Warren Buffet Disses Gold - Then BUYS A GOLD COMPANY...

Discussion in 'Gold' started by VRS, Feb 26, 2012.

  1. malachii

    malachii Well-Known Member

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    Considering he's now one of the richest people in the world (top 3 I think) and he certainly wasn't back in the 70s I'd say pretty well - certainly better than anyone who has just bought gold over the years.

    malachii
     
  2. thatguy

    thatguy Active Member

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    Could of been richer if he had seen golds potential. But then every little shrimp feels pretty big on his own little pool... then the tide comes in
     
  3. malachii

    malachii Well-Known Member

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    "Could of been....." The gamblers catch cry! Only works in fishing circles and down the pub. Doesn't belong in investing or finance circles ever!!

    malachii
     
  4. BBQ

    BBQ Member

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    The public at large, some of which may do business with his organisation. Why does glossy feel-good advertising work for companies, even though they mostly sell toxic garbage? He is basically the public face of his business; it helps to come across as likeable regardless of your power level or influence. In fact, you get away with more that way.


    He doesn't have to be a politician to benefit - and profit - from a good image, or profit from lies or half-truths. It just means he can get away with more while the 'dumb' public at large hang on his every word. Why does he even need to speak to the public if he's so powerful, especially at his age?

    As for investing in Coke, only you can answer whether it's wrong or morally bankrupt; I would have issue personally, but they make lots of products, and maybe Coke is just one bad product in their (shitty) range to you, or maybe you don't care at all - which is fine if that's how you think; people just want to make money these days, and they put that before everything - and sometimes you can't blame them; the more and more that is stolen from us, the more desperate people get to "get by". Even when they have plenty, for many people it's just about making more.

    www.killercoke.org
     
  5. thatguy

    thatguy Active Member

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    Brodsky On Buffet On Gold

    http://www.zerohedge.com/news/brodsky-buffet-gold

     
  6. malachii

    malachii Well-Known Member

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    That is one of the worst articles I think I have seen for a long time. There is no evidence just shadowy maybes and personal opinions.

    Direct cut and paste from the article "Mr. Buffett may have known about this opportunity earlier and better than almost anyone else because his father, (Howard Buffett, US Congressman from Nebraska), was outspoken in aggressively supporting gold and a fixed exchange currency system. It would be counterproductive and beyond our area of study to try to understand what psychological impulse might compel Mr. Buffett to pursue and achieve lifelong financial success in a manner directly contrary to his father's views on the value of gold and paper currencies. So we can only guess whether his astounding success in consistently positioning a leveraged inflation portfolio has been the result of a sound pre-meditated strategy passed down from his father or has merely been very ironic."

    What a croc of $hit!!

    He doesn't like gold as a long term investment because it doesn't produce income. End of story!

    malachii
     
  7. thatguy

    thatguy Active Member

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  8. malachii

    malachii Well-Known Member

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    Some income will always do better against inflation than no income. As is frequently said on here - gold is not an investment it is a way to protect purchasing power. Even the frequently quoted Mike Maloney says that the ultimate investment is income producing real estate.

    Gold makes a very poor investment. It produces no income and only protects purchasing base during periods of higher inflation. Purchasing gold anytime from 1980 through to 2002 would have been a bad investment at best. It has only been a good "investment" since 2002 and then only if you don't compare it to others (eg R/E, shares etc) up until 2008 when "real" inflation and global concern increased to "out of the norm" levels.

    To argue that gold is an investment removes any benefit that the precious metal has, because you must compare it to taxable cashflow returns as well as capital growth of other assets and over the long term - it can never win out. Gold can only maintain purchasing power and by definition that can only be average. To succeed in gold you must eventually trade out of it (preferably when it "peaks" in purchasing power) for other assets (preferably at their "troughs") or otherwise the other assets will outstrip the purchasing power gold made during the inflation bubble. Look over history and you will see that when gold peaks other assets are down but then gold will be down for a couple of decades while the other assets peak. This is the whole attraction of gold and PMs - the counter-cyclical nature of them.

    malachii
     
  9. malachii

    malachii Well-Known Member

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    Seriously - that's the best they can do? Cherry pick a decade and use that as a long term argument. That decade is well known as the decade where Gold increased in value after 2 decades of zero (or negative) growth. That's like saying gold is a great investment because it showed a greater return than stocks druing the Great Depression. Under certain circumstances Gold will do better than other assets but equally other assets will do better than gold at other times (counter cyclical).

    .I also note that the chart does not include any dividends or payouts at anytime during that decade. Another inconsistency that is frequently ignored. Some other assets (including Wells) return cashflow which gold does not. You cant look at any comparison investment in selective isolation.

    Why not compare the two from 1980 until 2002? Because even though that is a longer timeframe - it would put major holes in their argument.

    Gold is not an investment. An income producing asset is.

