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A Golden Tipping Point: University of Texas Takes Delivery Of $1 Billion In Physical Gold
Tipping points are funny: for years, decades, even centuries, the conditions for an event to occur may be ripe yet nothing happens. Then, in an instant, a shift occurs, whether its is due a change in conventional wisdom, due to an exogenous event or due to something completely inexplicable. That event, colloquially called a black swan in recent years, changes the prevalent perception of reality in a moment. This past week, we were seeing the effect of a tipping point in process, with gold prices rising to new all time highs day after day, and the price of silver literally moving in a parabolic fashion. What was missing was the cause. We now know what it is: per Bloomberg: "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." And so, the game theory of a nearly 100 year old system of monetary exchange has seen its first defector, but most certainly not last. With an entity as large as the University of Texas calling the bluff of the Comex, the Chairman, and fiat in general in roughly that order, virtually every other asset manager is now sure to follow, considering there is not nearly enough physical gold to satisfy all paper gold in existence by a factor of about 100x. The proverbial Nash equilibrium has just been broken.
From Bloomberg:
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, added about $500 million in gold investments to an existing stake last year, said Bruce Zimmerman, the endowment’s chief executive officer. The holdings are worth about $987 million, based on yesterday’s closing price of $1,486 an ounce for Comex futures.
Years from now, when historians attempt to define who may have started it all, one name may emerge...
The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. 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 yesterday in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”
In summary - the fiat tide is now going out. And among those who will first be
observed swimming naked are the very same people whose fate has been so
very intrinsically linked to the perpetuation of a flawed regime (and
who coined this very saying). In the meantime, hold on to your hats: should a scramble for delivery ensue, the recent parabolic move in various precious metals will seem like a dress rehearsal for what is about to transpire.
The only open question is who was the broker with enough gold to deliver to the UofT. We hope to find out soon enough. We also hope that the UofT is smart enough, and that Kyle Bass advised it, that if they are getting "delivery" in a Comex vault in New York, the gold has likely already been leased out at least several times to various entities demanding paper allocations...
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I'm an old horseshoer, and thought your post was a jewel. The junks show that a lot of bozos can do seventh grade arithmetic.
alex jones is from austin, Texas, as well.
They are sending Kinky Friedman up to get it.
Don't be surprised if this is more gold than they have in Ft. Knox.
Tungsten...Ft. Knox is storing tungsten.
Ya and don't you forget it. They can maket his a lightbulb free world at the drop of a hat.
Sorry, a little green here. What is the meaning of the lightbulb reference?
Just a stupid joke. Incandescent lightbulbs use a tungsten fillament.
Illegal now, of course. Death by dimmer if caught...
Yep you can't waste energy I need it to ship a boatload of stupid plastic toys for your happy meal.
You got That right!
I wish that people would get educated about energy. The ONLY time that there's "waste" with incandescents is running them in cooling months. When it's the heating season that "excess" energy is in the form of heat, heat that IS used!
I'd like to see some numbers for how many people use incandescents for things like chicken brooders.
marijuana growing a big electrical drain. I give you the cannabis carbon footprint
http://evan-mills.com/energy-associates/Indoor_files/Indoor-cannabis-energy-use.pdf
Greatly reduced breathing rates were not considered in this study and therefore its accuracy is in question...
Killed by Tim Geithner?
The horror.
lol gotcha, thanks
I've got more gold than that.
Remember the Alamo?
And that sounds like a mighty fine place to keep all that gold. It would fit against the back wall in a couple of pallets.
Or they could put it in the basement...
Basement of UT you mean. I dont think The Alamo has a basement. Too close to the river.
I am severely disappointed in the dearth of classic cinema knowledge.
http://www.youtube.com/watch?v=cYfjq3ZYZbA
I know you are but what am I? Infinity!
You don't want to get mixed up with a guy like me. I'm a loner, Bernanke. A rebel. A gold loving, silver adoring fanatic.
Some of us knew what you were talking about.
Or they could put it in the basement...
Everybody's got a big but, Michelle, let's talk about yours.
Huh?
Kaynt imagine U Texas trustin' them Yanks to protect their gold fer 'em.
Fucking beautiful.
Is that REALLY "taking physical delivery"?
It does not sound like it to me.
Seriously, Texas is, you know, Texas! I would have thought they would take it home, bury it, and guard it. They're trusting some facility in New York? They clearly understanding something about physical gold, but they don't have the whole "counterparty risk" thing down yet.
