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.
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Showing posts with label Shayne McGuire. Show all posts
Showing posts with label Shayne McGuire. Show all posts
The Driver for Gold You’re Not Watching
Jeff Clark, editor for big gold posts on the 800 pound gorilla in the gold mine. "The funds."
Jeff's article can be found by clicking HERE to find it on the Casey Research site.
This is a hot gold topic I discovered and posted about in October of 2010 after catching the presentation that Shayne Mcguire gave at the fall LBMA meeting. See my October post here complete with links to a Financial Times vdeo interview with Mr. McGuire and a link to his LBMA power point: http://aucanary.blogspot.com/2010/10/pension-funds-and-flight-to-quality.html
You can pick up Shayne McGuires books here: http://www.amazon.com/Shayne-McGuire/e/B001ILIEZI/ref=ntt_athr_dp_pel_pop_1
Jeff's article can be found by clicking HERE to find it on the Casey Research site.
This is a hot gold topic I discovered and posted about in October of 2010 after catching the presentation that Shayne Mcguire gave at the fall LBMA meeting. See my October post here complete with links to a Financial Times vdeo interview with Mr. McGuire and a link to his LBMA power point: http://aucanary.blogspot.com/2010/10/pension-funds-and-flight-to-quality.html
You can pick up Shayne McGuires books here: http://www.amazon.com/Shayne-McGuire/e/B001ILIEZI/ref=ntt_athr_dp_pel_pop_1
A Gold Bull and His Prediction: $10,000 an Ounce - WSJ
http://online.wsj.com/article/SB10001424052702304879604575582602233501196.html
'The World Does Not Need to End'
A Gold Bull and His Prediction: $10,000 an Ounce
FULL STORY ON WSJ
'The World Does Not Need to End'
A Gold Bull and His Prediction: $10,000 an Ounce
There are gold bulls. And then there is Shayne McGuire.
The 44-year-old pension-fund manager from Texas, who spoke recently at a gold conference in Berlin, caused a stir among the roomful of gold aficionados. His provocation: A book that predicts the price of the precious metal could soar to $10,000 an ounce, more than seven times its current price.
FULL STORY ON WSJ
Everything Gold Is New Again (Newsweek) Shayne McGuire
Everything Gold Is New Again (Newsweek)
Bryan F. Peterson / Corbis
In stormy times, investors look for something solid to hang onto—something like gold. The World Bank president himself, Robert Zoellick, suggested in November that the world’s economies could use the old reliable metal to help stabilize their currencies. For these and many other reasons, professional gold-fund manager Shayne McGuire argues that gold has nowhere to go but up. The following essay is adapted from McGuire’s latest book, Hard Money: Taking Gold to a Higher Investment Level.
Gold used to be regarded as an investment for losers—for the crazies forever expecting the financial apocalypse. To the great economist John Maynard Keynes, it was a “barbarous relic” of a primeval economic past. Many people have abandoned that lousy stereotype, now that the debt-driven bubbles in stocks and real estate have burst. Following the collapse of the world’s largest bank, the Royal Bank of Scotland, and the largest insurer, the American Insurance Group, among many other notable institutions now owned and directed by Western governments, people have come to understand the need for time-proven financial insurance that can insulate their wealth from government and financial firms. And there’s only one viable and liquid investment that enables a person to pull his or her wealth out of the financial system: gold.
Buying gold has been the best method for shorting the government. Betting against government—that is, on a sudden, sharp rise in inflation—has strong odds in the midst of surging government deficits. Hyperinflation is fortunately a rare event, and it is unlikely to emerge at present. But consider that all 30 documented cases of hyperinflation—that is, a situation where prices rise by at least 50 percent per month—have been caused by deficits that got out of control. Hyperinflation invariably emerges in a deflationary environment of weak economic activity, such as the one that now threatens the United States, European nations, and Japan. It can erupt when the public grows wary of the money being printed in growing quantities by monetary authorities, which are forced to buy—to “monetize,” in the financial vernacular—a surging supply of government bonds that the markets no longer all want to buy.
Every currency in history has eventually fallen against gold—most dramatically in times like these, times of surging liabilities and an increasing inability to meet them. Gold is the only credible currency whose quantity cannot be expanded at will to meet the spending needs of governments in distress. By its very nature it remains scarce and rises in value as the supply of paper money grows. And I think it’s safe to say that following the most dramatic credit crisis since the Great Depression—one that is continuing to produce ripple effects, like events in Greece that are broadening into Europe itself—we are likely to see historic investment shifts that will provide great opportunities.
