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Can Matt Damon Bring Clean Water To Africa?

Matt Damon, water warrior. He's not that interested in fancy galas as a way to raise money.
Article location:http://www.fastcompany.com/magazine/157/can-this-man-save-this-girl

Matt Damon, water warrior. He’s not that interested in fancy galas as a way to raise money. “That seems very analog,” he says. | In the Dogon region of Mali, a girl from the small village of Songhe scoops up water from a pit that has been dug deep into a dried-up riverbed. Mali faces continual water shortages, despite a rich aquifer. | Photographs by Damon Winters/The New York Times/Redux pictures (Damon); Stuart Franklin/Magnum (Girl)

July 22, 2011

Once upon a time, Matt Damon went for a long walk in rural Zambia. The devoted family man and method philanthropist was accompanying a 14-year-old Zambian girl who had no idea that her hiking companion was an Academy Award-winning international heartthrob.

The walk came toward the end of a 10-day African journey, a systematic primer on the complexities of the continent’s extreme poverty that had been organized for Damon by staffers from his friend Bono’s ONE campaign. Damon was on a quest to understand what it meant to be really, really poor. “It was like a mini course in college,” he says. Every day brought a different subject: urban AIDS, microfinance, education, and, finally, water. While walking with the young teen on her hour-long trudge to collect water for her family, something clicked. “We talked the whole time [through a translator]. When I asked her what she wanted to do when she grew up — ‘Do you want to stay here?‘ ” he says, pointing to the memory of the dusty village — “she got shy all of a sudden.” As they returned, both toting 5-gallon jugs of water filled at the well, she finally confessed her dream: to go to the big city, Lusaka, and become a nurse. Damon recalled his dreams at the same age, when he and best friend Ben Affleck were plotting their way from Boston to casting agents in New York. That connection opened the door for Damon. “I remembered so well the feeling of being young, when that whole world of possibility was open to you.”
But while Damon’s dream was made possible by Amtrak, the girl’s was possible only because somebody drilled a borewell near her home — and, yes, an hour’s walk for water is good news in lots of places in the world. Nearly 1 billion souls lack access to clean water; three times that number lack access to proper sanitation. “This is not something that most 14-year-olds have to go through,” says Damon, 40. Without access to the water, his companion would have been unable to go to school and would likely have been forced into a precarious fight for life, spending her days scavenging for often-filthy water in unhealthy and unsafe environments. “Now she can hope to be a nurse and contribute to the economic engine of Zambia,” he says. “Of all the different things that keep people in this kind of death spiral of extreme poverty, water just seemed so huge.” He pauses. “And it doesn’t have to be.”
Damon tells me this story on a rainy spring day in Manhattan, after a full schedule of board meetings for Water.org, the charity he cofounded in 2009, three years after his Zambia trip, with longtime water expert, and now dear friend, Gary White. It has been a long day but a good one, and Damon has more news to share. He checks his watch. “I have to pick up my daughter from school. Come along and we’ll keep talking,” he tells me. As we make our way from a conference room at McKinsey in Midtown (a board member works there) to a car waiting on the street, I watch passersby light up in recognition and try to catch his eye. In spite of his attempt to blend in — Damon is wearing glasses, a splash of whiskers, and a Panavision baseball cap — he is unmistakable. And he never fails to return a smile. “Clearly my strong suit is and will be trying to get people to care about this issue,” he says of his primary role. “Our vision is clean water and sanitation for everyone, in our lifetime …” he trails off. “So we better get to work.”
For all his star power, though, Damon is more than just the pretty face of Water.org. He has turned himself into a development expert. This would seem like an obvious and necessary first step for someone embracing the global water crisis as a personal mission. But, in fact, it’s highly unusual for a celebrity to dive this deep into a problem this daunting. Whether talking microfinance strategy with rural bankers, giving detailed reports from the field at the annual Clinton Global Initiative, or personally thanking donors like PepsiCo CEO Indra Nooyi, Damon has quietly developed the cred of a program geek. “If you want to understand how this works,” he says, sounding more like an anthropologist than a celebrity spokesperson, “there is no substitute for going there and talking to people in their homes.” It’s an approach he comes by honestly. His mother, a professor of early childhood education, spent part of her summers living with local families in Guatemala and Mexico, attending language school in preparation for her field research. She brought her impressionable teenage son along. “She specialized in nonviolent conflict resolution,” Damon explains. In war-torn areas like El Salvador, she interviewed children, studied their artwork, and documented their trauma. “So I’d seen extreme poverty at an early age,” he says. “I knew what it was, and I always cared about it.” He has replicated her research process, immersing himself in the business of social enterprise until he found the cause that he felt passion for — water.
Damon reads as equal parts hardworking, ambitious, grounded, and caring, the kind of celebrity you’d want your son to be if you had a son who could get both the girl and the point of fame. He’s a son who’d make a mother proud. “She doesn’t say it quite that way,” he says. “It’s not the way she talks. She says, ‘I affirm him.‘ Hang on a sec.” As he hops out of the car to go pick up the eldest of his four daughters, a charming tween who will never have to fetch water for her family, he smiles and looks affirmed.

In 2009, Damon and Gary White cofounded Water.org. That same year, they visited this town in the Indian state of Tamil Nadu. Their initial trips into the field included a foray to South African slums while Damon was shooting <i>Invictus</i>. | Courtesy of Water.org
In 2009, Damon and Gary White cofounded Water.org. That same year, they visited this town in the Indian state of Tamil Nadu. Their initial trips into the field included a foray to South African slums while Damon was shooting Invictus. | Courtesy of Water.org

