Why Warren Buffett Won't Invest In Gold (102 hits)
Steve Denning, Contributor
RADICAL MANAGEMENT: Rethinking leadership and innovation
The wealth of nations is men, not silk and cotton and gold.
Yesterday I noted the comment of Charlie Munger, Vice-Chairman of Berkshire Hathaway [BRK.A BRK.B] comment that “civilized people don’t buy gold”. They are not simply involved in a zero-sum game in which the goal is to outsmart the computer system in the trading markets. They invest in productive businesses that add value to society.
Warren Buffett, Chairman of Berkshire Hathaway, expressed similar reservations about gold as an investment on Monday on CNBC’s Squawkbox:
“When we took over Berkshire, it was selling at $15 a share and gold was selling at $20 an ounce. Gold is now $1600 and Berkshire is $120,000. Or you can take a broader example. If you buy an ounce of gold today and you hold it at hundred years, you can go to it every day and you could coo to it and fondle it and a hundred years from now, you’ll have one ounce of gold and it won’t have done anything for you in between. You buy 100 acres of farm land and it will produce for you every year. You can buy more farmland, and all kinds of things, and you still have 100 acres of farmland at the end of 100 years. You could you buy the Dow Jones Industrial Average for 66 at the start of 1900. Gold was then $20. At the end of the century, it was 11,400, and you would also have gotten dividends for a hundred years. So a decent productive asset will kill an unproductive asset.