Interesting comments by Warren Buffett on gold in the article below. I suspect he’s not saying gold can go up, but rather should gold go sideways for ten years, equities are dynamic, growing or paying dividends while gold is fully valued and more a trading vehicle… I went back, did some reading of comments and editorials from the 2001 period, and found that Buffett bought a significant amount of silver in 1998 – $500 million worth. It seems Buffett does not like gold because it’s a storehouse of value and therefore it’s not consumed – it never shrinks. Much of what has been mined through time is still around. Silver, on the other hand, is consumed in products, especially technology products, so there is no stored silver the way gold is stored. Therefore, by Buffett’s thinking, silver has a scarcity value that gold does not have. An interesting perspective.
Tom – LOTM
Warren Buffett: Forget gold, buy stocks
By Ben Stein, contributor October 19, 2010: 2:24 PM ET
FORTUNE — The first thing I notice on my most recent visit with Warren E. Buffett, who recently turned 80, is how incredible he looks. He would look terrific for 50; for 80, he looks like Charles Atlas. He’s modest about it, as he is about everything. “It all works great,” he says. “The eyes, the hearing — everything works great … which it will until it all falls apart.”
The second thing you notice is that he is so smart it curls your hair.
My first question, as I sit there on the couch in his office, is: “What about gold? Is this a classic bubble or what?”
“Look,” he says, with his usual confident laugh. “You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all — not some — all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?”
Okay, so gold is not a screaming buy to Buffett. What should a typical upper-middle-class person in the U.S. buy to prepare for retirement?
“Equities,” Buffett answers without a moment’s hesitation.