The gold price
Warren Buffett Is Wrong on Gold - 12 November 2010
"Extreme value" still to be found in Gold Bullion, whatever Warren Buffett says...
FOR ALL THE gold that's ever been mined, you could buy every acre of farmland in the United States and 10 companies the size of ExxonMobil, writes Dan Ferris, editor of Extreme Value, in Steve Sjuggerud's Daily Wealth.
And you'd still have $1 trillion left over.
Would you rather have a shiny cube of metal, 67 feet on a side...or trillions of dollars of assets that actually produce wealth?
That's essentially what Warren Buffett, the world's most successful and famous investor, wondered in a recent interview with Fortune.
Buffett doesn't like gold because it's got no intrinsic value.
In a way, he's right. Most of the gold in the world just sits around collecting dust. Very little of it is used for industrial purposes. With the price near $1400 an ounce, industrial gold users will likely use as little of the stuff as possible.
But here's what Warren Buffett – the Sage of Omaha – is not seeing. A year ago, in an Extreme Value update, I wrote:
The Fed pretends it's a sophisticated operation with an array of complex, surgical-grade financial tools. But it's really an imbecile with a hammer. The hammer is money-printing, and every economic problem is a nail.
So you should always own gold.
I'm not saying gold and Silver Bullion are cheap, although – relative to dollars – I believe they are. I'm saying the world's most well-known, well-liked, and widely held standard of value (the US Dollar) is a poor standard of value. In fact, it's a phony standard of value.
The Dollar is easily created – at the touch of a button nowadays. Does that make sense to you? Have you ever in your life created anything of value without putting effort into it?
Value isn't created easily, on a whim. Value is created by employing capital productively… the way gold and silver are made. You should own gold and silver, because they're the ultimate standard of value.
Gold is the asset that can't be inflated, yields nothing, and is no one's liability. It's real wealth...pure wealth...the most enduring form of wealth in history.
Let's be clear. I'm not talking about exchange-traded funds, precious metals mutual funds, Gold Mining stocks, silver mining stocks, gold- or silver-indexed preferreds, or paper certificates of any kind. They have their place, but that's not what I want you to buy.
I'm talking about physical gold, in the form of Gold Bullion coins. I'm not talking about speculating on the price of the commodity. I'm talking about exiting paper dollars and putting your savings in real money.
For gold bullion coins, I buy and recommend Krugerrands. The premiums are usually low. There's plenty of supply. And it's the most widely circulated Gold Bullion coin in the world. For silver bullion, I buy whatever one-ounce, 0.999 fine silver rounds my coin dealer suggests. I've been going to the same guy for years. He knows me when I come in, and he knows I like the coins with low premiums.
I've occasionally recommended putting 5% of your investable assets in gold bullion. I'm raising that to 10% and recommending both gold and silver bullion. Buy it. Hide it somewhere you'll always have access. Buy physical gold and silver to preserve the purchasing power of the wealth you've created. Do it to protect yourself from the Fed's war against the dollar. Do it because gold is the ultimate standard of value.
The only reason most value investors don't like gold is that Warren Buffett doesn't like gold. And believe me, I'm only human. I've fallen under the spell of a big name money manager a time or two. But if Buffett and his followers want me to believe that paper makes better money than gold, that paper keeps mischievous men from degrading my wealth better than gold, that gold isn't a more enduring standard of value than anything else that's ever been tried...they're going to have to keep talking, because I'm not anywhere near convinced.
Why is the safest gold also the cheapest? Save a further 10% compared with Krugerrands by using world No.1 online, BullionVault, today...
FOR ALL THE gold that's ever been mined, you could buy every acre of farmland in the United States and 10 companies the size of ExxonMobil, writes Dan Ferris, editor of Extreme Value, in Steve Sjuggerud's Daily Wealth.
And you'd still have $1 trillion left over.
Would you rather have a shiny cube of metal, 67 feet on a side...or trillions of dollars of assets that actually produce wealth?
That's essentially what Warren Buffett, the world's most successful and famous investor, wondered in a recent interview with Fortune.
Buffett doesn't like gold because it's got no intrinsic value.
In a way, he's right. Most of the gold in the world just sits around collecting dust. Very little of it is used for industrial purposes. With the price near $1400 an ounce, industrial gold users will likely use as little of the stuff as possible.
But here's what Warren Buffett – the Sage of Omaha – is not seeing. A year ago, in an Extreme Value update, I wrote:
"Never forget what's at the bottom of the banking system: the Federal Reserve as lender of last resort, with its unique ability to print as much money as it wants in order to have enough to lend into the banking system."The money-printing I worried about is well underway...and it'll continue until at least next summer. Last week, the Federal Reserve issued a press release in which it said it would buy $75 billion of Treasury bills per month until June 2011. That's in addition to another $35 billion of mortgage bonds to replace maturing mortgage bonds.
The Fed pretends it's a sophisticated operation with an array of complex, surgical-grade financial tools. But it's really an imbecile with a hammer. The hammer is money-printing, and every economic problem is a nail.
So you should always own gold.
I'm not saying gold and Silver Bullion are cheap, although – relative to dollars – I believe they are. I'm saying the world's most well-known, well-liked, and widely held standard of value (the US Dollar) is a poor standard of value. In fact, it's a phony standard of value.
The Dollar is easily created – at the touch of a button nowadays. Does that make sense to you? Have you ever in your life created anything of value without putting effort into it?
Value isn't created easily, on a whim. Value is created by employing capital productively… the way gold and silver are made. You should own gold and silver, because they're the ultimate standard of value.
Gold is the asset that can't be inflated, yields nothing, and is no one's liability. It's real wealth...pure wealth...the most enduring form of wealth in history.
Let's be clear. I'm not talking about exchange-traded funds, precious metals mutual funds, Gold Mining stocks, silver mining stocks, gold- or silver-indexed preferreds, or paper certificates of any kind. They have their place, but that's not what I want you to buy.
I'm talking about physical gold, in the form of Gold Bullion coins. I'm not talking about speculating on the price of the commodity. I'm talking about exiting paper dollars and putting your savings in real money.
For gold bullion coins, I buy and recommend Krugerrands. The premiums are usually low. There's plenty of supply. And it's the most widely circulated Gold Bullion coin in the world. For silver bullion, I buy whatever one-ounce, 0.999 fine silver rounds my coin dealer suggests. I've been going to the same guy for years. He knows me when I come in, and he knows I like the coins with low premiums.
I've occasionally recommended putting 5% of your investable assets in gold bullion. I'm raising that to 10% and recommending both gold and silver bullion. Buy it. Hide it somewhere you'll always have access. Buy physical gold and silver to preserve the purchasing power of the wealth you've created. Do it to protect yourself from the Fed's war against the dollar. Do it because gold is the ultimate standard of value.
The only reason most value investors don't like gold is that Warren Buffett doesn't like gold. And believe me, I'm only human. I've fallen under the spell of a big name money manager a time or two. But if Buffett and his followers want me to believe that paper makes better money than gold, that paper keeps mischievous men from degrading my wealth better than gold, that gold isn't a more enduring standard of value than anything else that's ever been tried...they're going to have to keep talking, because I'm not anywhere near convinced.
Why is the safest gold also the cheapest? Save a further 10% compared with Krugerrands by using world No.1 online, BullionVault, today...
Steve Sjuggerud, 12 Nov '10
Former stock-broker, mutual-fund vice-president and hedge-fund advisor Dr. Steve Sjuggerud is the founder and editor of True Wealth. Launched in 2001 and now one of America's best-followed newsletters for private investors, True Wealth also provides free analysis and ideas in the Daily Wealth email service.
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