University of Texas Endowment Holds $1 Billion Gold, 5% Of Its Portfolio

Major academic institutions, just like many other central banks, are looking at gold as an investment to produce a large source of funds. University of Texas revealed that 5% of its $19.9 billion endowment was in actual bars of gold bullion.

Apr. 17 2011 - 3:01 pm

It should come as no shock to financial markets that university endowments have followed in the wake of central banks and hedge funds to become the newest major investors in precious metals like gold.

Just as central banks in China, India, Russia and many other nations view gold as a monetary reserve protection against the falling dollar, major academic institutions are looking for new asset classes like precious metals and commodities to produce returns that can be put to work as a source of funds for a large portion of college operating expenses.

Friday, as gold prices hit a new all-time high – $1486 an ounce($1500 is around the corner),the University of Texas Investment Management Co., revealed that 5% of its $19.9 billion endowment(it handles Texas A&M as well) was in actual bars of gold bullion in a New York bank vault owned by HSBC Holdings, the London based global banking institution. Not in any gold ETF or individual gold mining shares, or in gold futures;l Texas took delivery of 6,643 actual bars of bullion, or 664,300 ounces– a quite unusual transaction for a university.

According to Bloomberg Texas University’s decision to own gold was influenced by a successful hedge fund manager in Dallas, Kyle Bass, who made a fortune shorting sub-prime mortgage securities on the eve of the financial crisis. (I wrote a column about Bass’ killing at the time) Bass is on the endowment’s board of directors, and reflects the view of several leading hedge fund managers such as George Soros, John Paulson and gold enthusiasts Frank Giustra and Thomas Kaplan, whom I have written about often.

Bass was quoted by Bloomberg Friday explaining that “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. I look at gold as just another currency that they can’t print any more of.”

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