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Old 04-17-2011, 12:33 PM   #1
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Default $1 Billion in Physical Gold Delivered -University of Texas

Is this the first run for the exits due to the insane printing policies of The Bernank?
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Old 04-17-2011, 12:37 PM   #2
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Shocking. Really shocking. Do we want our Public Universities making market bets with their endowments?

Gold this time. What next time? Cattle futures?
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Old 04-17-2011, 12:40 PM   #3
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Shocking. Really shocking. Do we want our Public Universities making market bets with their endowments?

Gold this time. What next time? Cattle futures?
Philosophical discussion aside, I don't think this is much of a bet when you look at the underlying fundamentals (read: underneath the propaganda). Seems like the only sane play to make if you ask me.
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Old 04-17-2011, 12:46 PM   #4
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Philosophical discussion aside, I don't think this is much of a bet when you look at the underlying fundamentals (read: underneath the propaganda). Seems like the only sane play to make if you ask me.
You could make that argument about other things. You could argue for silver. You could argue for oil (physical or futures), since in fact US inflation has moves more closely with the price of crude than anything else.

It's probably better for our major universities not to be picking commodities. They don't have the competence. And it's too subject to corruption. What if we find out the person running the endowment's wife's best friend stands to make money off this gold purchase?
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Old 04-17-2011, 01:11 PM   #5
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It's probably better for our major universities not to be picking commodities. They don't have the competence. And it's too subject to corruption. What if we find out the person running the endowment's wife's best friend stands to make money off this gold purchase?
Seriously? Who is, in your estimation competent enough to manage commodities? Who isn't subject to corruption? You're working from the presumption of guilt, bordering on pre-thought crime and your logic would transcend to any asset class for that matter. Therefore, by your logic, endowments and the management thereof, should not exist at all because of a potential risk.
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Old 04-17-2011, 01:13 PM   #6
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Correct. Public University Endowments should not be allowed to take wild-ass market bets. If the price of gold collapses? Then what? Bailout?
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Old 04-17-2011, 01:18 PM   #7
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Seriously? Who is, in your estimation competent enough to manage commodities?
Traditionally, sellers and buyers of the underlying commodity. The people who "managed gold and gold futures" were those who sold gold (mining companies) and those who buy gold (jewelers).

Not some douchebag at the Univ.of Texas, looking at a chart of gold prices. This is exactly the hubris that made Orange County go bankrupt, because some idiot who ran their investments was sure interest rates were going up.
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Old 04-17-2011, 01:21 PM   #8
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Correct. Public University Endowments should not be allowed to take wild-ass market bets. If the price of gold collapses? Then what? Bailout?
I'm not following your logic at all. What if any asset class collapses? What would you consider to not be a "wild-ass market bet"? Taken to the extreme; you wouldn't even have an endowment place its holdings in a bank savings account because the potential for a collapse exists for myriad reasons. Would U of T have been better off by placing its resources in the Bank of Sealy?
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Old 04-17-2011, 01:24 PM   #9
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What if any asset class collapses? What would you consider to not be a "wild-ass market bet"? Taken to the extreme; you wouldn't even have an endowment place its holdings in a bank savings account because the potential for a collapse exists for myriad reasons. Would U of T have been better off by placing its resources in the Bank of Sealy?
You don't put the money you need for your monthly expenses in the stock market or gold, do you?


Universities need the cashflow from the endowment (the interest or dividends) for operating expenses, every year. It's budgeted-in, so without it, they can't pay promised tenured faculty salaries and make other expenses like buying high end IT equipment.

We found this out in 2008. There were a dozen major universities (ASU was one) that couldn't make faculty salaries, when the stock market crashed, and their endowment value crashed.

The only reasonable thing to do with money that you need, is to keep it in something safe. Inflation protected US govt bonds, or cash in the Bank of Sealy.
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Old 04-17-2011, 01:34 PM   #10
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Correct. Public University Endowments should not be allowed to take wild-ass market bets. If the price of gold collapses? Then what? Bailout?
It is University of Texas. It isn't like it is Texas A&M.

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Old 04-17-2011, 03:11 PM   #11
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Neither U.T. or A&M need to bet on oil because they have always been funded by the state revenues collected from the oil business not to mention the alumni contributions that come from oil money.

Universities have always invested in all sorts of things. The only surprising thing is that this news leaked . . . if it is true.
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Old 04-17-2011, 04:16 PM   #12
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Not some douchebag at the Univ. of Texas, looking at a chart of gold prices.
Uh huh. You might want to read up a bit on Kyle Bass.
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Old 04-17-2011, 05:57 PM   #13
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Uh huh. You might want to read up a bit on Kyle Bass.
So we should have sensible public policy, but abandon it when someone really, really, really smart comes along?


