Worth another mention? Pension Fund Gold Holdings: More significant than Mr. Jim Rogers is making it out to be?

I believe that Pension Funds and Insurance Companies moving more assets into gold is a critical indicator of the US economic demise. Gold used as a low-correlation hedge in a portfolio will start becoming common place in the galaxy of  Pension and Insurance Funds worth over 43 Trillion dollars.  Move over China, here comes some serious hoarding.

Gold (Au) is a precious metal;   a monetary metal;  considered by states, central banks, and once entire civilizations as money, perhaps the most important money.  It is one of a very few global historic  and timeless methods for storage of wealth.   Gold acquisitions  in boom or bust cycles is a metric, a litmus, a measure of faith in other monetary forms and stores of wealth.  Gold is a canary in the coal mine and it is telling us something. Listen:

While S&P delivers a negative opinion on a the mystical (a.k.a bullshit) AAA bond rating of the "US of debt, unfunded entitlements and un(der)employed", Fed Benny and Treasury Timmah got their last lesson on monetary sentiment from The University of Texas Pension Fund (The UT System).

Bloomberg reported that University of Texas Pension fund (UT ) increased its holdings in physical Au allocated bullion to about 5%. This percentage for gold in a pension fund is almost unheard of, except to people like Dallas Hedge Fund manager: Kyle Bass, and TRS (Teacher Retirement System of Texas) Manager: Shayne McGuire. According to Bloomberg, HSBC will be the custodian in NY for UT's hoard of approx. $1 Billion Au.   http://aucanary.blogspot.com/2011/04/golden-tipping-point-university-of.html

Most importantly this gold holding is not in some pretend paper (GLD or iAU) account -- its the real thing: allocated bullion. No cheesey COMEX receipts for the UT. nothing but the real thing, baby... ain't nothing like the real thing.

See my post about pension funds from last year -- It was correct to believe Shayne McGuire from the Texas Teachers Pension Fund, who has been promoting gold as "acting like a currency".    (A currency without a nation.) Pension Funds worldwide represent about 25 trillion (USD equivalent) in assets, plus there's insurance funds and then combined with mutual funds are worth over 60 Trillion. (60 million, millions).  For you bankers: That's the equivalent of a stack of money starting from your printing press and going  up (to) Uranus.

In my original post I calculated (on the back of a gas bill envelop)  that if just the pension funds (not the insurance or mutual funds) increase their Au bullion holdings by 1% that would be equal to about 3000 metric tons of gold.  Please read the last sentence again, bankers: that's gold up (to) Uranus. 

Now we see the UT System holding a full 5% of assets in physical Au -- So, will other pension follow suit now at a time when Au price is fighting bank manipulation around the psychological $1500 spot price level?  Will other funds see the value of an asset correlated low against fiat denominated holdings? -- (Gold - Reducing VAR) -- or, will they see it as chasing an investment whose price is certainly not as attractive as 4 years ago?  I believe the former, because Pension fund managers are extreemly intelligent conservative investors looking for slow steady growth and risk aversion, instead of the big  investment return.  5% of a portfolio allocated in physical monetary metal is the opposite of taking on a risky position, it's a legitimate longer term risk aversion strategy.  (Gold Low Correlation - evidence again)

It might be worth it to listen to the London FT interview with Mr. Shayne McGuire once again: http://aucanary.blogspot.com/2010/10/pension-funds-and-flight-to-quality.html ... worth it at over 5-digit per troy oz?


The Au Canary is alive and well, and the Mine is continuing to collapse around Tweety. Chirp! Got earthquake insurance?

AuCanary


Sorry Mr. Rogers, I personally don't believe AU/Ag spot prices are gonna be too gradual and smooth going forward.  However I too would like to see a few pull backs or "BTFD levels return". :








WHAT ARE YOUR THOUGHTS ON THIS ONE?  Drop me a line or comment below. 

Gold-Shortage Threat Drives Texas Schools Hoarding 664,000 Ounces at HSBC -- Bloomberg Follow-on Story

University of Texas Takes Delivery Of $1 Billion In Physical Gold

Texas University Takes Cue From Kyle Bass to Hold $1 Billion in Gold Bars

  

Bloomberg Story: Here

 

 The ZEROHEDGE spin:

A Golden Tipping Point: University of Texas Takes Delivery Of $1 Billion In Physical Gold

Submitted by Tyler Durden on 04/16/2011 19:59 -0400

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...

http://www.zerohedge.com 


So,  is $100B in pension fund physical gold investments next?: http://aucanary.blogspot.com/2010/10/pension-funds-and-flight-to-quality.html