Kyle Bass: "Don't Sell Your Gold"

Tyler Durden's picture


The mainstream media seem willing to sound the all-clear and bring us back from Defcon-3 on the back of what can generously be described by realists willing to look at the actual data as a 'murky' NFP print. The market's reaction seems modestly QE-off (with rates up decently) but the only modest drop in Gold appears to fit with a lack of conviction in the data (especially given the EUR sell-off on Papademos chatter). It seems, as Bloomberg reports, Kyle Bass is right to take the longer-view when he notes today "I'm against selling any of the gold" in UTIMCO's portfolio, pointing out the mounting risks from government deficits in US and Europe, "as every day goes by, I see deflation in the things you own and inflation in the things you need." Summing up the reality of our global situation, one of Bass's colleagues adds "This is a grand experiment and they typically never end well."

YTD performance of Silver, Gold, S&P 500, and the Long Bond.

and today's reaction in context this week.

Chart: Bloomberg


Kyle Bass Urges Texas Endowment Fund to Hold Gold Hedge as Assets Shrink

Kyle Bass, the Dallas hedge-fund manager, urged overseers of Texas (STOTX1)’s state university endowment, the second-largest U.S. college fund, to stick with a $1 billion investment in gold bullion even as the fund’s assets decline.


“I’m against selling any of the gold,” Bass said today at a meeting of fund directors in Austin, citing the need for a hedge against mounting risks driven by government deficits in the U.S. and Europe. “As every day goes by, I see deflation in the things you own and inflation in the things you need.”




The Fed’s governors, led by Chairman Ben S. Bernanke, “are scared as they can be of deflation,” said Ardon Moore, president of Lee M. Bass Inc., an energy company in Fort Worth, Texas. “This is a grand experiment and they typically never end well.”




Kyle Bass, a managing partner at Hayman Capital Management LP and a Utimco trustee who isn’t related to Lee Bass, faulted the world’s biggest central banks for expanding the money supply by what he said was $15 trillion during the past five years. In April, he advised the fund on holding gold bars rather than futures contracts.


Gold futures for April delivery, the most-active contract traded on the Comex today in New York, touched $1,763.80 an ounce, the highest price since Dec. 2. The metal, which reached a record $1,923.70 on Sept. 6, climbed 11 percent last month, the biggest January rally since 1983.

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Fri, 02/03/2012 - 10:49 | 2123052 francis_sawyer
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Kyle Bass: "Don't Sell Your Gold"

OK... You've convinced me...

Fri, 02/03/2012 - 10:57 | 2123079 Pladizow
Pladizow's picture

Gold just had its best January in 32 years!

Fri, 02/03/2012 - 11:11 | 2123145 falak pema
falak pema's picture

one month, cold month, gold month; will it turn to blow month next month? Or will it stay glow month?

I love all months as long as they are different months, as variety stays spice. Life, wife and avocado pulp with shrimp on top. What more could one ask? Maybe a mistress  of blue mussel along with fresh clam and distressedly naked open oyster on ice. Thats variety of shell and sweet smells so fresh it would make a woman blush in reminiscence. 

Fri, 02/03/2012 - 11:21 | 2123183 KingPin 999
KingPin 999's picture

Would someone at Zerohedge take a look at this BLS birth/death model link.

I can't tell exactly what is going on but the adjustments this month are massive compared to anything seen in the last year.

It looks like Birth/Death (calculated quarterly now) were massive this month but I can't tell with this and all the other adjustments.

Fri, 02/03/2012 - 12:08 | 2123432 trav7777
trav7777's picture

Texas can eventually just start levering their gold and borrowing with it as collateral in a self-running ponzi.  Effectively become a bank with real assets.

Fri, 02/03/2012 - 12:20 | 2123491 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Shhh!  You'll give away the Federal Reserve's secret!  Can't have anyone knowing about their philosopher's stone!

Fri, 02/03/2012 - 12:35 | 2123530 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Like a very sick rabbit population...

Fri, 02/03/2012 - 11:51 | 2123310 Flakmeister
Flakmeister's picture


it may well have been the best in 32 years, but you really should examine the historical context of gold's action in 1980...

Just sayin'

Fri, 02/03/2012 - 12:22 | 2123497 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

When discussing gold the first thing out of the mouths of 99% of people out there is "But it is at its all time high".

No it's not.

Inflation adjusted it's nominal high of $880 in 1980 is $3300 in today's dollar.


