Kyle Bass Shares The "Stunning" Thing A Central Banker Once Told Him

http://www.zerohedge.com/news/2016-07-01/kyle-bass-shares-stunning-thing-central-banker-once-told-him

Kyle Bass Explains Why He Had The U of TX Take Physical Delivery Of $1 Billion in Gold

I will repeat the following information for newbies:  Kyle Bass, of Hayman Capital, is on the board of UTIMCO, the University of Texas endowment fund, which happens to be the second largest in the world--next to Harvard's endowment fund.  Bass was chronicled in Michael Lewis' The Big Short, due to the fact that he and Hayman Capital's clients profited immensely after the implosion of the subprime mortgage bubble.

In short, Bass has a history of identifying distortions in the market before they collapse--and positions himself to profit from said distortions.  He's a contrarian, rarely following conventional wisdom.  He knows his stuff.  Here's what he had to say about gold and why UTIMCO took delivery of their physical gold and traded out of the GLD ETF, which is an ETF holding un-allocated and fractional reserve gold, qualifying it as a ponzi scheme for the clear-eyed.


https://youtu.be/lgNVNTvlpFY

Writing's On The Wall: Texas Pulls $1 Billion In Gold From NY Fed, Makes It "Non-Confiscatable"

I've blogged about this numerous times before <click here>, so there is no need for further comment, other than...
Don't Mess With Texas!  The confiscatory implications regarding sovereignty and currency options are huge.

http://www.zerohedge.com/news/2015-06-13/writings-wall-texas-pulls-1-billion-gold-ny-fed-makes-it-non-confiscatable

Kyle Bass Was Right: Texas To Create Own Bullion Depository, Repatriate $1 Billion Of Gold

Just as I suggested in 2011, UTIMCO wants their gold repatriated back to Texas.

It's understandable that readers may believe my unshakeable belief that all fiat currencies (including the USDollar) will collapse as being hyperbolic.

Well, the University of Texas endowment fund did exactly what I and a few others predicted back in 2011.  Here is today's zero hedge article.

http://www.zerohedge.com/news/2015-06-01/kyle-bass-was-right-texas-create-own-bullion-depository-repatriate-1-billion-gold

And here are previous blog posts forecasting said event, with my pertinent comments:
April 18, 2011
http://gregnguyen.blogspot.com/2011/04/texas-university-takes-cue-from-kyle.html

I blogged about this last week, but wanted to reiterate that the University of Texas Endowment fund took delivery on $1 billion of physical gold bullion--not an ETF, for reasons I've blogged about many times.  Use the Search function in this blog and enter "GLD" and "SLV" on why it makes sense to avoid those precious metals-based ETF's for gold and silver, respectively.

In a nutshell, those ETF's are good proxies for spot prices of gold and silver UNDER NORMAL MARKET CONDITIONS.  But under distressed conditions, or in the case of a default in the physical markets (i.e. the custodians don't have enough physical inventory to meet their obligations), the physical spot prices will decouple from the ETF prices.  In other words, owning GLD and SLV are merely paper claims to precious metals that may or may not exist in the custodian vaults.  In the case of a shortage, the spot price may soar, while holders of GLD and SLV will be left with owning empty claims.  There's nothing worse than betting in the right direction, and still losing everything.

This is the reason why Kyle Bass advised the University of Texas endowment fund to take physical delivery of their gold bullion, removing counterparty risk.  But there is one detail they did not account for.  Since HSBC is now the custodian for the endowment fund's gold (with serial numbers of gold bars on every certificate), HSBC becomes the counterparty risk, as bullion banks have been rumored and even prosecuted for charging storage fees to clients even though their clients' inventory is no longer in their vaults.  In other words, their clients' gold had been swapped, sold, or leased out--without knowledge and consent from the client!  I'm not suggesting HSBC has been guilty of this in the past, but it has happened.  <click here>

In June of 2007, Morgan Stanley agreed to pay $4.4 million to settle a class-action lawsuit with brokerage clients who bought precious metals and paid storage fees, when in fact it was alleged that Morgan Stanley wasn't physically storing their gold and silver at all. NIA believes we may now have an epidemic of banks selling gold/silver they don't have. If this isn't exposed immediately, it could bring down the world's financial system.