Nor do they have an understanding of the term "misappropriation" or "theft". They should move that gold to Texas at once.
Tell ya what, them shoulda moved that there gold yesterday.
Imagine the uproar when the day comes that UT arrives to load their trucks and take it all back to Texas...physically.
Talk about a panic.
It'll be one Hell of a convoy.
This here is the rubber duck ...
Regards,
Cooter
First of course, Texas would need a safe depository. Maybe open it up to others who want THEIR allocated or physical gold stored securely outside NYC.
I'd split it up into at least five convoys, all w/ heavily armed Texas Rangers in armored vehicles taking different routes.
This will be a fascinating game to watch. Previously, the Fed had to create liquidity to save the banks (which drove the price of gold to the moon). Bit what if they have to drive the price of gold and silver down to save the banks? Rates to the moon... But then the banks collapse from illiquidity -- they're screwed either way. Damned if they do, damned if they don't.
Death by soaring metals prices, or death by illiquidity. How would you like to die, Wall Street? Because you're just about fucked. You just haven't chosen which hole yet.
I'll take "Death by soaring metals prices" for 1 Trillion, Alex...
It is late. You sir, will bless me with sweet dreams this eve ...
Regards,
Cooter
We all have a choice. We sacrifice the future for the present, or sacrifice the present for the future.
It is precisely that simple Crab Cake. And as long as we valve our present day comfort over our future discomfort this insanity will progress.
Nice to see you haunting ZH today.
I'm here everyday CD. I just don't like repeating myself. Loved your new article by the way, keep it up my friend.
Thank you. Another one coming real soon called "Comfortably Numb".
Typically long, but with lots of pretty art to give the ADHD among us a break. :>)
CogDis,
I am looking forward to your "Comfortably Numb" piece!
Although I was late last night... :)
Well said, Crabby. Needs to be said in Congress.
HSBC, a full member of the LBMA...Is this a cyber-vault like JPM's?
Just be careful where you park when this fiat monster comes tumbling down.
texas gold bitchezzz - 5% allocation & growing
Isn't the UT motto, "Hook 'em horns" ? How effing appropriate.
I'd say UT has gored the establishment.
It's actually "What starts here, changes the world"
Link for the uninitiated ...
http://www.utexas.edu/opa/utbrand/
... or those who are google challenged.
Regards,
Cooter
The U.T. Investment Mgmt system includes U.T. Austin, U.T. Arlington, U.T. Dallas, U.T. San Antonio, U.T. El Paso, etc.. It hooks a lot more than just the longhorns.
$1 Billion = chump change in today's world.
$1 Billion converted to Gold = REAL BIG MONEY!!!
Please The University of Texas Investment Management Co, provide a photo of the $1 billion physical gold (or comparative proof of the existent of this physical bullion), otherwise i ain't buying this news. Just looks like another move in the shell game of paper gold.
Hell, i've got $1b in physical gold also, and i'm storing it a New York vault too. Everybody is, didn't you know?
From the Daily Texan student newspaper, July 18, 2010 :
"The editorial board is very pleased by the University of Texas Investment Management Company’s recent announcement that the University has invested $500 million in gooold! Precious gold!
The Daily Texan has heard that the nuggets are as big as your fists!
By investing in the precious metal, the University is hedging its bets against the economy. The cost of gold rises in reaction to inflation. Thus in the event of further economic decline, the University’s costly investment will increase in value.
The announcement comes on the heels of UTIMCO’s Board of Directors vote to reverse a policy that allowed members to co-invest with the organization.
That means more gold for us! Glorious gold!"
I don't see the word physical there.
"The Daily Texan has heard that the nuggets are as big as your fists!" - Heard? heard? Hardly proof?
Show me the proof that this physical exists. After all, if you owned $1b in physical gold, you'd want a photo with it right, to show the grand kids right?
I searched through UTIMCO's 2010 annual report and only found references to shares of gold stocks. A few days before the Daily Texan article the Houston Chronicle quoted Zimmerman saying "Investments in gold, natural resources and hedge funds are a means of countering that possible trend [inflation]." He said most of the gold purchases have been through futures trading, but he said UTIMCO _may take physical possession of some gold_". Sounds like $500 million initially invested was not in "physical" gold.
"Sounds like $500 million initially invested was not in "physical" gold."
They probably redeemed their GLD shares for bullion, which Paulson did over a year ago, and which the Chinese are rumored to be doing. Consequently, declining amounts invested in GLD don't necessarily mean that investors are selling gold.