    They (you) are selective comparing the equivalent of apples and Sard Wonder Soap.

    malachii
     
  10. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    If an income producing asset is returning less than the rate of inflation and gold is keeping track with inflation, is the income producing asset still an investment and gold not an investment?

    I'd consider both asset classes to be investments but whether they're good investments or not depends on the circumstances.

    (And just to say something on topic, Cookson Group is a metal recycler and manufacturer. The fact that they happen to recycle and manufacture precious metal products is only important in that there is demand for what they make so I don't really think Buffet is being hypocritical in buying them).
     
  11. thatguy

    thatguy Active Member

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    Yes but the point is there are time to be in gold and times to be in shares... even bank shares. The big question is, which is it now? And that answer is simple... I know it, Buffett knows it and the sheeple do not
     
  12. malachii

    malachii Well-Known Member

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    In the context of inflation protection Gold is not an asset (in my opinion only!!), rather a way to store wealth. The same as purchasing currencies. In some cases it can be an investment - but to others it can be a means of transaction or a way to protect from currency deflation/inflation. It depends on your intended outcome. Sorry I should have made that clearer.

    malachii
     
  13. malachii

    malachii Well-Known Member

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    Certainly - but to say that gold (or anything else for that matter) is a great investment full stop (which is what those articles were advocating) is pure bollocks.

    malachii
     
  14. thatguy

    thatguy Active Member

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    Gold has gone up and down in purchasing power and therefore is NOT a store of wealth. It can be a way of loosing wealth and it can be a way of gaining wealth. If you invested in 1980 and sold and sold in the year 2000 you certainly did not preserve your wealth even though you invested in gold AND if you invested in the year 2000 and sold in 2012 you certainly did not preserve your wealth (you increased it) even though you invested in gold.
     
  15. hiho

    hiho Active Member Silver Stacker

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    two things

    The gold market is manipulated so its difficult to measure its true value and secondly we measure gold in terms of fiat which itself is not backed by anything except a promise. SO really I dont think its possible to say if your preserving your wealth or not, but over time gold has proven to be a great store of wealth for many civiallisations, hence the reference to roman suit of armour and an armani suit each costing an ounce of gold at the time.
     
  16. chimpanchu

    chimpanchu New Member

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    I would as far as to say that Buffet is a liar. My guess is he's working for "the other side", those banksters who are manipulating PM price down and discouraging the masses to get into PM.

    Just look at him, how can a billionaire like him NOT part of the club?
     
  17. Silverthorn

    Silverthorn Well-Known Member

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    what ifs are wonderful things. what if you didn't buy the mania of a short period in 1980 and instead bought a few ounces of gold every year since then. You might have done better elsewhere along the way but I don't think you be too worried about it nowadays.
     
  18. Dogmatix

    Dogmatix Active Member

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  19. Black_Sun

    Black_Sun New Member

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    No wonder Buffet hates gold! The price of a share of Berkshire Hathaway class A stock has collapsed, when measured in ounces of gold. Makes sense that he hates it. Here's an article from Dave's "The Golden Truth". http://truthingold.blogspot.com.au/

    Monday, February 27, 2012

    The Curious Warren Buffet

    Warren Buffet is so 1980's. His aura peaked in the 1990's. He should've sold out and moved to the South Pacific. By the time he dies, he will have made himself look like a complete jack-ass, especially with regard to his comments about gold.
    Before I start in on my commentary, I wanted to post a little update to the housing data that has been released over the past few days. I think these numbers further support claim that the housing data is misleadingly manipulated and fraudulent and that the housing market is headed a lot lower. New home sales were reported on Friday for the month of January to be a better-than-expected "seasonally adjusted" 321,000 annualized rate. Here's the real data: Only 22,000 new homes were contracted for in January; in total, 4,000 new home sales actually closed; 6,000 were vacant lots - 12,000 have not started in construction. Now how does the new home sales report look? You can draw your own conclusions.

    For me, Warren Buffet epitomizes everything about myth vs. reality and the power of the media's ability to influence the perceptions of large masses of the population. The mainstream public and it's penchant for instant gratification will typically, at best, catch only brief snippets of real news, preferring to feed any thirst for news and gossip with "reality tv" and shows like Jersey Shore and The View. What better way to shape perception than to flash ads with images of a smiling Warren Buffet sipping Cherry Coke? The myth that, despite his billions, he lives in the same small red brick house in Omaha, Nebraska with his wife is just that - pure myth. He hasn't lived in that house or with his wife for many years. He has beautiful homes and mistresses all over the country in places where the very wealthy "quietly" congregate, like Sun Valley and Santa Fe. I remember back in the mid-1990's reading an article that outlined the man vs. myth about Buffet which detailed how his simple "wrinkled, cheap sack suit" look was in truth very expensive Italian suits tailored for that look in order to give Buffet the Willy Loman veneer. It's also pure bullshit that he's going to put all of his wealth in a charitable trust when he dies rather than pass it on to his heirs.

