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"If you wrapped up all the $100 bills in circulation, it would form a cube about 74 feet per...
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Wednesday, May 30, 2012, 11:33 AM ET"If you wrapped up all the $100 bills in circulation, it would form a cube about 74 feet per side ... in a hundred years, that money will have produced nothing. In a thousand years ... worthless," writes David Einhorn, taking aim at Warren Buffett's bear case on gold (after being the subject of an ugly attack by the Oracle's partner).
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"Under today's conditions, therefore, I do not like currency-based investments. Even so, Berkshire holds significant amounts of them, primarily of the short-term variety. At Berkshire the need for ample liquidity occupies center stage and will never be slighted, however inadequate rates may be. Accommodating this need, we primarily hold U.S. Treasury bills, the only investment that can be counted on for liquidity under the most chaotic of economic conditions. Our working level for liquidity is $20 billion; $10 billion is our absolute minimum."
"Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal. This ugly result, moreover, will forever recur. Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies that produce inflation. From time to time such policies spin out of control."
I'm just sayin...
You think Im crazy well so be it, a good sign to follow is China, they have been buying billions and billions of dollars worth of pysical gold and silver over the past few years as well as telling their people to purchase also..........are the Chinese stupid? I believe not, what about you would you call this monster economic dragon (China) stupid?
I think Buffett has never said out loud to help other people.
I think that every word of Buffett said publicly pursuing only one goal.
I mean the personal self-interest of the Buffet.
If someone thinks that Buffett is a Santa Claus, then listen to him and do as he says. And you will be more poorer and Buffett will be even richer.
Staples and food may not be a bad bet. Bu ya product and look 6 mo's later. It is always significantly higher and the longer the timeframe, the bigger the difference.
Einhorn is right that the money was spent to paper over a malinvestment and is now worthless but needs to be covered at some point. The question is how (Inflation, rebasement, other....)
Do they need to stare at shiny yellow metal? No.
Do they want and need all kinds of products and services that bot make their lives literally possible in some cases and more enjoyable in others? Yes.
That should tell you all you need to know about where to invest money over the long haul.
Owners of gold for 100 years did not lose anything.
100 years ago, a good suit for men has cost 2 ounces of gold.
And today, a good suit for men has a price 2 ounces of gold.
To me he is just trying to talk himself out of missing the best performing investment over the last 10 years.
Warren likes to buy low and to him it does not make much sense to buy an asset which has gone up 10 years in a row. To him it feels like buying at a top.
Not going to begrudge him because his track record speaks for itself.
http://bit.ly/AlAjza
If we are talking about market speculation, no matter what you sell - securities, gold or dung. In this case, your success depends on your personal talents, but not the asset that you speculate on the market. I do not think prudent to discuss the topic "What is an asset, the most profitable for market speculation."
Beginning in 2000, the Dow lost against gold 5 times!
http://bit.ly/Kbc0Uh
In 2005, Rick Munarriz queried whether Google or gold was a better investment when both seemed to have equal value on the stock market.h By the end of 2008, Google closed at $307.65 a share, while gold closed the year at $866 an ounce.
So, if we talk about investments, the investment in gold is certainly more profitable and less risky than investment in any IOUs.
If we talk about market speculation, it is possible to speculate not only a successful stock trading, and successful gold trading too, and even successful trading of shit.
Your mistake is that you are trying to compare between investment and speculation. There is no logic to compare hats and tangerines.
The 'gold holds value' argument is terrible any way you measure it. Anyone participating in the economy, transacting business, will do better in 'currency' than in gold, always. Unless we are comparing burying a shoebox full of bills to a shoebox full of gold. In which case gold may have an edge.
But I sure hope that isn't your retirement strategy.
Its used for buying slaves far better then paper currency.
Least we forget it was used to purchase vases of oil and oxen for sacraficial religious ceremonies.
Time to load up on CDS!
goldmember steve, if the Chinese jump off a bridge, are you going to follow them?