Fri, 02/03/2012 - 12:40 | 2123555 Flakmeister
Flakmeister's picture

C'mon... quit with the posturing...

Has the Hedge gotten to the point where anything but slavish devotion to the altar of precious metals is denigrated...My fuck, is group think de rigueur here??

I just laugh when I hear about people talking about the best Jan since 1980 when January 1980 was a classic hyperbolic blowoff top that took 28 years or so to recover from....

There are lot of people here with egg on their face re: Silver... The people chasing the top in 2011 will be a source of resistance when Ag makes its next move as they get out...

Hell I have monster box of leafs that I am still down 5 bucks a coin (not that I am worried)....


BTW, I probably have more physical than you can imagine....

Finally, the ZH sentiment on PMs is the perfect contrarian signal for trading purposes.... Buy when its quiet and sell when rate of posts on a gold thread exceeds 125/hr....

Fri, 02/03/2012 - 12:48 | 2123587 tarsubil
tarsubil's picture

You just came here to rub in the fact that you have monster boxes and 100s of oz of gold.

Fri, 02/03/2012 - 13:09 | 2123608 Flakmeister
Flakmeister's picture

Don't you have some thermodynamics to brush up on?

PS I can assure you that I did not amass what I have by following the crowd...

Fri, 02/03/2012 - 15:15 | 2124251 Temporalist
Temporalist's picture

LenonHendrix it is $2300 aprox. not $3300 inflation adjusted.

Fri, 02/03/2012 - 16:58 | 2124666 tarsubil
tarsubil's picture

Did you see it snowed in Rome? Hmmm, how about that? I decree from that data that the Earth is cold today.

PS - There are a lot of people that need to play catch up. In which case, playing the charts to get the best price is probably too risky.

Fri, 02/03/2012 - 17:12 | 2124737 Flakmeister
Flakmeister's picture

Yep... Lots of snow in Japan and state of emergencies in Europe because of the cold...and I went golfing Feb 1st outside NYC when it was 62 degrees...

After brushing up on your thermodynamics, you might want to look at Hadley cells, the Arctic Oscillation and how they can influence the Jet Stream...

Before I forget, do you have a point that you are trying to make??

Fri, 02/03/2012 - 17:35 | 2124839 tarsubil
tarsubil's picture

Aha! More data. Let me just do a quick calculation accounting for Hadley's cellphone and The Arctic Oscillation! I now decree that the Earth is tepid. Phew! I thought we were done for there and that the Earth was going to freeze over.

Fri, 02/03/2012 - 14:25 | 2124078 Rakshas
Rakshas's picture

I'm not sure you can rely on such a small segment of the market population -worldwide; as I find most folks on NA blogs seem to have thier collective heads up thier own arses on this issue - as a reliable contrarian signal wrt the purchase of or reasons to purchase any hedges against the ever increasing {fiat tsunami}ponzi . 

But whatever, I keep hearing these sorts of comments about mining companies as well, blah blah blah overvalued, blah blah blah parabolic etc etc.  

At the end of the day it's all just opinion anyway, mine just happens to align with the bugs. But getting back to buy and sell indicators, how many of your wider ranging aquaintances even read financial blogs? {not such a valid question if you work in the financial sector} Bass and how many other wealth managers are talking PM's and hard assets? Yeah exactly, NTFM.... 



Fri, 02/03/2012 - 14:42 | 2124141 Flakmeister
Flakmeister's picture

Don't read too much into what I write... I am a gold bug but there will be many *paper* trading oppurtunities before the jig is up...

When the PM bugs emerge here like a murder of crows, it usually means to take profits..... 

Fri, 02/03/2012 - 12:28 | 2123512 JW n FL
JW n FL's picture



People should always have both eyes open.. regardless of how they feel.

Gold is Up..

we buy low and sell high.. with that said I see more drama coming.. is it worth taking profits now? to not have an entrenched position with the euro goes pop (in whole or in part)?

God Love and God Bless Fight Club!

signed, Christian Constitutionalist

P.S. dont for get! See Something? Say Something!

1. I own LOTS of PM's!

2. I own LOTS of Food! wayyyyyyyyyyyyyyyyyyyyyyy more than a weeks worth of cookies! PLUS PLUS PLUS

3. Water proofing ammo is a way of life!

4. I am a clutz and may very well lose a finger (more likely a toe) but the risk is there!

5. I HATE the Lobby Whores in Washington DC!

6. I HATE the Lobby in Washington DC!

7 I HATE Wall Street who OWNS the Lobby in Washington DC!

8. I HATE New Yorks Finest who are paid $27 bucks? an hour off duty to re-route traffic around the NYSE without a court order!

