The smart money has been and continues to acquire gold at an ever expanding pace.
After the collapse of 2008 most top level analysts shunned it as a relic. One top economist even suggested that $1500 or $1600 per ounce was “nonsense” even though he had predicted the real estate collapse. All the while, we and others in the alternative news and contrarian investment sphere recommended precious metals as one of the few assets that would retain or grow wealth during our modern day depression.
The Chinese government saw it. As did the Indians and other Asian and Mid-east nations. They have been stocking up with no signs of slowing down, regardless of the price.
The most recent addition to gold’s big buyers club may surprise you.
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 holdings are worth about $987 million, based on yesterday’s closing price of $1,486 an ounce for Comex futures.
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.”
First it was small investors, contrarian thinkers, who knew something wasn’t right. They’re the ones that started acquiring gold assets in the early 2000’s. Next, emerging economies like China got in on the action because they saw a progressively depreciating US dollar. Now we are beginning to see large investment funds, and even smaller investors who got creamed in the 2008 financial collapse, starting to take notice.
Gold may be nearing $1500 per ounce, but that’s not stopping anyone from buying. Better late than never.
It is our view that we are still in the early stages of what George Soros referred to as the Gold Bubble. While we believe Soros’ comments were taken out of a greater context, in that gold is nowhere near its bubble top as of yet, we have no doubt that it will one day reach these levels. When your neighbors, friends, family and your local barber are all talking about the savvy gold investments they’ve made, then it will be time to sell.
For now, if you’re a gold buyer, you’re still a little wacky, but certainly not a tin foil quack like you were back in 2008 or before.