In July, 2010 gold was about $1,200 an ounce:
http://goldinfo.net/London-Gold-Bullion-Market.aspx
Nice, safe wealth preservation approach....
Do you call your vault the bad student loan vault also. LOL
Don't make me put a billion dollars worth of mythical gold into my bad student loan vault. CAUSE I WILL!!!
And I'll do it like a BOSS you punk!!
It's "Show Me Da Bullion" from now on, Bitchez!
The price of physical is rising quicker than paper for sure.
But is this fund run by academics??
They r usually space cadets when it comes to finance.
a billion in gold is 4x4x4 feet if you pay cash for physical gold why would you let someone else store it makes no sense
Because you can't move it and store it. Plus, if you decide to liquidate part of it down the line you don't have to move it again in NY. Ease up on them. I have to believe they are going to verify and audit it.
False.
Overhead < RiskOfGettingRaped.
Simple math. It will get moved, but I doubt the news will wish to report it.
Please drive through.
Regards,
Cooter
"if you pay cash for physical gold why would you let someone else store it"
As long as the gold is in the vault of a bank, the bank will accept it as collateral with which the depositer can buy bonds or commodities or whatever. (Or more gold, maybe?)
Soon, you will be able to put 1 billion in gold in your glove box.
Good point!
You'll need it to buy a tank of gas.
True. However, I wonder what laws the Fed and USA Government will try to inact into law in order keep their current system intact?
I urge them to check that the delivered is not salted gold
According to a UT alum I know who bleeds burnt orange, the gold is being stored in the Federal Reserve's vault. I have no way of knowing if he is right, but he tends to keep up with these kind of things when they involve Mother UT. That Kyle Bass....he is a kicker, ain't he?
the fed gangsters cannot be trusted. take it back to texas and have it re-refined.
Move the metal back home! JPM would lease it to GS, who would crack it in to a thousand little pieces and sell it to the Fed to be turned into lead. If you do not have it in your hand! You have nothing.
The cognitive dissonance of a gold bug is an hilarious thing to behold.
I DARE you to explain the two mutually contradictory ideas that are supposedly in WHICH gold bug's head.
Heh.
These are interesting times!
Only in the rear view mirror can one with certainty say a fool is a fool!
In life's rearview, do not we all remember a lass fair and missed ...
Regards,
Cooter
If I was a student looking at a hundred thousand dollar debt in tuition to go to that school, I would be asking myself questions, and that would occur without any need to resort to alternative conciousness.
+++
Texas = George Bush = Economic Recession = Gold = George Bushs fault
-Nancy Pelosi
I'd like to wipe a longhorns ass with Pelosi's face.
Why do you have such hatred of Longhorns?
don't do it. pelosi would like it too much.
Nobody at the next cattle sale would buy the long horn or eat it then...........
Bush is a Massachusetts blue blood. Nothing to do with Texas. Except for the fact he got voted govenor.
<vomits>
Regards,
Cooter
Exactly...Bush is a perfect example of what's wrong with this country. A blue blood posing as a Texan but was just a banker/elite plant who continued to hand over the keys to the nation's wealth and resources to his cronies. All those pics with him clearing brush on the ranch .. what a joke. It's all theatre... why was he in Texas or Jeb in Florida for that matter? To get a leg up for electoral college for Red state "votes". Same game played by both Repub and Dems just a few different cronies when they get in power (they both serve the same masters mostly).
step aside, Moses!
Texas has a golden longhorn!
I guess all that glitters is not burnt orange.
Gold: the new status symbol. We only take gold at my new NYC club
NYC will be out of business soon.
You heard it here first. Club joke (no offense).
NYC houses the biggest criminal syndicate in this country's history. I am not surprised that it will crumble and crumble it will by the blessings of its useless politicians and the wall street crooks.
The joke is on the U of T. The gold bars will be sold and fakes will be substituted. When U of T wishes to cash out they will be paid with fiat.
wasnt there alot of gold in vaults below the WTC that disappeared.....i would take that gold to texas bar by bar ASAP
Gaold can't disappear. That violates a law.
Can gold be vaporized? Can that vapor be spread so thin that you can no longer see it?
Yup...$600mm in Morgan Stanley's vault down in the bedrock. About one day after the gold came up, TPTB attempted to call a halt to the intense search "for our fallen heroes".