I could go on and on and fucking on.. but why! you have seen enough! you should really call!

Fri, 02/03/2012 - 12:52 | 2123610 donsluck
donsluck's picture

Don't hate, meditate!

Fri, 02/03/2012 - 20:16 | 2125418 Ura Bonehead
Ura Bonehead's picture

Who's going to buy all that gold down in yor bunker, expecially with a Fed bounty on your head for still owning itBesides, it will be worth about $2.00 an ounce in trade - get ready for a HUGE bid/ask spread.

Just saying....

Fri, 02/03/2012 - 20:26 | 2125445 akak
akak's picture

Good handle for yourself you chose there, but the first name should have been "Ima".

Fri, 02/03/2012 - 15:56 | 2124394 DosZap
DosZap's picture


but you really should examine the historical context of gold's action in 1980...


Uh Huh,like comparing cat feces to sirloin steak.

Fri, 02/03/2012 - 16:16 | 2124498 Flakmeister
Flakmeister's picture

Man oh man... the grief I get for simply pointing out that Jan 1980 was the blow off top.. 

Maybe I missed it, where did I call a top? Where did I say sell???

Yes, I am well aware that the game is very different now.  Prevailing conditions in 1980  are not what they are in 2012...

Good god, the narrowmindedness of this site does wear on me at times....

Fri, 02/03/2012 - 16:58 | 2124667 fuu
fuu's picture

What grief? Feeling a little dramatic today?

<falls back on the divan, hand to brow, spent>

Fri, 02/03/2012 - 17:17 | 2124769 Flakmeister
Flakmeister's picture

Well there was a little drama with the PM bear raid and me holding an 80 contract spread on the SLV weeklies that expired today....

The short leg just closed in the money but I was worried for a while because it is no fun getting scalped by the house if you want to close a position like this on Op-Ex....

Fri, 02/03/2012 - 17:20 | 2124778 RockyRacoon
RockyRacoon's picture

You want even more red arrows?  Just say you think Obama did something right -- whether he actually did or not.   Going against the grain will get ya junked, regardless of the veracity of your position.  It's the tribal nature of the internet and especially here at ZH.   All I've done is put the word Obama and a positive notion in the same comment, so that will get me red arrows galore!

Fri, 02/03/2012 - 17:23 | 2124792 Flakmeister
Flakmeister's picture

Ask and ye shall receive...

Long time no see.... it goes well I presume?

Fri, 02/03/2012 - 22:24 | 2125744 zoomer
zoomer's picture


Fri, 02/03/2012 - 12:02 | 2123393 The They
The They's picture

how can you not be convinced when there is a banner add that says "Kyle Bass, The man who knows everything" right next to the article?

Fri, 02/03/2012 - 12:13 | 2123462 URZIZMINE
Fri, 02/03/2012 - 12:15 | 2123468 VegasRage
VegasRage's picture

I don't know why I can't stand Ben Bernanke, every time he opens his mouth my investments do better.

Fri, 02/03/2012 - 16:24 | 2124540 akak
akak's picture

It would be interesting if somebody could come up with a quantitative Ben Bernanke Quivering Lip Index ---- I bet it would track the price of gold almost perfectly.

Fri, 02/03/2012 - 11:01 | 2123103 4realmoney
Fri, 02/03/2012 - 12:01 | 2123384 BoNeSxxx
BoNeSxxx's picture

Very OT but related to the threads above and below with respect to bug-out plans, etc.

Without going into a long history of my awakening, suffice to say that it took a lot of time, was done carefully, and with verification (thorough reading of history, foreign version (true) history, etc.)

Step one was the religious unplugging.

Step two was the finacial unplugging.

Step three was the MIC/Media unplugging.

Throughout it all, the obvious distractions (Lizard people, etc) were culled and discarded.  One of those discarded 'true' conspiracies for me was Chem-Trails.

After very careful research I am coming to the conclusion that they are VERY real and that our air, land, and sea are being poisoned daily by our own government. (Aluminum particles up over 6,000 times acceptable levels and farm soil ph rising at an alarming rate).