THE BUSINESS OF philanthropy is a difficult one, often as challenging to decipher as the problems it aims to solve.
But Water.org is the smart and careful merger of two capable organizations: Damon’s H2O Africa, which he founded as a way to funnel money to well-managed NGOs in Africa; and Gary White’s WaterPartners, a two-decades-old group that had developed a series of highly innovative and counterintuitive approaches to water access. WaterPartners’ strategy had less to do with digging wells — which, if maintained poorly, can break down and leave a place in worse shape than before — and more to do with encouraging communities to participate in the creation and ownership of water and sanitation systems that function as mini utilities. These issues, known as WASH in philanthropic circles — water, sanitation, and hygiene — are among the least glamorous of all support efforts, yet are the most likely to lift a community out of poverty if done right. Think of toilets, hygiene education, pump maintenance, faucets, and a nascent form of self-government that literally takes a village. “A community has to invest in the project themselves to manage it,” insists White, 48. “It’s bottom-up, not top-down.”
The merger involved a leap of faith for both White and Damon, though neither describes it that way. In a world where celebrities routinely rain shame upon their personal brands with public meltdowns, sex tapes, or undeclared children, and where professional philanthropists come under fire for spending a lot to do very little, each had a difficult judgment call to make. Their long courtship started as collaboration and ended in partnership. “We were a grant recipient of Matt’s before we merged,” White says. “He was clearly looking for the same things we were and had developed such knowledge on the subject.” Damon had studied White’s innovations, particularly a microfinance instrument known as WaterCredit, as he brought himself up to speed on the water crisis. “Gary is the expert. I’ve come to trust him implicitly and value his input above all others,” says Damon. “When you talk to Gary, you understand that we can solve this thing.” The two were also in sync on the practical aspects of working together. Both willingly gave up the names of their organizations, and neither fussed about titles, credit, or where their names should go on websites or programs. In separate conversations, both men declare themselves lucky to have found the other. “He’s not what I expected at all,” they say of each other, sounding similarly surprised.

Water.org is on track to raise $10 million in 2011, up from $4 million in 2010. The primary use of that money is not as a handout to well drillers. Rather, Water.org tends to negotiate deals between microfinance institutions and communities. It might help a village get access to a local banker, who will then lend money to build systems that tap into a well, or a previously inaccessible water or sanitation grid. Water.org may guarantee the loan, but repayment falls to the villagers, who work together to manage the water supply and organize credit payments.
“By using local capital markets to develop the projects, people get access to the credit system,” White says. “The villagers own the project at the end of the exercise. They’re proud of it, and they have done it themselves.” Water.org claims that this approach has allowed it to help more than 315,000 people gain access to clean-water systems that are reliable and maintained.
That leveraged success, combined with Damon’s celebrity, explains why donations to Water.org are on the rise and why it has earned the attention of institutional funders. “It was clear that Gary had developed a really high impact and interesting play in the world of water access and sanitation,” says the Skoll Foundation’s David Rothschild of its decision to back the organization in 2009. “We were looking for something that would scale, and this was it.”
“THIS IS A PROBLEM we can solve,” says White. We are sitting in his sparse office in downtown Kansas City, Missouri, when he takes from his windowsill a plastic bottle of dirty water collected from his latest trip to Ethiopia, and shakes it into a chocolate-milk froth. “This is what they were drinking,” he says. Radiating warmth and calm, he shows me pictures of projects, of happy children near wells, each a story of heartbreak and redemption. These are, of course, the kinds of images we always see when asked to think about the water crisis. But behind me is a whiteboard, where White is trying to sketch out the future of Water.org. “We are looking for the next WaterCredit,” he explains.
White’s long path to WaterCredit, and to Water.org, began, as the best things often do, over a meal with good friends. In the late 1980s, he was working for Catholic Relief Services (CRS) as an engineering specialist on projects in Latin America and the Caribbean. “Someone said, ‘Your life should be about finding the intersection of the world’s greatest need and your greatest passion,’ ” he tells me. “That always seemed right to me.” But in order to sit for his professional engineer’s exam, he had to give up his relief work and join a stateside engineering firm. “I was devastated,” he says. So, the day after Thanksgiving in 1990, he invited 100 friends to the local Knights of Columbus hall in Kansas City to enjoy a donated catered meal and a keg of Boulevard beer. He also showed them a slide show of the work he’d done with CRS. “We raised $4,000,” he recalls with a smile. That money seeded a project that he started in El Limon in Honduras. The next year, another dinner and another project. A series of annual dinners grew into a fledgling enterprise he called WaterPartners, which became big enough to attract institutional investment. One of the first such grants was for $100,000, from the Michael & Susan Dell Foundation.
Still, even after White had led dozens of projects, he remained frustrated. “Projects — everyone’s projects — were failing at a really high rate.” Communities had broken wells or faucets that villagers were unable to repair, or the wells produced water more dangerous than that of the filthy rivers that flowed nearby. There were also few, if any, sanitation projects. “In the ’80s and ’90s, the approach was really supply-driven — ‘We are here to give you your water project,’ ” he says. Dig a well, put up a plaque, take a picture, and scram. “People were designing projects for people, not with them.” White came to understand that community engagement (a term rendered almost meaningless by politicians, major brands, and social-networking companies) is a life-or-death strategy in the developing world. “There needs to be a water committee. At least 80% of the community needs to sign up and raise money for the project, participate in its construction and up-keep,” he says. That’s how a project turns from top-down charity to bottom-up sustainability.
This led him to an important insight — an “orthogonal insight,” his geeky term for the kind of thinking in which forces that appear unrelated or irrelevant help solve a problem in an unexpected way. (“You come to love Gary’s unique vernacular,” says Damon.) Poor people do have some money, White observed. And millions of them spend an inordinate amount of that buying water from the equivalent of loan sharks and hucksters — opportunists with a faucet. “We knew they were getting water from somewhere because they were still alive,” he says. And for many of these poor communities, particularly those in quasi-urban settings, water infrastructure might be just a few kilometers away.
He put all of this together and came up with the basic thought behind WaterCredit: What if communities self-organized to get a loan to create their own wells or buy their way into water access? “We began to work with microfinance institutions [MFIs] instead of just NGOs,” White says. But infrastructure financing was a sticking point. “Microfinancers had never lent to anything that didn’t have a built-in revenue source or collateral.” Convincing a local lender to take a risk means demonstrating demand, training communities to run a project, and making the case that the poor people can afford to repay the loan. “A tough sell,” says White, “but not impossible.”

Photograph by Evelyn Hockstein/Polari
Photograph by Evelyn Hockstein/Polaris

WaterCredit is a full-on microfinance tool that tries to leave nothing to chance. Let’s say Water.org identifies an urban Indian community it might be able to help build a public toilet. They rally local people into a committee to run the project, and then persuade the local utility to risk a construction project in a neighborhood that seems too poor to pay its bills. An MFI works with a local lender to loan the committee the necessary money. After the toilet is built, educators must teach people how to pay their loan — as well as why they should use their new toilets and, for that matter, wash their hands. All this for men and women who are in a hardened caste system. It is especially important for the women, because research shows that projects that ultimately succeed are designed with them in mind, as well as maintained mostly by them. So yes, it’s a long, tough sell. But if it works, a woman of low status might then be in charge of collecting maintenance fees — just pennies — at the new public toilet. That’s a woman who now has a job and dignity, and no dysentery.
In 2009, while filming Invictus in South Africa, Damon made a point of going with White to visit WaterCredit beneficiaries. “We’d go into a slum and talk to people who had taken out the loan, had a water tap or toilet in their house, and had already paid it back,” he says. “Their lives were changed.” Later, Damon got to know WaterCredit bankers and was just as impressed. An Indian branch manager explained that he was thrilled with his new customers, many of whom had returned for basic banking services. “He had been calling other branch managers, telling them how well it worked,” says Damon. “WaterCredit is our proof that risky ideas do work sometimes. It is a big idea gone right, and it’s working all over the place. That’s when it gets really exciting.”

