Written by Roman Baudzus
from Gold Money
The University of Texas’s endowment fund, UTIMCO, took physical delivery of 6,643 gold bars on April 15, with a total value of $987 million. UTIMCO is the second largest university fund in the United States after the Harvard Management Company. Kyle Bass, the renowned Dallas-based hedge fund manager, advises UTIMCO, and was influential in their decision to buy gold.
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According to market observers, other major investment companies and pension funds are likely to follow UTIMCO’s example and shift part of their capital into precious metals such as gold. According to published data from the National Association of College and University Business Officers, UTIMCO’s endowment management administers about $19.9 billion.
The $987 million that was invested in physical gold corresponds to about 5% of the fund’s capital. Kyle Bass helped plan the delivery of the gold bars that are now stored in the vaults of a New York bank. The decision to take physical delivery is a hedge against potential future delivery bottlenecks at the gold market. According to Bass, these bottlenecks could be triggered by rising demand for gold from across the globe.
Meanwhile, famous billionaire-investor Jim Rogers told Financial Survival Radio in an interview that UTIMCO’s investment decision was a wise one. However, Rogers wondered why UTIMCO or the majority of pension funds hadn’t entered the gold and silver sector five to ten years ago, nearer the beginning of the precious metals bull market. Soon, Rogers argues, everyone will start buying gold, which he thinks will indicate that it’s a good time to sell. However, according to Roger’s estimates, we are still someway from this point.
Rogers is, however, a little concerned about the rapid increase in the silver price. If the price of the white metal continues to rocket higher with such speed, then a bubble in this sector will be formed, which would eventually burst. Under these circumstances it’s possible that silver will reach a three-digit price level as early as this year. Rogers said that he would be selling silver in this eventuality, since history has shown that every bubble has to burst eventually. So far the development of the silver price has not been parabolic, however.
Rogers is hoping for a correction across the entire commodity sector, as this would be healthier as far as the asset classes’ long-term price development is concerned. He is waiting for such a correction in order to buy more silver. Rogers hopeful that the commodities bull market could last for another decade