Monday, May 7, 2012

Buffett: "Caves Might be a Better Investment than Gold"

CNBC reports:
After repeating his regular argument that gold is an unproductive asset that will be outperformed by stocks, or even farmland, over the long run, [Warren] Buffett does acknowledge that gold fans are "right" to be afraid of paper money.They have a "correct basic premise" that paper money will be worth less in coming years.
This is truly a bizarre screed  by Buffett. Owning gold as part of cash reserves does make a lot of sense if people should be afraid of paper money.

As I have pointed out before, gold is an alternative to cash and not necessarily an "investment" alternative, although, as the paper money crisis intensifies, the purchasing power of gold is likely to climb.

Buffett then got even more crazed. CNBC again:
He disagrees with them on the strategy of buying gold to avoid that decline in value.  "Where they run from that, and they should run from it, is, in my view, where they make their mistake."
This simply makes no sense, if the dollar is going to collapse, gold is the place to be. Buffett went on, according to CNBC:
 Buffett also notes that many gold buyers are emotional about the metal, and want other people to agree with them since more buying boosts its price. 
"They want everybody to be so scared they run to a cave with gold.  Caves might be a better investment than gold.  At least they're not producing new caves all the time."
Gold buyers emotional? To buy gold is the most rational thing to do if you understand how central banks destroy paper money overtime.

As for his caves comment, it tells you a lot about elitist Buffett. He is one nasty dude. He admits gold will perform well against paper currencies yet disses those who buy gold.

And as for those running into caves, you can bet with comfort that Buffett and his anti-gold sidekick, Charlie Munger, both have billionaire caves, that is if Buffett isn't cleared for entry, by his buddy Obama, into the governments nuclear proof cave in Omaha.

Rumors are already circulating that on 9-11, when then-President George Bush was taken to the underground base in Omaha, he ran into Buffett there.


  1. "Gold buyers emotional?"

    Exactly. And in any case, why should he care *what* people are buying or what happens WRT the price of PMs? Is it just because it drives of the price if something he wants?


  2. It's tough when you're a long term investor of someone else's money and you measure your performance to a piece of metal that sits in your closet.

    I don't think Buffet should be a gold investor though. If gold is a "cash alternative" then why do I need Berkshire Hathaway to hold on to cash for me? As Berkshire investor i'd ask that the money be invested in revenue producing assets or that the cash (alternative or not) be returned to me in either dividend or share repurchases.

  3. "At least they're not producing new caves all the time" He completely forgets that if governments and the central banks keep producing currency all of time, gold will be a valid source for storing wealth in an anonymous, portable, fungible vehicle.

    In an era where surveillance is almost total, gold possession continues to provide some measure of privacy not easily found in other goods.

  4. I'd rather live in a cave than hang out in the doghouse with the likes of David Sokol:

  5. Stratcom in Omaha has secure facilities, but they are not hardened against a nuclear strike.

  6. In Buffett we clearly see the that not all people "age like a fine wine"...some age like a wine with a compromised cork.

  7. Wait, so the elite were running into bunkers on 9/11? What, for show? To increase the realism of their illusion? They couldn't possibly be scared of their own, horrid prank, could they?

  8. Buffet thinks Gold is wrong purely because he has hopes on what is coming in place of the dollar. I'm pretty sure he'll be one of the first to know about new currency plans the question is whether or not he's blinded by his own perceived greatness to contend that he may be wrong and the plan may not come through. What would be smarter is if he isn't wrong and dollar goes out euro style.

  9. It seems the elites and their ranks are becoming more and more concerned about what the rest of us mere mundanes choose to invest in (and understandably so). The ideas of fiat paper money, central banking, etc., are losing their power.

    Time for your med's Mr. Buffett....