A working pump can make all the difference, as it does for these schoolgirls in Kisumu, Kenya. The pump was installed by White’s original charity, WaterPartners. | Photograph courtesy of Water.org
A working pump can make all the difference, as it does for these schoolgirls in Kisumu, Kenya. The pump was installed by White’s original charity, WaterPartners. | Photograph courtesy of Water.org

WaterCredit has elevated White to star status in the philanthropic world. In 2009, after a rigorous, multiyear vetting process, he won a Skoll Award for Social Entrepreneurship, scoring a $765,000 grant and access to an unparalleled network of entrepreneurial thinkers. “[WaterCredit] is well beyond proof of concept now,” says Skoll’s Rothschild. “Financial institutions, and other people, are doing it now too. It’s a shift in the way that systems operate.”
SHORTLY AFTER HIS TRIP to Zambia, in a burst of his own orthogonal thinking, Damon, who has his own production company, greenlighted a documentary that dovetailed with his newly discovered water quest. Three ultramarathoners had decided — for reasons that don’t seem much deeper than “It would be really cool to do this!” — to run across the Sahara Desert from Senegal to Egypt. The runners, Charlie Engle, Ray Zahab, and Kevin Lin, suffered (both with, and because of, one another) through the equivalent of one-and-a-half marathons a day for 111 consecutive days amid the toughest conditions on earth. Before his Zambian conversion, Damon might have passed on producing the project. “This is basically a masochistic, somewhat selfish sport,” he says. “But these three crazy guys were going right through the belly of the beast in terms of poverty, in six vastly different countries. We could use the film to highlight the water issue.” Damon and his producers discovered several small, good NGOs focused on water along the way. “That’s how we found Gary.”
The film, Running the Sahara, released in 2007, is an example of the type of messaging that Damon can employ, one that deftly uses his skills as a Hollywood power player and storyteller. (When the Libyan government threatened to deny the runners entry, Damon and pal Robert De Niro, who were then shooting The Good Shepherd together, personally worked the phones.) “Awareness is as important to us as fundraising,” says Damon. “We want people to understand the issue in all its complexity.”
But getting attention isn’t as easy as you think, even for Damon. Consider this odd couple of YouTube videos: Matt Damon speaks to the Clinton Global Initiative about water — 3,669 views; Matt Damon does a spot-on impression of Matthew McConaughey on Letterman — 13,492,392 views. Damon has no interest in typical celebrity heart-tugging. “Basically, there is the Sally Struthers approach,” he says, “where you guilt the shit out of people and they end up turning the TV off.” And most star-studded mega-events, of which he’s headlined plenty, end up netting little to the organization. “That seems very analog to me,” he says. “Unless,” he adds, referring to a recent Robin Hood Foundation event, “you’re doing what these Goldman guys do and get Lady Gaga to raise $47 million because they’re drunk and they’re trying to impress each other and they’re calling out numbers from the tables.” He pauses and laughs. “Of course, that is a kind of fundraiser we’d entertain for Water.org, but it’s the exception, not the rule.”
In today’s digital world, engagement can be stoked in ways that may not require Hollywood wattage. Sure, Damon can talk up his organization on Letterman; “that’s an audience of 2.4 million to hear our message,” says Water.org chief community officer Mike McCamon, who works closely with Damon on strategy, and is a veteran of Apple, Intel, and a handful of startups. But McCamon points out that 28 million people learned about the mission last December when they played Zynga’s FrontierVille and were offered a chance to buy or give a Water.org-branded blue water bison. That is the kind of engagement he could neither buy nor predict. “I cold-called Zynga out of the blue,” he says. “It was incredibly effective and took us about as far away from the pandering, puppy-dog-eyes style of messaging as you can get.” Zynga confirms raising $300,000 for Water.org.
The organization is also developing its My.Water.Org, a mini site that lets people follow a community in Haiti that is in the process of developing a water project. This is method philanthropy the way it should be. Instead of showing pictures of Damon with desperate kids or wells with YOUR NAME HERE! plaques, visitors learn about the difficult struggle that comes with creating sustainable water projects, virtually shadowing a community’s efforts as it goes through months of town-hall meetings, trainings, negotiations, and public debates. Upon signing up, people become digital ambassadors of sorts, with progress reports, even the disappointing ones, posted through their Twitter or Facebook feeds. Around 13% of those who sign up donate, and “65% get another person to come to the site,” says McCamon. For a profession that deems a 2% clickthrough rate as success, that’s an avalanche of engagement.
Which raises an interesting question: How in the world is a mere global celebrity supposed to compete with that? How can Matt Damon contribute when a FrontierVille bison and online town halls are hotter than an Oscar winner?
To the credit of both White and Damon, they rejoice that they even have such a question to consider. Damon does not seem to need the ego strokes of being associated with a good cause: He lives a quiet life for a celebrity of his stature. Damon, like White, is far more interested in pursuing the next big innovation, something that will likely build off of the contrarian genius of WaterCredit. The two have come to see that turning the poor into paying customers of a utility of their own creation spawns a consumer consciousness that can be harnessed. “There is development money allocated to communities all the time [via municipalities, NGOs, and international-aid agencies] that often never arrives,” says White. What mobile service could keep them in the loop, like a 311 for the poor? “If they knew what should be coming their way, they could hold others accountable,” he adds. In some communities, a water truck shows up daily. But since the women never know the time of the delivery, they can waste hours waiting with their water jugs for a truck that sometimes shows up empty. “What if there were a text system,” asks Damon, “that lets people know where the truck was and how full it was?” A compelling, time-saving notion, but hard to sell from the drawing board.
To explore possibilities such as these, the Water.org board approved, on that rainy day when I met with Damon, the creation of a new innovation fund. Damon kicked it off with a $1 million donation, and the Hult International Business School followed with a $1 million gift of its own. The fund’s goal is to spur development of a portfolio of new products and services that are specific to the bottom-of-the-pyramid water consumer. “It’s a very Silicon Valley approach,” says White. Invent. Test. Iterate. “And like the tech world, we can get the attention of bigger investors with concepts that have been proven in the field.” Damon hopes the fund will one day be open to individuals, not just institutional investors. “We all know what angel investing is now,” he says. “Why can’t we let people invest $25 in, say, the Water.org lab? Let them be part of picking the next big idea.”
White and Damon agree on their movement’s future. The new big thing will probably be the result of orthogonal thinking. “We want to support people in demanding the services and aid they’ve got coming to them,” says White, “while having an easier life in the process.” What can make the lives of people at the bottom of the pyramid, the people who form their customer base, better? Mobile-phone apps? A new financing scheme? An unconventional alliance? A technology yet to be born? Whatever it is, the story to be told will require more than a plastic bottle of dirty water.

