I caught two economy-based "warning" stories this morning. One concerns the stockpiling of $1 billion in gold by Texas U., the other is Zoellick stating the world economy is "one shock away" from food crisis. Make of them what you will...

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

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.

http://www.bloomberg.com/news/2011-04-16/texas-university-takes-cue-from-kyle-bass-to-hold-1-billion-in-gold-bars.html

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Zoellick Says World Economy One Shock Away From Food Supply, Price Crisis

World Bank President Robert Zoellick said the global economy is “one shock away” from a crisis in food supplies and prices.

Zoellick estimated 44 million people have fallen into poverty due to rising food prices in the past year, and a 10 percent increase in the food price index would send 10 million more people into poverty. The United Nations FAO Food Price index jumped 25 percent last year, the second-steepest increase since at least 1991, and surged to a record in February.

Food price inflation is “the biggest threat today to the world’s poor,” Zoellick said at a press conference following meetings of the World Bank and the International Monetary Fund. “We are one shock away from a full-blown crisis.”

“For most commodities, stocks are relatively low,” he said. “You have one other weather event in some of these areas and you really take a danger zone and start to push people over the edge.”

Zoellick said he opposes export bans that nations use to depress local commodity prices for their citizens, lifting costs for consumers in other countries.

Farmers in Russia, once the second-biggest wheat exporter, are planting the fewest acres in four years, in part because a government export ban kept prices low, a Bloomberg survey of producers, traders and analysts showed last month. India, the largest grower after China, is mulling lifting an export ban in place since 2007 as harvests may reach a record for a fourth straight year, Agriculture Minister Sharad Pawar said this month.

Economic growth “is leveling off after a post-crisis recovery,” Zoellick said. “The question now is whether it’s strong enough to reduce unemployment, particularly in developed countries. Inflation is up in developing countries, and this could lead to overheating or asset price bubbles.”

To contact the reporter on this story: Eric Martin in Washington at emartin21@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at Washington at cwellisz@bloomberg.net

http://www.bloomberg.com/news/2011-04-16/zoellick-says-world-economy-one-shock-away-from-food-crisis-1-.html