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Kyle Bass is a legend of a hedge fund manager because he tells it like it is and right now he’s telling people about gold and silver.

December 16, 2011 – Kyle Bass is a legend of a hedge fund manager because he tells it like it is and right now he’s telling people about gold and silver. And the reasons why are very interesting. Precious metals are traded in paper markets through several abstractions such as futures contracts. While we all know that those are supposed to be regulated by the Commodities Futures Trading Commission we can generally gather that these markets have fewer and fewer restrictions as to what they can sell and how they can do it. Yes, the same CFTC issued the ruling allowing MF Global to use its customer’s money in order to make its $63 million bad bet on European junk debt.

Kyle Bass tends to put it very directly. In an interview this week, he said, “My opinion is very simple as a fiduciary…to the extent that you own gold and silver you are going to own it a long time—it’s not a trade.” As a long-term investment, every analyst knows that gold and silver are the clear winners in a projected market. Centrals have been buying gold and silver in record amounts in the third quarter of this year and now that the price has dropped, as it did in September, we can assume they are currently buying gold and silver in record amounts.

Further, key banking institutions, Goldman Sachs included, have released reports identifying gold as a very strong position through next year. The fundamentals all indicate that gold and silver still have a way to go, but the Kyle Bass’s kicker comes in the form of a physical delivery. Gold and silver trade in paper markets on a fractional reserve, at many multiples of the underlying physical. When Bass looked at the ratio, he decided to hold his gold himself.

“When I talked to the head of deliveries at COMEX NYMEX, I was like, ‘What if 4 percent of the people want deliveries?’ He said, ‘Oh Kyle, that never happens. We rarely ever get a 1 percent 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.’”

You’re going to own if for a long time. Buy your gold and buy your silver. Get your gold and get your silver.

Shannon King

Senior Staff Writer – GoldSilver.org

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