A version of this article appears in the July/August 2011 issue of Fast Company.

Can Matt Damon Bring Clean Water To Africa? | Fast Company


Google Wants to Become Your Personal Finance Advisor:

In its attempt to break into the personal finance market, Google has launched a new tool for finding and comparing financial products.

At its core, Google Advisor is a personal finance comparison tool. It helps you check the rates for mortgages, credit cards, CDs, checking accounts and savings accounts by providing a list of financial instruments that meet your search criteria. For mortgages, Google provides data such as APR, monthly payment, fees and contact details. If you’re looking for a credit card, the search giant provides data on rewards, card type, purchase APR and the annual fee.

Google Advisor isn’t a search engine, though. It’s really a comparison engine with a lot of filters. If you need to find a 30-year fixed mortgage for a $650,000 home in Alameda County with a 660 credit rating, you will probably find it. Google advisor also features certain offers based on low APRs or the interest rate.

At the moment, mortgages are treated differently than the other financial categories. While Google doesn’t get paid if you find a credit card, CD, checking account or savings account through the search giant, it does make money whenever you contact a mortgage lender. You will noticed that mortgages have “sponsored results” while other financial instruments simply have “matching results.” Sponsored results could to other financial products expand over time.

Google has long wanted to break into personal finance, a sector where it could potentially make billions in advertising and referral fees. In March, Google acquired UK price comparison website BeatThatQuote for $61.5 million. There are a lot of similarities to BeatThatQuote and Google’s new finance service, and that probably wasn’t an accident. This is likely just the beginning of a series of tools Google will release to conquer the personal finance arena.

What do you think of Google Advisor? Do you trust Google to get you the best financial data? Let us know what you think in the comments.

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“MAPLE” Syrup used to glue all the partners…

Four pension funds have joined with banks in the deal, which offers TMX shareholders C$48 a share for the group, 70 per cent of that in cash and the rest in shares, a person familiar with the situation said. For every TMX share held, TMX shareholders would be offered C$33.52 in cash, up to a maximum of C$2.5bn, and 0.3016 of one share in the new TMX entity. TMX shares closed at C$41.75 on Friday.
This would give the bank and funds consortium, codenamed “Maple”, 60 per cent of the group, with existing shareholders holding the rest.
The funds are Caisse de dépôt et placement du Québec, Ontario Teachers’ Pension Plan, Canada Pension Plan Investment Board – which manages Canada’s public pension plan, the biggest in the country – and the Alberta Investment Management Corporation.
It was not clear whether the two banks advising the LSE on the TMX deal, Royal Bank of Canada and BMO, will join the counter-offer

