Posted on 02/10/2012 6:22:11 PM PST by bruinbirdman
Berkshire Hathaway chairman and famous investor Warren Buffett has dismissed gold as a "valueless asset".
Billionaire investor Warren Buffett has dismissed gold as a valueless asset saying that it has no inherent value. In an article for Fortune magazine, Buffett said that gold investors were pinning their hopes on future demand.
He warned that gold was a self-inflating bubble, created by investors desperate for a viable alternative to property and shares.
The infamous investor warned that investors in gold would be left with egg on their face when the price eventually crashed.
"Bubbles blown large enough inevitably pop," he said. "And then the old proverb is confirmed once again: "What the wise man does in the beginning, the fool does in the end."
Buffett's attack comes as private bank Coutts predicts that the gold price will hit "new highs" by the end of 2012.
In a report from the bank, that counts the Queen among its clients, gold is confirmed as a "key asset in investment portfolios".
Coutts said: "The easing of global monetary conditions in response to the liquidity squeeze in the latter part of 2011 has boosted gold.
"Some further stimulus measures could now be postponed by an improving economic outlook, at least in the US. Nonetheless, negative real returns, adjusted for risk, are undermining confidence in major currencies as a store of value. We expect gold prices to hit new highs by year end."
Meanwhile, gold fell more than 1 pc on Friday, hurt by a slide in the euro after a Greek party leader said he couldn't back the 130-billion euro bailout deal the country needs to avoid going bankrupt, which comes at the cost of painful austerity measures.
Spot gold fell as low as $1,703.69 an ounce and was down 0.9 percent
(Excerpt) Read more at telegraph.co.uk ...
His words are heavily laden with politics; he’s short gold for the short-term, and this will have the effect of bidding gold down a bit —something that will make him money.
At the same time, it shores up political favor with the Regime because just b4 the buddies of the Muslim Bisexual monetize the debt, it’s good to have as many suckers positioned to get creamed as possible.
If you’re a Mandarin inflating a currency that everybody has already fled, then that just wont do. Best to get everyone “Whew..!”-ing loudly —AND THEN pull the carpet out from beneath them.
Does Hussein have barnyard photos of Buffet, or has the Oracle of Omaha gotten a hankering for pastels and antique collecting...?
Gold: Warren Buffett has no value.
I wonder how much gold the old turd has salted away.
[The infamous investor warned that investors in gold would be left with egg on their face when the price eventually crashed. ]
what a moron. Gold precisely follows the printimg press of Bernanke. No big mystery. Retrenchment, maybe. Collapse, not very lkely.
That was the case because at all times wealthy people (kings, lords, merchants, etc.) existed who had use for this gold. They wanted it as jewelry, they wanted it as coins - which translated into other earthly goods.
However in war times - as recently as World War II - people in the trenches gladly preferred food or ammo or medicines over any amount of gold. You can't use gold if you are dead.
And that is exactly what Buffett is saying here. Gold has little physical use in the modern society. Sure it is essential in electronics, but even those volumes are microscopic.
You can make coins out of gold, just as it was done before. People might take those coins thinking them to be reliable money - because gold is hard to counterfeit and easy to test. But ... no more. Today's technologies allow to counterfeit gold bars, coins and any other shapes. Plating over worthless metals can be done, so accurately that the correct density of the composite will be preserved. How do you test for those coins? Cut them in half? Not feasible. Use some ultrasound reflectometer? Not feasible. So gold coins are the same fiat currency to a common man - issued by someone in quantities unknown and rising.
Buffett is saying that instead of hoarding metals he prefers to invest into things that people need. Food was already mentioned; but it is not a very convenient barter item; it perishes, it is not very expensive per unit of volume, it can be easily produced, it has variable demand. But there are items of value that will keep their value far longer than a stick of salami. For example, the factory that makes salami, or the farm where pigs are growing up, or the railroad that the cattle is transported on. Those are his coins. Perhaps not everyone is wealthy enough to use those, but that's what he does.
So what would be the perfect store of wealth today? I wish I knew; I'd be hoarding that. For the moment the best store of wealth I can think of is my own knowledge and skills. Not only it pays for my daily bread, it also ensures that whatever dark future we might find ourselves in my skills will be always in demand.