Amex Black card about to get bumped as status fetish by Actual Gold Card (your name engraved here). Oligarchs only please.
In the Federal Reserve Vault?LOL They wont even let you in the door.
The Federal Reserve stores tons of Gold for entities and foreign countries in their vaults. Common knowledge.
Common knowledge for some but not for my next door neighbor or the cat at the grocery store who rang me up tonight.
How much "gold" is actually there? And who "owns" it? Does that even matter when possession is 9/10 of the law (or the only thing that matters when SHTF)?
FunkyMonkeyBoy has it correct above - you gotta call bullshit unless they take possession and evidence it.
My guess is that UT trusts the federal Reserve to store their gold. But, as with all my posts, I will take the non-cocksure stance that I might be totally wrong.
My guess is that, too. I, however, am cocksure enough not to trust the fed with my gold. I advise all to do the same.
My God Ted Celeste.....if you can't trust the Fed of these here United States of America...then who can you trust?:)
I've soul-searched more than a few times on that question. After all, every "smart" person I meet out here in the "real world" either: a) doesn't know what the fed is or b) thinks they are a gov't agency.
So it goes. Good luck to all and goodnight.
http://www.youtube.com/watch?v=Uuq6HgKgEFQ
@"The Federal Reserve stores tons of Gold for entities and foreign countries in their vaults. Common knowledge."
yippee ki-ay, motherfucker
--Simon: [on the phone] John... in the back of the truck you're driving, there's 13 billon dollars worth in gold bullion. I wonder would a deal be out of the question?
Ha, I bought all my gold for half as much money. :) UT is late and because they are late they would be better off going all in. That would say something.
.
They should buy a bunch of guns and bullets first.
Oh wait. University of TEXAS. Never mind.
Still they need peanut butter and dvd's of the goldsilvergold bears.
The big test? Ask for delivery.
The other question in my mind; Shouldn't they have diversified 50/50 au/ag?
Now what would the fireworks display look like if they had done that? Fat Boy comes to mind.
Good one Al: ask for delivery and let them sweat. Then, take all bars out of their vault into your own vault (you have the key!) and after assaying, put UOT on the app 1700 x 400 Oz Au bars followed by an identification number.
Without delivery it is all paper promise junk.
Texas and gold
http://www.madcowprod.com/03022011.htm
Man you are awesome at finding stuff.
Google must be really jealous of you.
Kyle Bass for Treasury Secretary.
I think Kyle Bass is one of the smartest guys in the investment world, and although he made his way around Wall Street trying to get somebody in a major investment house to try to understand what he was seeing in the mortgage market (they did not), he ultimately did make a fortune off the misfortune of many people. I am not sure what I am saying here, since my wife - a doctor - also makes her living off the misfortune of others. I guess I am just saying.
In my book there's a big, big difference in alleviating and exacerbating. :) Hug your wife and thank her from me for all the sacrifice, long hours, mental gymnastics and nightmare internship she endured to be able to attempt to alleviate. And I'm sure even now the hours are long, arduous and unpredictable. I hope you two are getting paid well....
I am always looking for another reason to hug my wife. Thanks.
A double.
A triple! Do I get some kind of prize for this?
Not even close to a record, buit (thats French for but) thanks for playing!
Well, I gave it my best, green man.
That's enough of you hugging your wife. It's my turn.
;-)
Well...I will have to ask her....not sure how that will work out..."Hey Hon, got this request from a nice anonymous guy on an Internet blog, he wants to hug you." I will let you know how that turns out, SIK. As always, I am optimistic.:)
Thoughts of hugging wife > shakey hands ;-)
Yes...even still, at my advanced age. Of course, she is 20 years younger than me, so I guess that makes me a pervert of sorts, albeit a legal, friendly one.
Your wife is a M.D.?
I.GUESS i always thought of you as a vet living on disability overseas. She's not an american m.d. right? You do live overseas unless i am mixing up posts. If i were gonna.guess your wife is thai filupino or korean?
How close did i get? Not trying to be disrespectful just curious.
I am a vet, but have no disability, My wife is an American citizen, but was born in India. She is licensed in the US to practice medicine. We live in the US and Thailand. Where I am is dependent on a lot of things. Right now I am in Tennessee, because my wife is at Vanderbilt, and we have a place here for reasons I do not care to go into. Somebody accused me here of being a slime ball on a vet disability. Well, I am not sure vet disability rights means you are a slime ball, but I do not have one. I got my share of being pasted in Vietnam, but none of it translated into a disability claim....and nor should it. Many people came out of there in much worse shape than I did, and deserve it.