Canadians launch counterbid for TMX

FT.com / FT Trading Room / Exchanges Consolidation –

By Jeremy Grant in London and Bernard Simon in Toronto
Published: May 14 2011 17:48 | Last updated: May 14 2011 17:48
Canada’s biggest banks and pension funds have tabled a cash and shares bid worth at least C$2.8bn ($2.9bn) for TMX Group in a bid to break up an agreed merger between the operator of the Toronto and Montreal bourses and the London Stock Exchange.
TMX confirmed the approach on Saturday, saying it would consider the offer. LSE, which on Friday reported a sharp rise in pre-tax profits, said it remained committed to its $3bn all-share merger with TMX.
Acceptance of the Canadian offer would deal a huge blow to the LSE’s ambitions to forge a transatlantic merger as a way of safeguarding its future amid a wave of exchange mergers.
It also signals that protectionist forces in Canada rallied to prevent the country’s main bourses from losing their independence, moving to create a “national champion” instead.
Four pension funds have joined with banks in the deal, which offers TMX shareholders C$48 a share for the group, 70 per cent of that in cash and the rest in shares, a person familiar with the situation said. For every TMX share held, TMX shareholders would be offered C$33.52 in cash, up to a maximum of C$2.5bn, and 0.3016 of one share in the new TMX entity. TMX shares closed at C$41.75 on Friday.
This would give the bank and funds consortium, codenamed “Maple”, 60 per cent of the group, with existing shareholders holding the rest.
The funds are Caisse de dépôt et placement du Québec, Ontario Teachers’ Pension Plan, Canada Pension Plan Investment Board – which manages Canada’s public pension plan, the biggest in the country – and the Alberta Investment Management Corporation.
It was not clear whether the two banks advising the LSE on the TMX deal, Royal Bank of Canada and BMO, will join the counter-offer.
Luc Bertrand, a former chief executive of the Montreal bourse, would become chief executive of the new TMX group, replacing Tom Kloet, the current chief executive and an American citizen.
In a key move, the banks would also tender their shares in the clearing house for the Toronto Stock Exchange, CDS Clearing and Depository Services, as part of the offer, meaning that if the deal goes ahead the clearer would become part of the TMX Group.
This would turn TMX Group into a “vertical silo” along the lines of Deutsche Börse, CME Group in the US, the SGX Singapore exchange and Bolsas y Mercados Españoles, the Spanish exchange. Such structures often use clearing as a way to defend their business against competitors, giving them stronger businesses and higher stock market valuations.
In addition the alternative share trading platform Alpha Trading – which competes with the Toronto exchange – will be folded into the group, restoring the Toronto exchange’s former near-monopoly in Canadian share trading.
Alpha is owned by the major banks in the counter-offer. Last week it had a market share of 18.1 per cent in trading of Canadian stocks, with the Toronto exchange on 63.2 per cent.
The heavy presence of Canada’s banks as shareholders in the country’s two exchanges could cause concern among banks and brokers that are not part of the Maple consortium. Banks – which are typically among exchanges’ biggest customers – have for years not been owners in exchanges, after a wave of demutualisations transformed exchanges into publicly listed companies with no dominant group of owners.
Banks and brokers that are not part of the Maple consortium may question what this may mean for the pricing power of the two Canadian exchanges, if the country’s biggest banks are both their part-owners and biggest customers.
A second person close to the situation said an announcement from the consortium, could come on Monday.
The development is a bitter blow for Xavier Rolet, LSE chief executive, who had staked much on the success of his proposed merger with TMX to restore the LSE to the top ranks of global exchanges.
When the deal was announced in mid-February, Mr Rolet and Mr Kloet said the combined group would be the world’s largest listing venue for mining and natural resources companies, as countries including Brazil, China and Mongolia look to exploit their natural resources.
The UK and Canadian exchanges also operate large junior markets – London’s Aim and the TSX Ventures board, and share the same legal system and language.
Supporters maintained that the merger would improve Canadian groups’ access to global capital. They also warned that the TMX cannot afford to be sidelined in the accelerating consolidation of global securities trading. Canada would maintain regulatory oversight because the merger involves the exchanges’ holding companies, not the exchanges themselves.
The LSE-TMX camp received a boost in mid-April with the conditional endorsement of the deal by an all-party committee of the Ontario legislature.
However critics of the deal, which included Ontario finance minister Dwight Duncan, had said it was less a merger than a takeover of TMX, which owns the Toronto and Montreal exchanges. Existing LSE shareholders would hold 55 per cent of the enlarged group’s capital, with Mr Rolet as chief executive.
A combined LSE-TMX group, which would have a dual stock market listing and be jointly headquartered in London and Toronto, would be worth just under £5bn ($7.7bn), including debt. It would have a combined 6,700 listings, making it the world’s largest exchange by numbers of companies traded.
TMX investors were to receive 2.9963 ordinary shares in the enlarged group for each share held in TMX. LSE shareholders would own 55 per cent of the enlarged capital, with TMX shareholders holding the rest.
The LSE and TMX only this week submitted their joint applications to four provincial securities regulators for approval of the proposed deal.
One person familiar with the counter-offer said that talks had been “on again, off again” over the past three months.
Some of the banks – notably Toronto-Dominion, Canadian Imperial Bank of Commerce and National Bank of Canada – have led opposition to the LSE-TMX deal, maintaining that the Toronto and Montreal exchanges are national champions that could do much better than aligning themselves with a second-tier overseas partner.
Public opinion has been far less inflamed by the deal than by BHP Billiton’s $40bn bid last autumn for PotashCorp of Saskatchewan. The political backlash in that case forced the federal government to reject BHP’s proposal. Many observers believed that the ruling Conservatives’ resounding victory in a general election earlier this month increased the chances of the LSE-TMX merger being approved.
However, critics took heart from remarks by Mr Duncan shortly after the deal was announced that the Toronto exchange was “a strategic asset in a strategic industry”. Mr Duncan also expressed concern that Dubai would be the biggest shareholder in the merged group. The LSE’s largest shareholder is Borse Dubai.
The banks are unlikely to find universal acceptance for their proposal. They will come under close scrutiny for the virtual monopoly over securities trading that would be created by folding Alpha into the Toronto exchange. Furthermore, Canadians have a love-hate relationship with the banks, respecting their stability while chafing at their economic power.
However the involvement of four of Canada’s biggest pension funds is likely to aid the banks’ campaign to swing public opinion to their side.
Politicians and regulators will be forced to choose between the potential rewards of creating a national champion and the risks of the banks abusing their extra power.
If the counter-offer is accepted, it would mark the return of big banks as shareholders in a large exchange since banks exited from exchanges in a wave of demutualisation that swept through the exchange world a decade ago.
Tom Caldwell, a Toronto securities dealer and whose company, Caldwell Financial, invests in exchanges, told the FT last week that a bid for TMX involving the banks “would be a terrible thing for Canadian markets”, noting that “exchanges should be neutral”.
The move by Canadian institutions to prevent the LSE-TMX deal comes only weeks after the Australian government rejected an attempted takeover by the Singapore exchange for its Australian counterpart, on national interest grounds.
The two developments signal that the current wave of cross-border exchange mergers is starting to fall afoul of nationalist sentiment, with some countries insisting that exchanges are vital national economic infrastructure – unlike airlines.

FT.com / FT Trading Room / Exchanges Consolidation – Canadians launch counterbid for TMX

________________________ The MasterBlog

Chavez’ Government asked the FARC to kill opposition leaders and carry out bombings




Today’s New York Times has an article by Simon Romero on the book with the internal FARC communications found in Raul Reyes‘ computers. Among the highlights:
“In some of the most revealing descriptions of FARC activity in Venezuela, the book explains how Venezuela’s main intelligence agency, formerly known by the acronym Disip and now called the Bolivarian Intelligence Service, sought to enlist the FARC in training state security forces and conducting terrorist attacks, including bombings, in Caracas in 2002 and 2003. “
and:
“The book also cites requests by Mr. Chávez’s government for the guerrillas to assassinate at least two of his opponents.
The FARC discussed one such request in 2006 from a security adviser for Alí Rodríguez Araque, a top official here. According to the archive, the adviser, Julio Chirino, asked the FARC to kill Henry López Sisco, who led the Disip at the time of a 1986 massacre of unarmed members of a subversive group.”