SO... this has caused a lot of other things to change for me -- most notably MY bug-out plan which involved having a small farm and my own water source.  Neither are much help if both are poisoned.  Which also begins to explain the FEMA camps (for when the knowledge becomes common) and the underground bunkers for the elite, AND the seed banks...

F me running.  I now feel ill-prepared.

Fri, 02/03/2012 - 11:23 | 2123194 slaughterer
slaughterer's picture

Sorry, I sold all of my paper gold and silver after NFP.  However, I will buy it all back soon enough.  

Fri, 02/03/2012 - 11:37 | 2123248 TonyCoitus
TonyCoitus's picture

I'm ready to buy physical gold. Compare Gold Prices dot com lists several brokers and options. Newbie question: Is there any logical reason to buy 1 oz gold eagle over 1 oz maple leaf, krugerrand, etc? Why would I want to pay a premium for one over the other? Liberty precous metals seems to have best pricing. Is there an advantage of using one broker over another? Thanks in advance. TC

Fri, 02/03/2012 - 11:54 | 2123325 Badabing
Badabing's picture


Fri, 02/03/2012 - 12:07 | 2123418 TonyCoitus
TonyCoitus's picture

Just for grins, I emailed Sprott Money asking them what they BUY 1 oz gold maple for and they responding by asking what year are the coins and in what condition.

Why does that matter?  Aren't they buying gold for the intrinsic value?

Sorry for the newbie questions.



Fri, 02/03/2012 - 12:19 | 2123486 trav7777
trav7777's picture

refer to my answer below

Fri, 02/03/2012 - 14:55 | 2124177 Troll Magnet
Troll Magnet's picture


gold is gold and silver is silver no matter what it says on its face.  but some people prefer u.s.-minted coins (eagles, buffaloes) because, well, we live in the u.s.  some prefer leafs because of its .9999 purity and because they see it as a way to diversify their collection and avoid confiscation by the u.s. gov't should some nefarious shit like that is undertaken by our government (which i would never rule out).  

there is no single "best" approach but IMHO i think it's wise to diversify.  get some eagles, some buffaloes, phils, leafs, krugs, libertads, credit suisse, pamps, pandas, etc.  

Fri, 02/03/2012 - 14:22 | 2124055 BoNeSxxx
BoNeSxxx's picture

You'll get all sorts of opinions on this but I don't buy coins at all.

I prefer the 1 oz. bars and pay as small a premium over spot as possible.

There is no intrinsic difference in one form vs. another IMHO if all you want is a way to store value.

Fri, 02/03/2012 - 12:19 | 2123481 trav7777
trav7777's picture

no, none.

Maples should be avoided as the scratches they can easily get will fetch you less money when you go to sell, despite the whole it's a BULLION coin and still .9999 gold.  Smalltime buyers expect "collectable" looking coins and many major dealers have just flat stopped dealing with the bullshit of Maples because of this scratch issue.

A krugerrand can reasonably be expected to sell for right at spot pretty much wherever and by whomever.  If you want .9999, go with the philharmonic or kangaroo.  Buffalos command a premium on both ends of the transaction, as do Eagles, vis a vis other coins of the same purity.  You'll see markup on both bid and ask.

Fri, 02/03/2012 - 14:32 | 2124109 Matt
Matt's picture

One big thing about the high purity is that it has to be something like .995 pure to be considered a commodity in Canada; otherwise, you have to pay tax on it, HST, or GST + PST or whatever, 12 to 15 percent unless you're in Alberta, only 5 percent.

Fri, 02/03/2012 - 14:42 | 2124142 TonyCoitus
TonyCoitus's picture

Thank you for your input!



Fri, 02/03/2012 - 12:29 | 2123515 silverbullion
silverbullion's picture

Be sure to get into physical silver as well: :-)

Fri, 02/03/2012 - 10:49 | 2123053 midtowng
midtowng's picture

I'll sell my gold when real interest rates turn positive in a significant way.

Fri, 02/03/2012 - 10:58 | 2123084 fonestar
fonestar's picture

I'll sell my gold when the public are chasing Dimon, Blenkfein, Moynihan, et al down the streets with pitch forks and lanterns!

Fri, 02/03/2012 - 11:10 | 2123143 midtowng
midtowng's picture

that will be a glorious day!

Fri, 02/03/2012 - 11:43 | 2123274 Pegasus Muse
Pegasus Muse's picture

Stoning with gold bricks seems appropriate. 

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