"15 Brilliant Insights From Hedge Fund Superstar Kyle Bass" – Business Insider – Great Article
This is just pure mathematical common sense from one of the true super stars of the hedge fund world. He has the right long term view and his view on holding the physical gold is correct. While he doesn't mention the massive manipulation and rehypothecation fraud going on and all the games being played in the derivatives markets, with even the viability of the exchanges coming into question, given the growing disconnect between the paper and physical markets, his conclusions allude to me that he knows it. If pension funds had been listening to Kyle, they'd be way ahead by now in my opinion.
Very brief excerpt of this great and long detailed article from Business Insider. (Opening words):
"…"My opinion is very simple as a fiduciary… to the extent that you own gold and you are going to own it a long time –it's not a trade. It costs us about 90 basis points a year to roll it through financial futures contracts," he said.
"And then we went and looked at the COMEX. The COMEX at the time they had about $80 billion in open interest between futures and futures options. In the warehouse they had $2.7 billion of deliverables. So $80 billion in open interest — $2.7 billion in deliverables. We’re gonna own it a long time. You're on the board, as a fiduciary, what do you do? That’s an easy one. You go get it. So you go take a billion of $2.7 billion and you let them worry about the rest."
"When I talked to the head of deliveries at COMEX NYMEX, I was like, 'What if 4% of the people want deliveries?' He said, 'Oh Kyle, that never happens. We rarely ever get a 1% delivery.' And I asked, 'Well what if it does happen?' And he said,'Price will solve everything' And I said, 'Thanks, give me the gold."…'