It is very difficult to find the perfect store of wealth because it has to depend upon the fact that whatever material you buy today will be in greater demand tomorrow, or it will be harder to obtain. However as the society develops every material good becomes cheaper and cheaper with every day. Think what would happen if robots are producing everything; what would be the price of that? Ideally, zero. Aluminum, when first produced, was more expensive than gold. That changed as soon as efficient production technologies were invented. Today aluminum is dirt cheap (being dirt to begin with :-)
There is of course the consideration of some calamity that the society may experience. Then your supplies of daily items become priceless. But calamities are rare, fortunately, so I can't seriously suggest buying tons of salt or beans. If the calamity doesn't come to pass then all that salt becomes cheaper and cheaper with every day. It may well be that the only material investment that doesn't become cheaper every other day is investment in production of goods. And even that has to be rotated as technologies change.
You will not be able to eat your gold when the revelation begins.
How much value would Warren’s firms have today, if they hadn’t been bailed out by the government?
For that matter who owns Moodys, the ratings firm that slapped AAA ratings on all that toxic sludge slung around the world far and wide?
Why did ole’ Warren change his tune on derivatives??
I guess the apple does fall pretty far from the tree, sometimes. I smell a rat. At least read the article linked above by Congressman Buffet, and keep his viewpoint in mind when listening to Warren.
I can’t think of the Bozo’s name, but he was high in Nixon’s administration when Nixon unhooked the dollar from gold and it immediately shot up to $40-$48 an ounce.
The Bozo claimed that the only value gold had was that it could be traded for dollars. I nearly wet myself when I heard that one.
Read what Warren’s father had to say about gold and human freedom. It’s linked in an earlier post.
Howard’s point, and it’s a good one, is that most people don’t make the connection between money and freedom - that they figure one is economic, the other is political. Note, though, the first thing dictators do is steal the people’s gold - Lenin, Stalin, Hitler, etc. Lenin said the surest way to overturn society is to debauch their currency.
Government currencies work, it’s just that we’re dependent on politicians for our survival. If you read Howard’s article, it’s very prescient and describes exactly what we’re facing. Just sayin’.
Especially the little ones that wear small copper jackets.
Yes. Food may, indeed, be handy for short-term trading but if your money tends to rot if it isn't eaten, it's a lousy way to store your savings.
Warren- what really has increasingly less worth, is the dollar, which is why purchasing 1 ounce of gold costs about 1,700 dollars. It’s inflation, caused most recently by your friend Barack Obama, and Ben Bernanke.
Spot on. I’m not bothering to invest in much else since it’s a gamble - and I’m not a gambler.
Buffet bought 130 million ounces of silver through one of his funds in 1998. He must have made a nice profit. I think it was something like 20% of all silver traded within a year.
This statement says it all in a nut shell. Gold has no intrinsic value, i.e. no utility. The irony is that most who are currently investing in gold are doing so in the hopes that it will survive a global melt down. Gold is worthless in the midst of chaos. I've had this argument with my father many times. He thinks because he has some physical gold stashed away that he will be able to “buy bread” when everything collapses. I ask him, “Do you think you'll just be able to waltz down to Safeway and fork over some gold for bread unscathed in that scenario? How will the starving hoards who have no gold react to that... old man?” He still can't answer that. I've pondered this “gold rush” for some time now and I can only concur with Buffet. Gold has no value. You can't eat it. You can't clothe yourself in it. You can't build with it. You can't defend yourself with it. You can't DO anything with it but look at it. When everything crashes so will gold. The only thing of value at that point will be tangible items of utility: food, land, implements, livestock, guns and ammo, etc. In the best case, gold can only preserve and unknown amount of your wealth AFTER a global melt down. And that's only IF you have it physically, you survive the period of the melt down, and it is once agreed upon as having some value there after. Good luck.
[gold is no more inherently valuable than paper currency is, ]
That is false. Paper and digital money can be made worthless by decree. Your gold is gold is gold.
Our country will be like Greece soon, if these morons running our country keep giving us these wonderful TRILLION dollar deficits.
The good news is we can print money. Greece cannot print Euros(bummer). Therefore we will never technically default.We will just print money,debase our currency, and cause hyperinflation.
Our clowns cannot print gold, so that is a good thing for this asset. Buffett must be trying to accumulate gold at lower prices with these statements.
“Do you not recognize that what happened around 1979 and 1980 looks very similar to what is happening today?”
I think the financial disaster that was expected around 1979 is finally happening today.
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