Gold - view from Warren Buffett
I paraphrased here : "if you take all the gold that has been mined and sell them at current price, you can buy all the farmland in US, plus 10 Exxon Mobil, and still have $1 trillion change. Which one has better long term value?"
http://www.gurufocus.com/news.php?id=109871
If the gold standard was not abandoned and replaced by paper money the world GDP would not have grown to this size today.There isn't enough gold to facilitate trade and commerce. The gold standard was too rigid.
ReplyDeleteJohn Keynes the money theorist was right when he expounded the quantity theory of money in 1936.
If you had gold then and kept till today the return is very miserable... Nothing beats equities, the companies their stocks.
On the other hand, Silver potentially may be depleted in another decade or so.
ReplyDeletePart 1 http://www.youtube.com/watch?v=zkRNe...eature=related
Part 2 http://www.youtube.com/watch?v=j8ecn...eature=related
All, well almost all, the gold ever mined remains in vault or in the form of jewellery, coinage or decors (remember gold tap found in a certain charitable org *wink*).
Silver on the other hand, are being consumed at an exponential rate in electronics, batteries, solar energy and medical industries.
And its cheaper than gold by more than 50 times, currently.
Just my personal view. Not an inducement to buy or invest.
DYODD (Do Your Own Due Diligence) :-)
If you consider buying at its lowest in 1980 which was $612 and 30 years later it is valued at $1383, what is the return? The return is only 2.755% hardly worth waiting for 30 years , right?
ReplyDeleteGold is a rage now and often time investors turn to when the dollar is losing its glow , With QE2 and 3 in good prospect of implementation by FED the panic to seek safe haven in hard asset like gold. But gold is speculative and short term and because of these characteristics it makes a dangerous investment especailly for ordinary investors.
Be careful... investing in gold is not for you.. don't be enticed into it.
well, lets not forget warren isn't quite a guru when it comes to commodities. afterall, he sold silver at $8 per ounce and it has since risen to above $20. gold certainly has less industrial application compared to silver, but it is also more expensive to mine. the current fixation with gold isn't hard to understand if we believe that interest rate will remain low for the forseeable future and inflationary pressure likely to escalate as a result of quantitative easing. Until the US economy finds a way to start its engine without having to resort to printing more $$$, I see now reason why gold won't go any higher. Do not forget, gold being priced in US$ means it is cheaper in other currencies even if absolute price stays constant!
ReplyDeleteThe process of "taking" (buying) all the gold that has been mined would drastically increase the current price. As such, the formula in that statement has a glitch.
ReplyDelete