One major beneficiary will be gold. I strongly believe that present financial conditions are about to transform the investment strategies of the world’s largest investment funds in a way that will cause gold to surge substantially higher.
To understand why, consider present asset allocation at some of the world’s largest investment funds. Pension funds, like the one I work for, have a significant effect on the world’s markets, since they collectively manage $24 trillion. But gold plays a negligible role in their asset allocations. Teacher Retirement System of Texas, whose GBI Gold Fund I manage, probably holds a larger percentage of assets in gold than any other large ($10 billion and higher) pension fund in the world, but our holdings in the precious metal are modest in comparison with any major type of asset like stocks and bonds. And so it is with other pension funds. Since commodities typically represent around 3 percent of a typical fund’s total assets, and the precious metal makes up less than 5 percent of commodity allocation, that makes gold only 0.15 percent of a fund’s total assets. Add in the value of gold-mining stocks and precious-metals exchange-traded funds (maybe another 0.15 percent of total assets, at most), and a typical pension fund holds less than a third of 1 percent in gold—that is to say, virtually nothing.
Continued...
FULL STORY ON NEWSWEEK - Continued HERE
Bryan F. Peterson / CorbisIn stormy times, investors look for something solid to hang onto—something like gold. The World Bank president himself, Robert Zoellick, suggested in November that the world’s economies could use the old reliable metal to help stabilize their currencies. For these and many other reasons, professional gold-fund manager Shayne McGuire argues that gold has nowhere to go but up. The following essay is adapted from McGuire’s latest book, Hard Money: Taking Gold to a Higher Investment Level.
Gold used to be regarded as an investment for losers—for the crazies forever expecting the financial apocalypse. To the great economist John Maynard Keynes, it was a “barbarous relic” of a primeval economic past. Many people have abandoned that lousy stereotype, now that the debt-driven bubbles in stocks and real estate have burst. Following the collapse of the world’s largest bank, the Royal Bank of Scotland, and the largest insurer, the American Insurance Group, among many other notable institutions now owned and directed by Western governments, people have come to understand the need for time-proven financial insurance that can insulate their wealth from government and financial firms. And there’s only one viable and liquid investment that enables a person to pull his or her wealth out of the financial system: gold.
Buying gold has been the best method for shorting the government. Betting against government—that is, on a sudden, sharp rise in inflation—has strong odds in the midst of surging government deficits. Hyperinflation is fortunately a rare event, and it is unlikely to emerge at present. But consider that all 30 documented cases of hyperinflation—that is, a situation where prices rise by at least 50 percent per month—have been caused by deficits that got out of control. Hyperinflation invariably emerges in a deflationary environment of weak economic activity, such as the one that now threatens the United States, European nations, and Japan. It can erupt when the public grows wary of the money being printed in growing quantities by monetary authorities, which are forced to buy—to “monetize,” in the financial vernacular—a surging supply of government bonds that the markets no longer all want to buy.
Every currency in history has eventually fallen against gold—most dramatically in times like these, times of surging liabilities and an increasing inability to meet them. Gold is the only credible currency whose quantity cannot be expanded at will to meet the spending needs of governments in distress. By its very nature it remains scarce and rises in value as the supply of paper money grows. And I think it’s safe to say that following the most dramatic credit crisis since the Great Depression—one that is continuing to produce ripple effects, like events in Greece that are broadening into Europe itself—we are likely to see historic investment shifts that will provide great opportunities.
One major beneficiary will be gold. I strongly believe that present financial conditions are about to transform the investment strategies of the world’s largest investment funds in a way that will cause gold to surge substantially higher.
To understand why, consider present asset allocation at some of the world’s largest investment funds. Pension funds, like the one I work for, have a significant effect on the world’s markets, since they collectively manage $24 trillion. But gold plays a negligible role in their asset allocations. Teacher Retirement System of Texas, whose GBI Gold Fund I manage, probably holds a larger percentage of assets in gold than any other large ($10 billion and higher) pension fund in the world, but our holdings in the precious metal are modest in comparison with any major type of asset like stocks and bonds. And so it is with other pension funds. Since commodities typically represent around 3 percent of a typical fund’s total assets, and the precious metal makes up less than 5 percent of commodity allocation, that makes gold only 0.15 percent of a fund’s total assets. Add in the value of gold-mining stocks and precious-metals exchange-traded funds (maybe another 0.15 percent of total assets, at most), and a typical pension fund holds less than a third of 1 percent in gold—that is to say, virtually nothing.
Continued...
FULL STORY ON NEWSWEEK - Continued HERE
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