The “Oracle of Omaha” expounded at length today on why he despises the barbarous relic. The sage doesn’t really care if the yellow metal hit an all-time high today of $1,440. He sees it primarily as a bet on fear. If investors are more afraid in a year than they are today, then you make money. If they aren’t, then you lose money. If you took all the gold in the world, it would form a cube 67 feet on a side, worth $7 trillion. For that same amount of money, you could own other assets with far greater productive power, including:
*All the farmland in the US, about 1 billion acres, which is worth $2.5 trillion.
*Seven Exxon Mobil’s (XOM), the largest capitalized company in the US.
*You would still have $1 trillion in walking around money left over.
Instead of producing any income or dividends, gold just sits there and shines, letting you feel like you are King Midas.
I don’t know. With the stock market peaking around here, and oil trading at $115/barrel in Europe, a bet on fear looks pretty good to me right now. I’m still sticking with my long term forecast of the old inflation adjusted high of $2,300.