold bullion in a New York bank vault owned by HSBC Holdings, the London based global banking institution. Not in any gold ETF or individual gold mining shares, or in gold futures;l Texas took delivery of 6,643 actual bars of bullion, or 664,300 ounces– a quite unusual transaction for a university.
I believe they started buying at $700 and stopped at $1100. In 2013 they divested 1/2 or more of their physical gold and bought ETF's. I think they did this so they could more easily divest without disrupting the market. My theory is that they are supporting the price at $1200 until they can liquidate more.
<< <i>I'm glad my alma mater is trying to invest in the future. Namely Jim Harbaugh. Football is all that really matters.
MJ >>
You didn't need to offer SIX years. He's got no place decent in the NFL to go after this week. He terms himself out everywhere after four years.
The people who count have had enough. You will also.