    There have been several recent examples that have slipped out of the "do as I say, not as I do" reality of Warren Buffet. A few years ago he wrote a piece that famously referred to derivatives as being financial weapons of mass destruction and said that he avoided them in his course of business. But then not too long after that one of Berkshire Hathaway's large insurance companies, General Re, revealed that it was sitting on huge derivatives losses. Executives at the company subsequent to that were prosecuted for accounting and business fraud. In the latest reported quarter Berkshire's earnings were directly affected by big derivatives losses. And how about Buffet talking big about how the very wealthy should pay more taxes, and yet Buffet's personal marginal tax rate is significantly lower than that of the secretaries who work for him. To paraphrase NJ Governor Christie, Buffet should either shut the f_ _ k up or write the Government a big check.

    I am going into all of this because I want to underscore the true lack of credibility Buffet has when he uses his annual shareholder meeting, in part, as a forum to make derogatorily incorrect statements about the investment value of gold. How many of you reading this knew that Warren Buffet's father was a 4-term Congressman from Nebraska who championed the use of gold as a currency anchor?

    Buffet spent - dare I say "wasted?" - a considerable amount of space in his widely read shareholder letter explaining why gold is not a good investment. You can see his thoughts on the matter HERE (http://ftalphaville.ft.com/blog/2012/02/26/897141/buffett-stamps-on-the-gold-bugs-again/).

    In one sense, on a superficial level (of course, everything about Buffet's public display is superficial), his thoughts make perfect sense. I'm not going to "invest" in gold to produce something useful in the same manner that I would invest in farmland or invest in a plant to produce widgets.

    But "investing," in that context and meaning of the term, is not why you buy gold. In fact, you don't really buy gold. When you acquire a holding in physical gold that you control, you are really doing no more than exchanging fiat dollars - which are used as a currency - for gold, which is the world's oldest currency. It just so happens that over the last 10 years the number of dollars it takes to exchange into an ounce of gold has increased. Why? Because fiat dollars are rapidly being devalued by catastrophic public policy AND the dollar appreciation of gold - gold as currency - is not going up in value the way a successful investment might but instead is merely reflecting the fact that the market demands more paper fiat dollars in order to exchange gold for those fiat dollars.

    Here's an interesting way to look at it. In 1971, right before Nixon closed the gold window and took the $35 fixing off of the price of gold, oil was roughly $3/barrel and an ounce of gold would buy 11 barrels of oil. Today, with gold at $1750 and West Texas oil around $109, an ounce of gold will buy 16 barrels of oil. If the world was on a currency exchange standard that was based just on oil and gold, does it look like the price of gold is in some kind of investment bubble, as Buffet would have you believe? That example shows the remarkable stability of gold as a currency versus the remarkable depreciation of fiat dollars, as it takes slightly less gold in 2012 to buy a barrel of oil than it did in 1971 BUT it takes 36 times more fiat dollars to buy the same damn barrel. Which would you rather hold in your pocket to use as a currency?

    But perhaps this is why Buffet is so unhappy with gold:

    [​IMG]

    This chart shows the number of ounces of gold it takes to buy 1 share of Buffet's Berkshire Hathaway class A stock. In 1999, at the peak of the internet bubble (which was fueled by Greenspan's money printing/dollar devaluation), it took 280 ounces of gold to buy one class A share. Currently it takes just under 70 ounces of gold. A picture says 1000 words, huh? In less that 1000 words, and in summation of the chart, a market participant would be about 400% wealthier if they had exchanged their investible fiat dollars for gold in 1999 and simply held it until now than if they had invested in Warren Buffet. No wonder he's coming out of his Depends over gold.

    As you can see, gold is not an investment at all. It's a currency that embodies relative purchasing power in the same way that the U.S. dollar or the euro contain relative purchasing power against each other and against the goods and services these currencies are used to procure. The relative purchasing power of each global paper fiat currency pretty much fluctuates on daily basis. But it is a fact that the relative purchasing power of each currency against gold has been rapidly declining over the past 11 years.

    So gold isn't even an investment, contrary to the notion of gold which Buffet absurdly attempts to explain. Gold is a nothing more than something that possesses decorative value as jewelry, but more significantly has functioned for over 5,000 years as a remarkably stable currency for the purposes of commerce. Looked at properly, Buffet's long-winded written pontification on why gold is not a good investment seems absolutely silly.


    Posted by Dave in Denver at 5:32 PM 3 comments Links to this post
     
  20. Water&Food

    Water&Food New Member

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    Away from this hell bent place
    Just to get you the 'investor'/hedger to take notice wanting a piece of the action. The more 'raid' stories that come out, the more it fuels you the consumer (i.e. end user) wanting to 'buy' more (re: precious metals).
    Source: Big Bird from Sesame Street.
    [​IMG]

    Notice the similarities?
    They are both wearing gloves to avoid leaving finger prints, and feathers on their head acting as a hidden Echelon Antenna.
    .
    .
     

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