Is that kinda like the president should be a natural born citizen, unless the person is Carlos Slim?
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Old 04-17-2011, 06:05 PM   #14
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Universities have always invested in all sorts of things.
Not really. Public Universities up to the 1970's did not generally have multi-million dollar (let alone billion dollar) endowments. The only universities that did were the Ivy League. And even they did not typically invest in anything other than local land/cash/bonds, up until the 1980's. Then they began to make forays into stocks. And now gold! Cattle futures next! Or maybe mortgage-backed securities? All the smart people buy those.
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Old 04-17-2011, 06:57 PM   #15
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So we should have sensible public policy, but abandon it when someone really, really, really smart comes along?


Is that kinda like the president should be a natural born citizen, unless the person is Carlos Slim?
You're assuming your public policy is sensible, which I would argue isn't.

What is the net value of assets you have under direct management compared to Bass?
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Old 04-17-2011, 07:03 PM   #16
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You're assuming your public policy is sensible, which I would argue isn't.
Do you think it is sensible for a Public (not private) University that has to make payroll to invest its funds in something that goes up and down by large percentages on a yearly basis?

Isn't this exactly what those towns in England and Ireland did in 2005-2007, only to go bankrupt? Isn't this what Orange County did? Isn't this what Fannie and Freddie did? Shouldn't government-related entities invest their funds in safe things?
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Old 04-17-2011, 07:14 PM   #17
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This would make a good "Simpsons" episode.
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Old 04-17-2011, 07:18 PM   #18
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Do you think it is sensible for a University that has to make payroll to invest its funds in something that goes up and down by large percentages on a yearly basis?
No. See diversification for other investment hints.

Quote:
Isn't this exactly what those towns in England and Ireland did in 2005-2007, only to go bankrupt? Isn't this what Orange County did? Isn't this what Fannie and Freddie did? Shouldn't government-related entities invest their funds in safe things?
You're stated position is the only thing a university should invest in are TIPS and mattresses. Assuming an average ROI of 6% on TIPS, you're limiting annual payroll increases, including bonuses to that 6% less brokerage fees and taxes. To be clear, you're telling me that 6% covers all those and any other associated costs a university is relying on an endowment to pay? And in deflationary years, nobody gets a raise? Or would you just have it come out of the backside of students in increased tuition and book fees?

What's even more absurd is you're saying a TIPS investment device is a safe bet when it is based upon the full faith and credit of the U.S. Government. But someone like Bass is incompetent.
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Old 04-17-2011, 10:05 PM   #19
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Arrow

I would be quite happy to have just few of those 100 ounce 'good delivery' bars.
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Old 04-17-2011, 10:14 PM   #20
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Do you think it is sensible for a Public (not private) University that has to make payroll to invest its funds in something that goes up and down by large percentages on a yearly basis?

Isn't this exactly what those towns in England and Ireland did in 2005-2007, only to go bankrupt? Isn't this what Orange County did? Isn't this what Fannie and Freddie did? Shouldn't government-related entities invest their funds in safe things?
DR, do you realize you are bitching about what, 5% of assets? What part of diversified portfolio don't you understand?
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Old 04-17-2011, 10:29 PM   #21
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Quote:
Originally Posted by DReynolds View Post
Do you think it is sensible for a Public (not private) University that has to make payroll to invest its funds in something that goes up and down by large percentages on a yearly basis?

Isn't this exactly what those towns in England and Ireland did in 2005-2007, only to go bankrupt? Isn't this what Orange County did? Isn't this what Fannie and Freddie did? Shouldn't government-related entities invest their funds in safe things?
Gold varies somewhat, but it is one of the most stable commodities, and probably by far the safest investment one could make. Orange County, Fannie and Freddie made bad investments in things that suddenly became essentially worthless nearly overnight. Gold has never done anything like that. To compare physical gold to things like derivatives or questionable mutual funds is ludicrous.
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Old 04-18-2011, 02:08 PM   #22
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DR, do you realize you are bitching about what, 5% of assets? What part of diversified portfolio don't you understand?
Crickets............

Crickets............

Maybe DR would prefer that they go all in on GM bonds.

Whoops, that would have been a fail.

How about Lehman brothers? Fail

How about Greek government debt, that should be pretty safe right? Fail

Or how about US Treasuries. They are safe, aren't they? Interest rates aren't going to go up, only down, and therefore, return on principle has nothing but upside!
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Old 04-18-2011, 06:23 PM   #23
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Well...........now it has shot up to $1448 an ounce.
Some-thing smells about this. With my experience at betting on horses its obvious ............
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Old 04-18-2011, 08:42 PM   #24
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Gaudia?
Ray . . . ?
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Just being tangential.
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