Institutional investors are no doubt recoiling on news that one of their very own – the $20 billion Texas University Endowment Fund – has taken a $1 billion position in dumb ol' gold bars, stored on their behalf in New York vaults, collecting dust but earning no interest and paying no dividend. This report at Bloomberg has all the details:
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.
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 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.”
What has the world come to?
Just think how silly this would have sounded just a few years ago -- that is, before the financial market crash caused investors all around the world to start doubting all sorts of conventional wisdom, not the least of which is the idea that the U.S. currency is sound.