Monday, April 18, 2011

Hey University of Texas Investment Management: TAKE POSSESSION OF YOUR GOLD

One of the main reasons to buy gold and silver is because you know not to trust the Government or the banking system. If you let Wall Street "safekeep" your metal, you are fundamentally undermining the very reason to buy the stuff in the first place.

By now most of you have seen the news that the University of Texas Investment Management Co, the 2nd largest U.S. academic endowment, has taken delivery of $1 billion in gold bullion.  Unfortunately they are storing the gold in a NY vault depository owned by HSBC.  HSBC is a notorious gold-leasing bullion bank and therefore can not be trusted.

I've got news for UTIMCo:  just because HSBC has signed over title to these gold bars, it does not mean that you actually own them until you take POSSESSION.  In other words:  MAKE THEM DELIVER THE BARS TO A PRIVATE DEPOSITORY off Wall Street and outside of the control of any part of the gold cartel.  Until you do that, your investment is still at significant of risk of ultimately not being there when you want it. 

We use Diamond State Depository for the the gold and silver and we buy for our fund.  We have been advised by a long-time precious metals professional who is in a position to know the facts that Diamond State is the most reliable and trustworthy of the private depositories.  If you want a bigger depository, Delaware Depository is probably the next best alternative, although I have been advised that they do not pay for full insurance coverage, which isn't necessarily a bad bet EXCEPT for the fact that Delaware Depository also serves as one of the Comex depositories and you risk having your gold mingled with unallocated gold or "accidentally" borrowed.

Bottom line:  Anyone trusting a Wall Street bank with the safekeeping of their metal is making a potentially catastrophic error in judgement.  With the sleaze and corruption embedded in our entire system, especially on Wall Street, the only way you can be certain that you have full control of the gold and silver you purchase, or take delivery of from the Comex, is to make the counterparty delivery it to you or to your own private depository.  Anything short of that is still a paper investment.

I will say that this move by the Texas institution is likely to trigger, over time, a new flood of institutional capital into investing in physical gold and silver.  This is obviously extraordinarily bullish for gold and silver, and even more so if many of these institutions wise up and actually force true delivery.  One of the main pillars in my thesis for thinking that gold and silver would be the best investment assets for a long time was based on the idea that eventually big institions like pensions and insurance companies would eventually move 5-10% of their capital into the sector.   As of the 4th qtr of 2010, total retirement assets in just the United States were estimated to be $17.5 trillion.  5% of that is $875 billion.  As of Friday, there was about $3.5 billion worth of gold available for delivery on the Comex and about $13 billion in total gold holdings.  You get the idea...

The institutional move into gold actually started with Northwest Mutual about 2 years ago, which invested in $400 million of physical gold. Now the next big institution has started with $1 billion.  Expect this to flow of institutionally managed capital to start accelerating over the next 6-12 months.   Perhaps maybe even at a rate that is higher than the geometric growth rate in Treasury debt? LOL.  If I'm right, look out above...


  1. The U.O.of Texas most likely wanted it this way(their gold with HSBC). Think about it - most educational institutions throughout the US would prefer that things stay status quo regarding present day economics.Their take- keep the Central Banking System alive. Help(hold gold themselves) by taking it away from those who would prefer taking down the very institutions that help keep the phony educational system going. It's a catch 22 actually.
    All you got to do is follow the money ~ and motive.

  2. "As of the 4th qtr of 2010, total retirement assets in just the United States were estimated to be $17.5 trillion
    ..and it is anybody's guess how many $billion worth od PM's are squirrelled away, 'under the wire' do to speak, in private holdings.

    (As in private individual's safe-deposit boxes, buried on their property, or stashed under matresses?)

  3. Well if UT was unpatriotic enough to buy gold instead of US Treasuries at least they had the decency to leave their gold in the hands of an institution with this country's best interests at heart.

  4. "Delaware Depository also serves as one of the Comex depositories and you risk having your gold mingled with unallocated gold or "accidentally" borrowed"

    What I read by this is you're saying Delaware Depository would defraud their clients by giving/lending a bullion bank the client's allocated gold without their knowledge.

    Do you have any basis for this beyond the fact that they are a COMEX depository - it is pretty defamatory statement in my view.

    Just because someone is a COMEX depository does not mean they are tainted and cannot segregate their clients' metal properly.

    Delaware have been around for a while and are not a financial insitution. I think you've stepped over the line with this.

  5. Bron, here's what I know:

    1) Very few people/entities can be trusted in the world of precious metals

    2) DDC does not pay for full insurance coverage. That is likely not problematic in reality, but it is sleazy unless that fact is disclosed up front. It is not. DDC is a Comex depository - sorry, guilt by association and guilt by sleaze.

    3) All I was conveying was that - coming from someone who has been doing this since the mid-1970's and is in a position to know the facts/truth about all the players - Diamond State is the most trustworthy depository. If you want to read into or infer anything from what I wrote, that's your business. We moved our metal from another depository to Diamond State based on my contacts recommendation.

    Beyond any of that, you crossed over the line by accusing me of crossing over the line. Is DDC tainted? I don't know for sure but there are red flags and I personally and professionally can not afford to overlook ANY red flags with my gold or that of my fund.

  6. Dave, when THSHTF and tanks start rolling down the streets of America, all these large private depository holding companies will be taken over by the government mob due to "national" interest.

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