Hook 'Em Horns! Or, Don't Mess With Texas--UT Endowment Takes Physical Delivery Of Gold

It's such a common practice in the popular media, both entertainment and 'news'--the portrayal of Texans as rubes, fools, rednecks, sadists, hicks, farmers and ranchers with IQ's no higher than the Dallas Cowboy Cheerleaders. It's so common we simply become innured to it, and quietly assume it must be true, because after all it's 'common knowledge'. California, on the other hand, is the epitome of all that is cool, forward-thinking and praiseworthy.

Movies such as 'Best Little Whorehouse in Texas' and the remake of 'The Man Who Loved Women'(with Julie Andrews and Burt Reynolds, back in their day), provide particularly funny skewering of Texas life. Chuck Norris did the state no favors with stilted productions of his TV series set in the state. Add in clowns like Jerry Johnson, eccentrics like Willie Nelson, stir gently.

OS has visited the place a few times over the years, and one of his best friends is a proud Texan transplanted to points north. These people are different, to be certain, but they are no fools. Anyone notice that there is an ongoing migration of population of businesses and people from California to Texas? Might that say something about life in those two states?


So, this little gem from Bloomberg today was not surprising.

Dallas hedge-fund manager J. Kyle Bass helped advise the University of Texas Investment Management Co. on taking delivery of 6,643 gold bars, worth $987 million on April 15, now stored in a bank warehouse in New York.

Bass, who made $500 million with 2006 bets on a U.S. subprime-mortgage market collapse, said managers of the endowment, known as UTIMCO, sought board approval to convert its gold investments into bullion this year. A board member, Bass, 41, said he was asked to help with that process.

While Bass, a managing partner at Hayman Capital Management LP, said in an April 16 e-mail that “the decision to purchase and take delivery of the physical gold” was made by endowment staff members, “I helped where I could.” Gold futures touched a record $1,489.10 an ounce April 15 in New York before closing at $1,486.

There's all sorts of paper floating about, putatively backed by physical gold. Both the gold and silver markets have become massive shell games, because there isn't even a fraction of the metal needed to deliver to all the customers who could demand delivery. So, UTIMCO decided it was time to pick the chips off the table and leave the game. They demanded and took delivery last Friday, in physical gold.

It's theirs, and no one else's.

Wonder what happens when another twenty or so similar funds decide to follow suit? Rather like a deadly game of musical chairs: twenty players, nineteen chairs, and when the music stops, someone ends up on the floor. Repeat--nineteen players, eighteen chairs.

This could get ugly, unless you're the board of UTIMCO. Yep, them folks is just a bunch of rubes and rednecks, so don't pay them no attention....

Moral of the tale: Don't mess with Texas. (And take delivery while you can...)

(Disclosure--long gold and silver--in self defense, 'cuz the money printing will eat us all up before too long.)