Monday, December 12, 2005

Bearish on Gold

"We're not enthused about gold. People say it's a hedge against inflation, but that's also true of oil, land, Coca-Cola, See's Candies, etc. I'd much prefer to own land in Nebraska or an apartment house or an index fund as a store of value. We'd rather own an asset that will be useful even if the currency drops to 10 cents on the dollar. People will always need to drink and eat [referring to Coke and See's]. We wouldn't trade ownership of businesses for a hunk of yellow metal.

"The Dow went from 66 to 11,000 or 12,000 during the last century, and you got paid a lot of dividends along the way. Gold went from $20 in 1900 to $400 in 2000, plus you'd have to pay insurance and storage costs, so it's not a good store of value.

"I'm not advocating paper money - it's good to worry about this. But I'd rather sell one pound of candy. That will retain its value even if the currency is seashells."

- Warren Buffett

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