From this morning's Ed Steer (of Casey Research) email: "And here's another neat chart...this one courtesy of reader William Gebhardt. This is a graph that Warren Buffett should see...and he certainly doesn't want his stockholders to know about. It's too bad that Warren is now a bought and paid for shill of the dark side of The Force. His dad would disown him if he knew how badly his son had sold out to the very evil he himself fought against while he was alive." I like the Star Wars analogy
You guys got it all wrong. Uncle Warren prefers silver... Google up what Martin Armstrong says about him.
Don't know why you posted this picture of some strange old man. Post a picture of Warren, so that everyone knows who we are talking about.
Just received this in this morning's email. It supports some of the points made earlier in this thread. Berkshire, Gold, and the Status Quo By A Casey Research Correspondent (A correspondent's letter to his aunt, who is heavily invested in Berkshire Hathway, lightly edited for spelling and grammar) You still have a good-sized position in Berkshire so let's take a look at it. Buffett and Munger have said a lot of smart things over the years. It was in 2007 - during the financial crisis - that their words started to conflict with their actions. A Google search using "Buffet [sic] hypocrisy" shows about 5,750,000 results [Ed. Note: Using the correct spelling of the name yields roughly 2,000,000 results.]. Of course I'm referring to the fact that they would have lost some or even all of their fortunes were it not for the bank bailouts implemented by the US government. I suppose the intention was to protect Berkshire Hathaway and country (in that order). I have no ill will against these guys, other than the fact that they wrap themselves in the blanket of moral superiority. What concerns me most is that I have, over the course of my own investing career, put money with people who I felt would die richer than they are today; in short riding on their coattails. Their actions over the last couple of years have confirmed my hunch; expediency rules their actions. But it also highlights their vulnerability to systemic risk. Nevertheless, Berkshire continues to prosper. And it will probably continue to do so insofar as the status quo is kept in place. The status quo: the idea that the world will be the same tomorrow as it is today. This is something to ponder. To my mind, there is every indication that the world is changing dramatically, and those who are the status quo are doing everything within their power to avoid this change. Buffett and Munger are the biggest cheerleaders! Make no mistake. What Buffett and Munger are talking about here is government control - the use of force to keep things the way they are for their benefit (AND YOUR OWN GOOD)! Buffett even wrote a thank-you praising this. Buffett suggests that without the bailouts, Berkshire would have failed. He stated this in his NYT op-ed piece "pretty good for government work." (Why did he thank the government? Wouldn't it have been more appropriate to thank the US taxpayers?) To my mind, Munger also understands that maintaining the status quo for Berkshire is paramount. On September 14, 2010 at the University of Michigan, Munger said: You should thank God [for the bank bailouts] ... Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies.... Hit the economy with enough misery and enough disruption, destroy the currency, and God knows what happens.... Germany was unable to stabilize its financial system in the 1920s and we ended up with Adolf Hitler. It appears that the status quo is certainly on Munger's mind. Bailouts are great - for him anyway. Yet he neglects to mention a few things. A collapse could have purged the system of bad debts, simultaneously eradicating the system of corruption, which is the big banks, and hence set the stage for vastly improved economic conditions. Further, he forgets to mention that the outstanding debts placed on Germany's shoulders by the treaty of Versailles afforded them no chance of economic recovery within even one generation. Or that there was a major currency war being played out even after bombs stopped dropping. A corollary to very same situations of all Western countries and Japan today. Reporter Becky Quick recently tweeted about Munger in a conversation he had among shareholders: If u think country u live in is going to kill u then gold is a good buy. Otherwise BRK shares are better. Perhaps there is great wisdom in these words. Given that gold was $285/oz. ten years ago and is $1,600/oz. today, using Munger's logic I can surmise that there are a lot more people in the world who think that their country is out to get them! The Defense Authorization bill recently signed by Obama which gives unlimited power to the president and US military personnel to arrest, imprison, and kill anyone they want - even on US soil - without trial is certainly a bullish argument for gold; again, at least as Munger sees it. Where's Charlie's complaint about this Hitleresque legislation? Aren't we in the midst of another major currency war today? Isn't this the kind of stuff Hitler did to consolidate power in 1934? Is he arguing for or against buying gold? Perhaps he doesn't know but is astoundingly clever to distill our current investment climate into one sage statement. Let's look at it another way. Also inherent in Munger's statement is that he judges the value of Berkshire Hathaway against gold! Since Nixon closed the gold window in the early '70s, cutting the dollar's link to the metal, we have been using dollars as our ruler. I don't want to get into the details of monetary history, but suffice it to say that many of us alive today have known nothing else. For this very brief period of history we have not used gold as our measure. I suspect that the last 10 years have been a gradual realization of this and that we still have another decade to go before everyone will routinely use gold weight (or a currency convertible into gold) as the measure of value. Is Charlie already calculating the value of Berkshire shares in term of gold rather than dollars? Where's he going with all this? Let's look at Berkshire shares in terms of gold. Well, it looks like the holder of the metal has beat the pants off the sages in this decade. A decade! That's a long time. It must be galling to both these guys, to think that they could have sold their company and retired at the turn of the century and put all their retirement savings into gold and been even richer today! Think of the significance of these data. One of the most important financial industrial conglomerates generating thousands of jobs and providing needed services to the world returned about half the return of the same original value of a dumb hunk of metal sitting in some vault somewhere, enriching no one but its owner. There is something going on out there. This is just too weird. Warren and Charlie have an ax to grind; the current system has been very, very good to them (and their shareholders). They will say or do anything that keep things as they are. And yet it will be these very actions, taken as a whole, that will feed the fire under gold and hence devalue their own position. The tides will eventually go where they will in spite of the machinations of the powerful. But for now, I vote to keep the Berkshire; but let's not kid ourselves. The wealth this company represents is dependent upon the status quo. It is the antithesis of gold.
