The ‘Oracle of Omaha’ Warren Buffet often goes to great lengths to explain why he despises the barbarous relic. The sage doesn’t really care about the yellow metal, whatever the price. 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 $6 trillion. For that same amount of money, you could own other assets with far greater productive earning power, including:
*All the farmland in the US, about 1 billion acres, which is worth $2.5 trillion.
*10 Apple’s (AAPL), the largest capitalized company in the world.
Instead of producing any income or dividends, gold just sits there and shines, making you feel like King Midas.
I don’t know. With the stock market at an all time high, and oil trading at $80/barrel, 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/ounce.
But we may have to visit $1,000 on the way there first.