Warren Buffett On Gold

On the other hand, if that 4% return does not include inflation or taxes on the gain for that savings account, maybe the metals weren't all that bad even then. I would probably look at those decades as terrific long-term buying opportunities!



I will agree with this just as soon as the US government becomes fiscally responsible via spending less than it earns, the Fed ceases excessive money printing, and the markets are no longer being manipulated for the benefit of the very few, most of whom are already billionaires. PMs are one of the very few things that we can buy that actually give us a bit of power to oppose all these paper games that are being played.



Amen to that, Bro! As a reasonably intelligent human being, I am getting really tired of the lies that are being told about inflation, unemployment, and world politics. I'm a big boy now. I CAN handle the truth, given the chance to do so, and I don't need to be spoon-fed a bunch of pablum that makes my tummy feel good when things are not so good. If and when the government ever stops doing this, they might... just might... earn back the respect that they once had when they tended to treat us all like adults instead of like the proverbial red-headed step-kids. Until then, I will keep on stackin'.



Yes, that would be a substantial amount to put into PMs. Personally, I can do that but simply have not so far. My real goal is to have about 10-15% invested in PMs at some point. That will be closer to 3x that $50k number. Obviously, to reach that amount and not have a foot-locker full of the stuff, a good part of it will have to be in gold. Not that I mind that a bit.



It is but doing so is still a lot easier than some of the real estate holdings that some people have. Owning real estate in more than one state is especially troublesome because all 50 states have differing laws regarding the transfer of real property. It can get complicated rather quickly.



One could probably say that about ANY investment, MK. Who knows what the stock of XYZ Corp. will be worth in 5 years? Is that so different? What we DO know is that the dollar is being made cheaper via over-printing as we speak. This is not speculation because we KNOW that this is happening. We are also pretty sure that it is not happening by accident but by plan. OK, fine. So fiat money is getting cheaper all the time. Knowing that, we can deal with it. Buying something that does not become cheaper by plan seems good to me and PMs are one asset that fills that bill rather nicely.



Is that why ALL central banks hold gold and have been adding large amounts to their holdings over the past few years? I figure that if it is good enough for them, it ought to be good enough for me too. There are any number of people who would say that holding a lot of fiat currency is pretty irrational too.



Excellent comment, IMHO.



Or in the out-house!

As to coins, I agree there too. All PM coins and even copper pennies and nickels should retain at least their face value, no matter what happens.



Bernanke has WAY over-done the interest rate cutting, IMHO. There is no reason for the rates to be this low for this long as far as the economy goes. No, I am afraid that he has done this because if he did not, the US government could be instantly insolvent and unable to paper over its financial problems fast enough to do any good. With an annual deficit of more than a trillion dollars every year at near zero interest rates, one truly shudders to consider what it would be at, say, 5%. Well, for one thing, the amount paid out in interest alone would be about 20x larger which would consume ALL tax receipts about 4x over!



Yes, he has. In fact, his record with PMs is quite abysmal. Remember the 130 million ounces of silver that he bought and then sold at a loss? Had he held on to that for another year or two, it would have produced some VERY fat profits. I'm sure that would have changed his mind on the value of PMs considerably.



I would agree with that but wonder whether Buffer EVER speaks only for himself. In his position as CEO of Berkshire Hathaway, it is difficult for him to speak in any other capacity. He IS the Oracle of Omaha and when he speaks, people listen because of that. While his value stock investing ability is unquestionably terrific, his politics leave a lot to be desired, IMHO.

Derivatives are theft by deception. Take the commissions and the heck with investors many many times

I clicked on this link thinking I'd find an engaging discussion on WB's published thoughts.

What's missing is what Warren Buffet actually said about gold. I don't know the rules about quoting others on this site, so I'll give just a snippet:




That seems perfectly reasonable to me!

It isn't hard to find Buffett's views--they're on the Berkshire website. The pertinent information is on pages 17-19 of the 2011 letter. I bet >90% of Buffett bashers haven't read it.