Let the denials begin…

And

May 10, 2011

Venezuela Asked Colombian Rebels to Kill Opposition Figures, Analysis Shows

CARACAS, Venezuela — Colombia’s main rebel group has an intricate history of collaboration with Venezuelan officials, who have asked it to provide urban guerrilla training to pro-government cells here and to assassinate political opponents of Venezuela’s president, according to a new analysis of the group’s internal communications.
The analysis contends that the Revolutionary Armed Forces of Colombia, or FARC, was asked to serve as a shadow militia for Venezuela’s intelligence apparatus, although there is no evidence that President Hugo Chávez was aware of the assassination requests or that they were ever carried out.
The documents, found in the computer files of a senior FARC commander who was killed in a 2008 raid, also show that the relationship between the leftist rebels and Venezuela’s leftist government, while often cooperative, has been rocky and at times duplicitous.
The documents are part of a 240-page book on the rebel group, “The FARC Files: Venezuela, Ecuador and the Secret Archive of Raúl Reyes,” to be published Tuesday by the International Institute for Strategic Studies in London. While some of the documents have been quoted and cited previously, the release of a CD accompanying the book will be the first time such a large number of the documents have been made public since they were first seized.
The book comes at a delicate stage in the FARC’s ties with Venezuela’s government. Mr. Chávez acknowledged last month for the first time that some of his political allies had collaborated with Colombian rebels, but insisted they “went behind all our backs.”
The book contradicts this assertion, pointing to a long history of collaboration by Mr. Chávez and his top confidants. Venezuela’s government viewed the FARC as “an ally that would keep U.S. and Colombian military strength in the region tied down in counterinsurgency, helping to reduce perceived threats against Venezuela,” the book said.
The archive describes a covert meeting in Venezuela in September 2000 between Mr. Chávez and Mr. Reyes, the FARC commander whose computers, hard drives and memory sticks were the source of the files. At the meeting, Mr. Chávez agreed to lend the FARC hard currency for weapons purchases.
A spokesman for Mr. Chávez did not respond to requests for comment.
Venezuela’s government has contended that the Reyes files were fabrications. In 2008, Interpol dismissed the possibility that the archive, which includes documents going back to the early 1980s, had been doctored.
Moreover, data from the archive has led to the recovery of caches of uranium in Colombia and American dollars in Costa Rica, and has been the basis of actions by governments including Canada, Spain and the United States. Such uses constitute “de facto recognition” that the archive is authentic, the institute said.
“We haven’t begun the dossier with the words ‘J’accuse,’ ” said Nigel Inkster, one of the book’s editors. “Instead we tried to produce a sober analysis of the FARC since the late 1990s, when Venezuela became a central element of their survival strategy.”
Recently, Venezuela seems to have cooled toward the FARC, conforming to a pattern described in the book of ups and downs between Mr. Chávez and the rebels. In April, his government took the unusual step of detaining Joaquín Pérez, a suspected senior operative for the FARC who had been living in Sweden, and deporting him to Colombia.
This move came amid a rapprochement between Mr. Chávez and Colombia’s president, Juan Manuel Santos, as a response by Mr. Chávez to Colombia’s claims that the FARC was operating from Venezuelan soil.
The archive, which opens a window into bouts of tension and even loathing between the FARC and Mr. Chávez’s emissaries, shows that Mr. Chávez has sided with the Colombian government on other occasions, especially when he stood to gain politically.
In November 2002, the book reports, before a meeting between Álvaro Uribe, then Colombia’s president, and Mr. Chávez, the FARC asked the Venezuelan Army for permission to transport uniforms on a mule train through Venezuelan territory. The Venezuelan Army granted permission, then ambushed the convoy, seized eight FARC operatives and delivered them to Colombia, allowing Mr. Chávez to inform Mr. Uribe of the operation in person.
Such betrayals, as well as unfulfilled promises of large sums of money, generated considerable tension among the rebels over their relationship with Mr. Chávez.
A member of the FARC’s secretariat, Víctor Suárez Rojas, who used the nom de guerre Mono Jojoy, once called Mr. Chávez a “deceitful and divisive president who lacked the resolve to organize himself politically and militarily.”
Still, periods of tension tended to be the exception in a relationship that has given the rebel group a broad degree of cross-border sanctuary.
In some of the most revealing descriptions of FARC activity in Venezuela, the book explains how Venezuela’s main intelligence agency, formerly known by the acronym Disip and now called the Bolivarian Intelligence Service, sought to enlist the FARC in training state security forces and conducting terrorist attacks, including bombings, in Caracas in 2002 and 2003.
A meeting described in the book shows that Mr. Chávez was almost certainly unaware of the Disip’s decision to involve the FARC in state terrorism, but that Venezuelan intelligence officials still carried out such contacts with a large amount of autonomy.
Drawing from the FARC’s archive, the book also describes how the group trained various pro-Chávez organizations in Venezuela, including the Bolivarian Liberation Forces, a shadowy paramilitary group operating along the border with Colombia.
FARC communications also discussed providing training in urban terrorism methods for representatives of the Venezuelan Communist Party and several radical cells from 23 de Enero, a Caracas slum that has long been a hive of pro-Chávez activity.
The book also cites requests by Mr. Chávez’s government for the guerrillas to assassinate at least two of his opponents.
The FARC discussed one such request in 2006 from a security adviser for Alí Rodríguez Araque, a top official here. According to the archive, the adviser, Julio Chirino, asked the FARC to kill Henry López Sisco, who led the Disip at the time of a 1986 massacre of unarmed members of a subversive group.
“They ask that if possible we give it to this guy in the head,” said Mr. Reyes, the former FARC commander.
The book says there was no evidence that the FARC acted on the request before Mr. López Sisco left Venezuela in November 2006.
Less is known about another assassination request cited in the book, including whom the target was or whether it took place.
But the book makes it clear that the Colombian rebels sometimes found their Venezuelan hosts unscrupulous and deceitful.
In one example, Mono Jojoy, who was killed in a bombing raid last year, had harsh words for Ramón Rodríguez Chacín, a former Venezuelan naval officer who has served as a top liaison between Mr. Chávez and the FARC, calling him “the worst kind of bandit.”

>

Excellent piece on the silver run. 

Facts on Silver

Bob Moriarty
Archives
Apr 25, 2011

For those who missed my piece of March 25, 2011, here is the link. I asked the question, “Is Silver Topping?” I may have been right about silver topping, only time will tell. For certain I was dead wrong about the timing and the price. Silver has rocketed from $38 and change when I wrote the piece to over $47 now.
But lots of people get lots of things wrong about silver. So here are some facts.
1. Silver is going parabolic.
According to Jim Rogers all parabolic moves end badly. I have seen similar charts in all kinds of commodities and they always correct. Parabolic charts mark tops. So when silver bugs start suggesting, “This time it’s different” I know better.
Study the chart below. Ignore the commodity. When charts go parabolic, it ends badly. I was an investor in the 1970s in both gold and silver. I started buying gold at $35 and silver around $5 an ounce. I sold out all my silver in January of 1980 a week too early at $35 as it rocketed to $50.25 an ounce at the open on January 21, 1980. It went parabolic and basically that’s all you need to know.