My wife is a 5' 2" neurosurgeon and gold bangle hoarder. I am a 6' prick who just quit a 30 year 3-pack a day smoking habit. I am still reeling from this cold-turkey exercise in healthfull restraint.
You are not being disrespectful, you have a right to know something about me, just not who I am.:)
Well, now that we know your wife is a 5'2" neurosurgeon at Vanderbilt, probable ethnicity Indian, it shouldn't be too hard to find out your identity ! ......
good luck with the smokes, seriously
after 3 packs a day for 30 years you won't believe how much free time you have when you stop
I was wondering how you were doing on the smokes.
Good on ya!
Dem be beautiful lakes and rivers in Tn, Ar. Get yourself a kayak or canoe and enjoy!
he talks a lot of macro for a former BS sales guy...
And so, the game theory of a nearly 100 year old system of monetary exchange has seen its first defector, but most certainly not last. With an entity as large as the University of Texas calling the bluff of the Comex, the Chairman, and fiat in general in roughly that order, virtually every other asset manager is now sure to follow, considering there is not nearly enough physical gold to satisfy all paper gold in existence by a factor of about 100x. The proverbial Nash equilibrium has just been broken.
...and that kids is why underground financial journalism is the shit right now.
check this out...
http://www.foxnews.com/us/2011/04/16/missing-idaho-silver-collapse/
Thanks for posting that. Hope they get him out ok.
Oh my ...... Passover's here and Texas is worshipping a golden calf ........ errrr I mean golden steer. Since this is a more mature bull God may not take offense. But I wouldn't be surprised if there is a swarm of locusts on it's way to Houston.
The locust hate us because they hate our freedom.
Unclear if the $1 billion of physical gold is a new position or adding to an exising holding. $1 billion represents about 3.8% of AUM for Texas Investment Management as of 2/28/11 which seems fairly reasonable from an asset allocation standpoint. I'm guessing they will add to the physical holdings over time.
According to the article Tyler posted above, half is from an existing position and half is newly acquired.
Just curious but don't you think UT should have been taking delivery on this size of order back when gold was trading $500-$750 /oz?
Do they have malpractice insurance?
"The University of Texas Investment Management Co., the second-largest U.S. academic endowment"
Biggest does not mean bestest. Isn't Harvard #1? Lolz. Better late than never.
Please report on an academic endowment who bought ~19,000 Kilos when gold was trading at $250. Then I will ohhhhh and ahhhhhh.
In the grand scheme, it doesn't matter if they bought it at $250 or $1460 (which also goes for the average investor reading this). Both prices are still cheap. Sit back and watch the fiat currency system swirl down the toilet bowl.
Fiat to infinity and beyond!
"Both prices are still cheap."
Maybe. I'm still trying to figure it all out. We bought into silver back when ZH was at blogspot so I have to say thanks for that education. One thing I do know is that I do not want to be on that elevator during a deflationary event. I heard the doors don't open.
I think the Fed will protect their paper at all costs, like they have been doing via their JPM proxy for years.
So I'm stuck trying to find value in some unusual places.
The Fed has no choice but QE. Tighten and all the banks collapse and anarchy ensues
"Biggest does not mean bestest. Isn't Harvard #1? Lolz. Better late than never."
Yep.
Harvard took it hard and fast up the ass when the financial crisis hit...then got untold millions in "shovel ready jobs" funds from Uncle Sugar to compensate for their "investing prowess".
For myself, I believe the Dunning-Kruger Effect is on permanent visual display throughout most of academia these days, that is, the more you think you know, the less you actually do.
But they got Larry Summers. LOL
Well there is that ;-)
They're taking delivery now, they've probably been rolling over contracts since it was $300. Maybe the writing is on the wall that we're finally going to see a spread between paper and physical.
Bingo!
Just because they're taking delivery now does not mean their purchase price is anywhere near today's price.
By the way is Bill at Pimpco going to follow suit. He shouldn't be keeping that large a cash position. It's time for Bill to put some PM where his mouth is.
cash or crash position...hehehe
"is Bill at Pimpco going to follow suit."
Now THAT will really put the cat among the canaries. That, plus the unraveling of the euro, starting next week. Gold should hit $1650 by midyear.
What the hell happens when states and muni's wake up and start buying..As Tyler says, this could be a match that lights the torch to let the games begin..