15 Brilliant Insights From Hedge Fund Superstar Kyle Bass

 

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KYLE BASS: On why he owns so much gold...

Image: Brian Giesen

"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.'"

Read more: http://www.businessinsider.com/americatalyst-kyle-bass-2011-12#on-why-he-owns-so-much-gold-14#ixzz1gtFXEX9v