Those investors who want to buy at new all time highs almost always are the same investors who want to sell at all time lows. Naturally as a guy running a metals site, I think $46 silver is wonderful for all my readers that I was telling to buy at $4 and $6 and $10 and $20. Is silver a good buy today? No, it’s a good sale… to those who insist on buying at tops.
2. The actual ratio of silver to gold in the earth’s crust is not 16 to 1.
It’s more like between 20 or 26 or 64 to one. This is not an absolute fact, these are opinions from experts but no experts conclude the ratio is 16-1. Go to Wikipedia and do the math for yourself.
What happens on the web is that one guy starts a rumor saying there are tens of thousands of gold-plated tungsten bars out there. Some other fool adds a few “facts” to the rumor and all of a sudden hundreds of sites are writing about fake gold bars.
Alas, years later not a single tungsten bar has showed up. It was rubbish and anyone who understood anything about metalworking would understand that technically it would be very hard to do. All 400 ounce gold bars are tracked and if by some strange process someone managed to counterfeit one, he would be caught at once. But you can sell a lot of subscriptions to those who pay to have their fantasies catered to.
It doesn’t matter how many people claim the ratio of silver to gold is 16-1, it simply isn’t true.
3. There is no shortage of silver. There never has been a shortage of silver. Until the laws of supply and demand are repealed, there never will be a shortage of silver.
The first person I ever read that claimed there was a shortage of silver was Ted Butler. He claimed in May that according to his figures the world was going to totally run out of silver by December. This was on the Kitco forum. I wrote and told him he was dead wrong, there were billions of ounces of silver above ground. His response was that according to his numbers, we would be out of silver bullion and that would drive the price of silver all by itself to between $50 and $100 an ounce. In a vacuum. Without gold going up or oil or anything else going up because of inflation. Silver was that rare.
My retort was that with billions of ounces around, prices would soon turn Grannie’s silver service into silver bullion. He insisted I didn’t know what I was talking about; he was the silver “GURU.” The exchange took place in May of 2001 and by December of 2001 I had correctly called the bottom in silver while he was insisting that it would be $50 an ounce. One of us was dead right.
But then he was also the guy claiming that silver was the most critical war material and if we ever go into a war, that would drive silver prices to between $50 and $100 an ounce and it was so rare that you should, “never, never, ever sell silver.” With the US engaged in three different wars at the same time, you would think that silver would be $300 an ounce. It’s not.
My question is, “If you were smart enough to buy 100 ounces of silver at $4 an ounce, a 5000-year low in real terms, how much profit have you made if silver goes to $50 or $100 or $300 and you never, never, ever sell? The answer, of course, and ignored by all the silver “GURUS” is that if you buy low and don’t sell ever, you don’t make any profit. That may be the dumbest investment advice I have ever heard.
Silver is a commodity like any other. If you are smart enough to buy it cheap and you are smart enough to sell it when it gets expensive, you will profit. If you want to buy at all time highs, good luck with that.
There are 19 billion ounces of silver above ground today. People talking about silver “bullion” inventories are being misleading. Silver is silver is silver and it only takes a day to turn a few 200 year-old-tea pots into a boring 1000 ounce “bullion” bar.
Just how accurate is the 19 billion ounce figure? We can figure that out with simple logic. I think the figure accepted by more people for total silver production ever would be about 45 billion ounces. A favorite argument of the permabulls is that silver is consumed, not recycled. Let’s think about that. Silver is used in computers, iPhones, aircraft, and lots of commercial purposes where it isn’t recycled. But that use of silver wasn’t common until perhaps 1960. Silver before that time was recycled. Yes, silver coins did wear but they didn’t wear out, they might lose 20% of their original weight.
If 45 billion ounces were produced, it’s more logical that a good percentage of it is still around. I was in my coin dealer’s shop a week ago. He bought 2800 ounces of silver on Saturday. Not a bar of bullion in the bunch but 2800 ounces of real silver in other forms. The numbers on silver are not hard numbers; we simply don’t know how much silver is around. But we do know there is a lot of silver and with the exception of a short period between the end of November of 1979 and January 21 of 1980, a mere six weeks later, silver has been well under $10 an ounce on average for the last 40 years. How rational is $46 silver? Not very.
I’d guess most silver mines have cash costs between $3 and $10. A market price of $46 an ounce will suck silver out of grannies’ closets and out of the ground at the same time. Every silver refinery in the world is running at capacity right now, if you want silver, there is a lot of it around.
4. The most illogical thinking and worst use of “facts” is common among the silver uberbulls and the parrots that follow them.
Someone just posted the most incredible theory on the validity of SLV. That’s the silver ETF that has been trashed for years by a small group of uberbulls with an agenda. One of their supporters came up with a brilliant argument. Since we don’t really know and can’t prove that SLV actually has all the physical silver, the proof that it is a scam is when they deny it being a scam. Read that carefully. The proof that it is a scam is when they deny it.
So, apparently, if you ask the people behind SLV if it is a scam and they admit it, that means we know it’s a scam since they admitted it. And if you ask the people behind the SLV if it is a scam and they deny it, that also means it is a scam because the proof is when they deny it.
I think that’s circular logic. No matter what the people behind SLV say, it’s a scam.
I have said in the past I have reservations about ETFs and I think investors should be aware of those reservations. If we have a total economic collapse and the financial system freezes, all ETFs could be frozen or worse for months. That includes Sprott’s paper silver, the CEF and SLV and all ETFs of all sorts. What happened in Argentina could happen in the US, it could happen all over the world. It’s entirely possible that all banks close for a good period of time, after all they are insolvent now and have been since September of 2008. But a financial freeze would affect all forms of paper silver including Sprott’s silver trust.
The CEF fund and the SLV have done more to improve the price of silver and gold than any other single action in the last 50 years. Silver bugs should be grateful SLV holds 366 million ounces of silver instead they are whining and posting simply absurd articles totally lacking in either facts or logic.
When someone posts something that ridiculous and lacking in logic, you may safely presume they don’t know what they are talking about. That’s real common when people write about silver and it’s going to cost investors a whole lot of money.
The daily bullish consensus on silver is 96% as of Wednesday the 20th of April. On January 21st of 1980, the very day of the top, the bullish consensus was 94%. How many of the silver uberbulls are suggesting that maybe the record high bullish consensus is suggesting a very dangerous time to start buying? The answer is damned few because they have an agenda and their agenda doesn’t involve them knowing what they are talking about. As long as they tell investors what they want to hear, they will be very popular.
5. There cannot be a run on Comex. The rules do not allow the chance for a run.
For years I have watched as each time silver runs up, certain people start spreading rumors that silver is in such shortage that there will be a run on Comex. The only problem with the rumor is that it can’t possibly happen. There cannot be a run on Comex. I repeat, there cannot be a run on Comex.
Part of the reason for the rumor is that most investors confuse the purpose of the exchanges. The purpose of the exchanges is not to exchange commodities. The purpose of the exchanges is to determine price. But certainly the possibility of a run on an exchange is possible so early on the exchanges adopted rules that called for cash settlement if necessary.
Most people don’t know this because they don’t read the small print but if you have a savings account, the bank has the right to withhold payment for up to 90 days. And all mortgages are essentially 90 notes at their heart. That’s right, the bank can demand full payment within 90 days if they wish and during the 1930s that’s how thousands of Americans lost their homes even when they were paying their mortgage.
I don’t write the rules and you don’t write the rules and they are what they are if you like it or not. There cannot be a run on silver, it’s impossible. So anyone writing about it is spreading disinformation. Of course anyone who ever passed a Series 7 exam know this but you will never hear the silver uberbulls mention it. I wonder why.
There are three guys in the mining business that are so smart and have such great track records that for 70% of investors in metals, they should buy into their mutual funds and stop trying to outsmart the market by picking stocks. The top three guys in the industry are Ken Gerbino, Eric Sprott and Frank Holmes. If you like metals and shares in resource stocks, stop trying to be so smart yourself, it’s difficult work. Hand your money to them to invest in one of their funds and you will do just fine.
That said, Eric Sprott seems to have done something that hasn’t happened to the market since the days of Johnny Carson. You have to be getting on in age to remember it but back in 1973 Johnny Carson started a toilet paper shortage that lasted a month. He was making a joke. He said that there was a toilet paper shortage. The next day, millions of rolls of toilet paper flew off the shelves of every store in the US and by noon there was no toilet paper to be had. It was nothing but a joke.
Don’t let anyone convince you that supply and demand doesn’t work. They do work and that’s far more important for you to know than belief in some mysterious manipulation conspiracy theory. I’ve heard all the stories and know all the arguments. No one in history has made a cent from a belief in market manipulation.
If gold has gone up 4100% since 1950, higher than any other commodity, anyone manipulating it down has done a piss poor job. And who cares if 4 guys have sold more silver short than exists in the known universe? Those are all interesting theories but that’s all they are. If you don’t buy low and sell high, you can’t make money. End of story.
Eric Sprott started his own paper silver fund called the Sprott Physical Silver Trust. It’s still paper silver like SLV or the CEF fund. It has some unique features, not benefits but features. He has done a brilliant job of promoting it.
Recently he purchased $300 million dollars more physical silver to put in the closed fund. As a result of his excellent promotion, as of last Wednesday, silver was selling for $46. If you bought the CEF silver fund, you paid $47.88 for silver. If you bought SLV, you paid $46 with no premium but if you bought PSLV, the Sprott Silver Trust, you paid an incredible $57.73 an ounce for silver.
I’d say that Eric Sprott buying $300 million dollars more silver lately was incredible timing. He pocketed probably $60 million in profit. Is Eric Sprott bullish on silver? I’d say so. He has 60 million reasons to be bullish. He can buy at the exact top of silver and watch a 25% decline and still make money.
How wise was it for investors to pay a 25% premium for silver? I’d like to believe my readers are smart enough to figure that out for themselves. Eric Sprott is both brilliant and rich but paying 25% over spot is not wise investing.
The Hunt Brothers investing in silver drove silver to $50.25 an ounce for a few minutes on January 21, 1980. I think it would be fair to credit the silver boom of 2011 to Eric Sprott. He’s not really saying anything new about silver, though, Ted Butler was claiming that we were about to run out of silver 10 years ago and claiming that silver was the most manipulated of all metals long before Eric Sprott bought his first ounce of silver for a fund. But Eric Sprott adds credibility. But we weren’t running out of silver ten years ago. We aren’t running out of silver now.
One of two things is going to happen. Either we are at a top and silver is about to crash both hard and long, or the world’s financial system is about to fall apart. I have been an advocate of a total financial crash for a lot longer than most writers. I was writing about the dangers of derivatives in 2002 when they were 15% of what they are now.
But I don’t believe the world’s financial system is going to crash next week. As in January of 1980, the silver bulls are going to be the ones losing money. You can’t profit if you don’t sell and all the permabulls are screaming “Buy, buy, buy.” As they will at every top. Buying at record high prices is rarely profitable. But perhaps this time it really is different.
Here’s what all potential investors in silver need to know.