January 8, 2013
http://gregnguyen.blogspot.com/2013/01/owning-physical-gold-and-silver-vs.html

Bass also serves on the board of UTIMCO, the University of Texas and Texas A & M endowment fund, which happens to be the 2nd largest ($28 billion under management), next to Harvard .  In other words, they have a lot of capital to invest, both wisely and prudently.  He's not some lunatic fringe blogger bent on the decline of western civilization.  His opinion carries weight on Wall Street--and on Texas ranches.

http://www.utimco.org/scripts/internet/index.asp

A couple years ago, he initiated UTIMCO's push to convert their GLD shares into $1 billion worth of solid gold bars--precisely due to counterparty risk (as in they may have legal claim to gold via a certificate, but if they don't possess the gold bars, all they own is an empty paper claim).

While I agree with him in principle, I don't believe UTIMCO went far enough.  Their gold bars do exist, but they are stored in HSBC's vaults, the custodian for the GLD ETF.  There have been some grumblings of HSBC manipulating GLD shares and physical inventory, as well as accusations of JPMorgan manipulating the SLV ETF for silver.  It's the ol' fox guarding the hen house syndrome.  If I were UTIMCO, I would go even further, and send a team of Texas Rangers to HSBC's vaults in New York, repatriate and transport those gold bars back to Austin, Texas.  After all, if/when the $hit does hit the fan, possession is 100% ownership--irrespective of legal paper claims.

Kyle Bass: The Looming Crises in Asia

http://www.advisorperspectives.com/newsletters14/Kyle_Bass-The_Looming_Crises_in_Asia.php

Kyle Bass on US Treasury Default

In other words, all paper assets go to zero.

Kyle Bass: "The Next 18 Months Will Redefine Economic Orthodoxy For The West"

http://www.zerohedge.com/news/2013-06-18/kyle-bass-next-18-months-will-redefine-economic-orthodoxy-west

Japan is 'adding a Ponzi scheme to a Ponzi scheme'

http://www.telegraph.co.uk/finance/economics/10045933/Japan-is-adding-a-Ponzi-scheme-to-a-Ponzi-scheme.html

Kyle Bass Is "Perplexed" At Gold's Low Price

http://www.zerohedge.com/news/2013-04-09/kyle-bass-perplexed-golds-low-price

GAIM 2013: Yen could hit 200 vs. the dollar - Hayman's Bass

http://youtu.be/LDs_vnyzmWU

Kyle Bass on Japan

Kyle Bass On ¥1 Quadrillion in Debt: The Japanese Zone of Insolvency-They’re Finished!

http://networkedblogs.com/JXe4H

Texas considers repatriating university pension fund's gold

This is happening as I predicted here earlier this year and here in 2011.  A couple years ago, Kyle Bass initiated UTIMCO's sales of the GLD ETF, and purchase of physical gold bullion to usurp counterparty risk.  I applauded the move, but I suggested UTIMCO didn't go far enough, as the gold bars reside in New York, not in Austin, TX.

As it stands, Texas Governor Rick Perry and the legislature are seeking repatriation of Texas' gold.  Smart move, y'all.

http://www.gata.org/node/12370

Kyle Bass Warns "The 'AIG' Of The World Is Back"

http://www.zerohedge.com/news/2013-03-12/kyle-bass-warns-aig-world-back

We Are Going To Kill The Dollar

http://youtu.be/OeIFcuVTS3U

"Detonating The Japanese Debt Time Bomb" With Kyle Bass

This is another great video clip of Kyle Bass' thoughts, especially on Japan.  Golfers will appreciate his metaphor at the end of this 9-minute clip.

Owning physical gold and silver vs. paper gold and silver

I get asked this question often, so this video is a short clip on why you want to take physical possession of your gold and silver.  Paper assets include the now-ubiquitous exchange-traded funds (ETF) which trade like stocks.  The most common ones are the GLD and SLV for gold and silver, respectively.  Without going into a long-winded discussion on why they are subject to market manipulation and pose counterparty risk, suffice it to say that they are not 100% backed by the physical metals (they openly admit this in their brochures).  Clients owning more than 10 million shares will be the only ones able to redeem said shares for physical delivery, so everyone else would own legal claim to paper and nothing more, in the event of a run on physical inventory.  In other words, unless you're a billionaire, good luck on getting your gold when the $hit hits the fun.