Twenty-twenty hindsight is always a wonderful thing. As I said before, had I bought gold in 1980, it would have been a horrible investment had I wanted to sell anytime in the next twenty years (especially had I bought during the height of its last spike). Had I bought gold in 2005, on the other hand, it would have been a terrific investment if I wanted to sell it just 6 years later.

You can either look at the current upsurge as an aberration or as the prevailing trend. History would indicate it is just an aberration and that prices will either fall back down eventually or else plateau at a new high -- neither of which bodes well for a long-term investment.

That may not be the case, of course, but in terms of risks and probabilities, I think Warren Buffet is correct that gold just isn't the best vehicle for long-term investment. It's great for other reasons (hedge against inflation, preparing for an end-of-the-world-as-we-know-it scenario, etc.) Plus, it sure does look nice!

Having said all that, I do think that a better argument could be made for silver as a viable long-term investment vehicle. Despite the fact that it has historically performed the same as gold (flat for many years followed by a huge upwards surge), there are other factors that might contribute to a continual increase in value for the foreseeable future. Factors such as increased difficulty of production and increased industrial uses, for example. Which is why, of course, the only gold I own are some coins for my 7070 album whereas I continue to buy silver whenever I can. I could be completely wrong about silver, but at least my initial investment won't break the bank if it doesn't go up in value.

Yes and hindsight is 20 20. I like PM since for the most part of history they have always had and held value and will do so in the future. Anything paper can be gone in an instant.

Interesting, since it was Warren Buffet who once called derivatives "weapons of financial mass destruction". One would think that with that kind of viewpoint, he would be the last person to buy into the derivative scam.



Yeah, I thought that it was kind of a "pile" too.



Isn't it, though? And so many of us just happen to have it!



Is there a "best" vehicle for long-term investment? If there is, it is likely to change from time to time which pretty much obviates the "long" portion of that discussion.



I agree, Barry. The fundamentals for silver look VERY strong these days. Looking at the production and consumption rates and the fact that only silver can do what it does makes it a very useful and therefore valuable commodity. Unlike gold it is actually consumed by industry and very little of it is recycled due to the level of dispersion that occurs. Some is recycled, of course, but much more simply ends up scattered in various landfills as the machinery that it is in becomes obsolete and discarded.



Could be but that seems VERY unlikely to me. I agree with your reasons for owning silver and have many of the same ones as my own reasons for buying and holding silver. It is virtually a win-win situation for long-term silver owners. Either it will go up significantly in price or it will serve as a storage of value that inflating fiat currency cannot match. Either way, it is beneficial to own some silver. Not that I would recommend going "all in" with any investment but having 10% or so of one's money in gold and silver would likely be very good over time.



Not necessarily, MK. I learn a lot via hearing what others have to say and what they are doing. Not that they are my only source of info but they are one of the better ones. Even if I do not learn something about a particular subject, I can still learn a lot about a particular person from what they say and how they say it.



Which is precisely the point of being diversified.



Agreed. I invest in "the big 5" and have for many years. These are: 1) stocks; 2) bonds; 3) cash; 4) real estate; and 5) commodities. PMs are commodities and they occupy part of what I own in that portion of my holdings. Owning 10% of so of my wealth in gold and silver would be just about perfect, IMHO. Owning much more or much less than that would not be... at least for me. After 35 years of investing, this approach has withstood the test of time, even during the worst of times for investors.

The other thing that has worked well for me is having the iron discipline necessary to create a good investing plan, updating it annually, and not selling when the market falls. In most cases, when the market falls, I am a buyer and use my cash holdings to increase my other holdings. When the market rises, I cash in some of those holdings and rebuild the cash reserve for the next drop in the market. Over time, this can result in some pretty good returns.

What Warren Buffett says in public and what he actually does are two completely different things. It's all about manipulation.