  1. The chart of silver has gone parabolic. Parabolic charts mark tops no matter what the commodity.
    .
  2. The bullish consensus on silver is at a record high. Record high bullish consensus on any commodity is common at tops.
    .
  3. When the most credible guys in an industry start explaining why supply and demand don’t really work, it’s a top. With 19 billion ounces of silver above ground we aren’t about to run out any time soon.
    .
  4. When guys start writing about silver that didn’t have a clue as to what it was or what it was used for at the bottom, you are at a top. I’m astonished at both the ignorance and the arrogance of the newly invented silver “Gurus.”
    .
  5. When the smartest guys in an industry start telling you, “This time it’s different,” it’s not. It’s just a top.
###

Bob Moriarty
President: 321gold


Humala Victory Won’t Derail Colombia-Peru Exchanges Merger, Echeverry Says – Bloomberg

________________________
The MasterBlog


>Texas University Takes Cue From Kyle Bass to Hold $1 Billion in Gold Bars

By David Mildenberg and Pham-Duy Nguyen – Apr 16, 2011 11:45 AM GMT+0200

The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board.

The fund, whose $19.9 billion in assets ranked it behind Harvard University’s endowment as of August, according to the National Association of College and University Business Officers, added about $500 million in gold investments to an existing stake last year, said Bruce Zimmerman, the endowment’s chief executive officer. The holdings are worth about $987 million, based on yesterday’s closing price of $1,486 an ounce for Comex futures.

The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse.

“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said yesterday in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”

Gold reached an all-time high of $1,489.10 an ounce yesterday in New York as sovereign debt concerns boosted demand for the metal as a store of value. Gold has climbed 28 percent in the past year on Comex.

The endowment, which oversees funds held by the University of Texas System and Texas A&M University, has 6,643 bars of bullion, or 664,300 ounces, in a Comex-registered vault in New York owned by HSBC Holdings Plc (HSBA), the London-based bank, according to a report distributed at the meeting in Austin.

To contact the reporter on this story: David Mildenberg in Austin, Texas, at dmildenberg@bloomberg.net. Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

Texas University Takes Cue From Kyle Bass to Hold $1 Billion in Gold Bars

The MasterMetals Blog





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