March 12, 2012

Kyle Bass: Gold is Going a Lot Higher

This is a transcript from an interview with Kyle Bass of Hayman Capital. He explains why he's so bullish on gold, with CNBC's Bob Pisani

Bob: Are you still bullish on gold?

Kyle Bass: I think that the pattern is set. The pattern is set that we are going to continue to monetize fiscal deficits  by expanding central bank balance sheets. Call it how you wanna call it, LTRO, QE any kind of acronym that the powers want it to be called but I call it  money creating out of thin air and that is why gold has a further to go.

Buy Gold

Bob: aks what will happen to the price of gold if China and India economies slowdown:

Kyle Bass: When you think about the way that India is now... they have significant inflation, if they have stagflation we will continue to see gold going higher.

Bob: Can you explain the decision to buy physical gold?

Kyle Bass: It costs you certain amount of money to roll the contract. As far as I know it costs 19 basis points per year and the holding and insurance to keep physical gold is cheaper than that. From a Fiduciary perspective physical gold is a must. Kyle store and insure gold at HSBC.

Gold is currently taxed as collectable at 28%, should there be some change to that?

Kyle Bass: Gold must be taxed as every other asset that you own. It is just a simple asset. Piece of art work, collectibale-gold coin, equity must be taxed the same especially if held long-term.

There is so much talk about gold these days. Should we go back to a gold-standard?

Kyle Bass: I don't think so. I'm not an advocate of such. Ting an enourmas economy to one metal coming out of the ground would probably be a bad idea but ting it to a basket of goods and services might be a good idea. Because we need to limit the amount of capital created in the system.

I just don't understand the logic behind it.

I think that the people who are deemed to be gold bugs, you know, are talking to a portfolio to a certain, yes I own some but when I tire our whole economic future as a nation to that idea, if you think about rationality it's a bad idea.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.