Other paper gold assets include COMEX futures, options, and other over the counter assets, which are highly speculative and volatile.  Physical gold and silver, on the other hand, are the soundest forms of money--even safer than currencies themselves.  Of course, the Fed, the US Treasury, and bankers would never admit this:  they want participants to have complete faith in the USDollar.  While the dollar remains a viable medium of exchange (for now), historically, it's been a poor store of value.  Hence, we see rising prices on everything we buy, year after year.  A college education used to cost under $1000 annually 30 years ago.  Today, that same education costs $20,000 annually.  Inflation has not been kind to tuition, healthcare, food, or energy prices.  Buy precious metals, and you mitigate rising costs.

As for Kyle Bass, here is some background on him.  He was one of the few money managers who bet on the subprime mortgage market collapsing--before it collapsed.  He and his firms' clients made billions when the real estate market imploded (while everyone else lost trillions in stocks and real estate).  He was featured in Michael Lewis' best-seller The Big Short, if you want to read about him and other investors prescient enough to identify the bubbles in real estate and financial assets, while everybody else was flipping Calfornia real estate and buying shares in banks and GM.

Bass also serves on the board of UTIMCO, the University of Texas and Texas A & M endowment fund, which happens to be the 2nd largest ($28 billion under management), next to Harvard .  In other words, they have a lot of capital to invest, both wisely and prudently.  He's not some lunatic fringe blogger bent on the decline of western civilization.  His opinion carries weight on Wall Street--and on Texas ranches.

http://www.utimco.org/scripts/internet/index.asp

A couple years ago, he initiated UTIMCO's push to convert their GLD shares into $1 billion worth of solid gold bars--precisely due to counterparty risk (as in they may have legal claim to gold via a certificate, but if they don't possess the gold bars, all they own is an empty paper claim).

While I agree with him in principle, I don't believe UTIMCO went far enough.  Their gold bars do exist, but they are stored in HSBC's vaults, the custodian for the GLD ETF.  There have been some grumblings of HSBC manipulating GLD shares and physical inventory, as well as accusations of JPMorgan manipulating the SLV ETF for silver.  It's the ol' fox guarding the hen house syndrome.  If I were UTIMCO, I would go even further, and send a team of Texas Rangers to HSBC's vaults in New York, repatriate and transport those gold bars back to Austin, Texas.  After all, if/when the $hit does hit the fan, possession is 100% ownership--irrespective of legal paper claims.

We have seen every major bank being fined for chicanery and manipulation of markets much bigger than gold and silver (see robosigning of mortgages, implosion of subprime bonds, and LIBOR market).  To suggest that banks aren't tempted to manipulate the precious metals sector is completely naive.

Given that background, watch this short 2-minute video clip.
http://youtu.be/leU1VajD7ug

Put simply, buying gold and silver mitigate risk--they are not speculative trades, unlike what my critics keep droning.  In fact, I would turn it around and insist that those who don't possess precious metals are the speculators, as they have 100% faith in the fiat dollar, which is by definition, not backed by anything tangible--except the US Treasury's ability to tax its citizens and private entities.  Even entrenched Keynesian economists admit this: 

“How long can the world’s biggest borrower remain the world’s biggest power?”

  - Lawrence Summers, former US Treasury Secretary

And trust in a fiat paper currency is a speculation that has a 100% track record of failing over time.  The only question is when, not if.  This includes all dollar-denominated assets, whether they be stocks, bonds, or to a certain extent, even real estate.  In other words, gold and silver aren't just financial assets, or even merely commodities.  They are money.  Money that has been good money for 6000 years.

And I end with this oft-quoted quip from JPMorgan himself, the architect of the Federal Reserve Bank, which has an understandably antagonistic stance against gold.  But in a rare moment of truth, testified this before Congress:

"Gold is money.  Everything else is credit." - JP Morgan, 1912

Remember:  don't trade gold and silver.  Accumulate.  And BTFD.

Why You Should Own Physical PMs - Kyle Bass

http://youtu.be/leU1VajD7ug

Kyle Bass on Japan’s Debt Crisis: This Is How It Falls Apart

This is a re-print of an interview with Kyle Bass.  Anytime I re-post something, consider it a high-priority topic.

http://annual.cfainstitute.org/2012/12/07/kyle-bass-on-japans-debt-crisis-this-is-how-it-falls-apart/

Kyle Bass Interview

http://youtu.be/t7Si3XTl6zQ