Warren Buffett – who is also known as the Oracle of Omaha – is by far and away the most famous investor that the world has ever known. He has made so much money that he really doesn’t even know what to do with it all, so he made what I feel is the right decision to give away the majority of his earnings to charity. Still, for all of the success that Warren Buffett has seen throughout his lifetime, he hasn’t warmed up to one asset in particular, and that is gold.
Buffett is known for a few different reasons. One of the reasons is his strength as a businessman. Another reason is that he has a very outspoken hatred of gold. This is a very controversial stance since gold is extremely popular, and so are precious metals in general, and they have made many people millionaires over the last 11 years. Plus, there are other billionaire investors who have made large bet’s in gold over the years, and even in recent weeks. Nonetheless, Buffett is not timid at all in regards to his views of this particular commodity. We dug through the Internet to compile a list of Warren Buffett’s seven most famous quotes in regards to gold. This will tell you exactly why he hates this commodity so much.
- “The problem with commodities is that you are betting on what someone else would pay for them in six months. The commodity itself isn’t going to do anything for you… It is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something that you expect to produce income for you over time.”
- “I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side… Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States… For $7 trillion… You can have all the farmland in the United States, you could have about seven Exxon Mobils, and you could have $1 trillion of walking around money… And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally… Call me crazy, but I’ll take the farmland and the Exxon Mobils.”
- “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
- “The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own 1 ounce of gold for an eternity, you will still own 1 ounce at its end.”
- “I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola will be making money, and I think Wells Fargo will be making a lot of money and there will be a lot – and it’s a lot – it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.”
- “Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything.”
- “What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth — for a while.”
There’s no question that Warren Buffett definitely makes a lot of important points about gold. But it’s difficult to look at the overall historical performance of gold throughout recent history and ignore it. How do you feel about this particular issue? Is Warren Buffett stuck in his ways, or is he correct about his overall assessment of gold?