By now most of you have seen the news that the University of Texas Investment Management Co, the 2nd largest U.S. academic endowment, has taken delivery of $1 billion in gold bullion. Unfortunately they are storing the gold in a NY vault depository owned by HSBC. HSBC is a notorious gold-leasing bullion bank and therefore can not be trusted.

I've got news for UTIMCo: just because HSBC has signed over title to these gold bars, it does not mean that you actually own them until you take POSSESSION. In other words: MAKE THEM DELIVER THE BARS TO A PRIVATE DEPOSITORY off Wall Street and outside of the control of any part of the gold cartel. Until you do that, your investment is still at significant of risk of ultimately not being there when you want it.

We use Diamond State Depository for the the gold and silver and we buy for our fund. We have been advised by a long-time precious metals professional who is in a position to know the facts that Diamond State is the most reliable and trustworthy of the private depositories. If you want a bigger depository, Delaware Depository is probably the next best alternative, although I have been advised that they do not pay for full insurance coverage, which isn't necessarily a bad bet EXCEPT for the fact that Delaware Depository also serves as one of the Comex depositories and you risk having your gold mingled with unallocated gold or "accidentally" borrowed.

Bottom line: Anyone trusting a Wall Street bank with the safekeeping of their metal is making a potentially catastrophic error in judgement. With the sleaze and corruption embedded in our entire system, especially on Wall Street, the only way you can be certain that you have full control of the gold and silver you purchase, or take delivery of from the Comex, is to make the counterparty delivery it to you or to your own private depository. Anything short of that is still a paper investment.

I will say that this move by the Texas institution is likely to trigger, over time, a new flood of institutional capital into investing in physical gold and silver. This is obviously extraordinarily bullish for gold and silver, and even more so if many of these institutions wise up and actually force true delivery. One of the main pillars in my thesis for thinking that gold and silver would be the best investment assets for a long time was based on the idea that eventually big institions like pensions and insurance companies would eventually move 5-10% of their capital into the sector. As of the 4th qtr of 2010, total retirement assets in just the United States were estimated to be $17.5 trillion. 5% of that is $875 billion. As of Friday, there was about $3.5 billion worth of gold available for delivery on the Comex and about $13 billion in total gold holdings. You get the idea...

The institutional move into gold actually started with Northwest Mutual about 2 years ago, which invested in $400 million of physical gold. Now the next big institution has started with $1 billion. Expect this to flow of institutionally managed capital to start accelerating over the next 6-12 months. Perhaps maybe even at a rate that is higher than the geometric growth rate in Treasury debt? LOL. If I'm right, look out above..."