Do you know how much the US is in debt over all?
http://bit.ly/5BsyVl
http://bit.ly/5BsyVl
Bernanke keeps on printing it continues to loose its worth
You're making the argument that since China is buying gold, it is a good investment....does that not make treasuries a good investment using the same logic?
If those scarry numbers stopped going up this very sec it would take longer then a thousand years to pay back.......gee thats somthing Im sure the generations of the future will really enjoy........oh but wait, how will they do that if the US dollar deflates to say 50 cents but the (scarry numbers) debt stays the same. Oh well maybe logic is a thing of the past.
Again what backs up the American dollar ? Supposedly gold.
Why does Bernanke and Obama continually have to print, print, print and print some more the way they print there isnt enough gold to back up the dollar hence they will have to devalue and as for treasuries well you can only bluff for so long. As for gold it still will be there after paper, all paper fails.
There is one thing I know for sure a strong cup of coffee will always beat anything paper and or gold, Im going to have one so enjoy your Mad Hatters Tea Party.
A thousand years to pay back the debt? You don't even know how crazy you sound.
I see the disconnect. I thought you were someone who knew we were off the gold standard. My mistake. I'm done here.
Mmmmmm the smell of coffee calls enjoy your day, hey and remember to smile :-)
Just like Buffett said in his Fortune article from February, you shouldn't hold cash. I agree that the government will continue to dilute its value. I don't agree that the best way to hedge/profit against that is to buy a yellow metal that has little to no utility.
http://bit.ly/JQKkG1
exactly how Turkey has become economically viable; eliminate zeros from its currency revaluation. Of course it wiped out their middle class...just collateral damage of course. But whose counting right!?! Your solution will be blood-in-the-streets painful.
When the pols target you to save....be careful, very careful what you ask for. Like the Great Society saved the poor!!
Let them.
I'm diversified. Are you?
http://bit.ly/MUUSDn
http://bit.ly/MUUSDn
My guess is that Charlie's personal assistant wasn't around to work the TV recently, and Charlie accidentally tuned into MTV and saw some rappers with full grills and neck chains for the first time.
If gold was $50 per ounce would you buy or sell? Why??
If gold was $3000 per ounce would you buy or sell? Why??
At what price in between $50 and $3000 would you indifferent to purchase or sell?
Hint: no matter what price you answer you are implicitly agreeing that gold has value. The argument should really be that the current market price may not be right for you now to either buy or sell. Not that gold has no value.
For investments where it is sitting in a vault for years? It doesnt do anything. At some point it has to be converted back into money to be traded for food, pay your mortgage etc.
Yeah, and we don't associate with lawyers either. (Munger started his career as a lawyer.)
PRODUCTIVITY.
How do you value whether gold is good at a certain price? You really can't....which is why Buffett and Munger avoid it (they don't invest in what they don't understand).
Also, didn't the statistics in Buffett's article basically squash the notion that gold is a great investment?
http://bit.ly/M8k7rA
Pretty sure I can read...S&P500 > gold.
Berkshire stock (since 1965) > S&P500 > gold.
Here's gold vs S&P500 1965-2011...
http://bit.ly/M8k7rA
Btw, a $100 in Berkshire in 1965 would be worth over $100,000 today. Any arguments?
Of course there's an argument, yours is a meaningless comparison. Who cares what happened since 1965 unless you have a time machine! Using you thesis I could say; an investment in Adams Express closed-end fund, (in the 1929 survivors club), today would have outperformed any other investment over 83 plus years. So what! one could rightly say.
BTW I don't think a decade performance is a "nitpick" either. Morningstar would agree as a 10 year performance is considered long-term! I stand by my comment that gold today should be a part of portfolio management to hedge risk.
WTF are you talking about? Where did I say anything like that?? Whats ironic is your nonsense comments on an investment website!!
greatful for getting out of all the csco's - intels - and many other tech
stocks I had been playing since 1997. I am very happy to let my
shinny yellow coins sit knowing that I will be able to go to my "yellow
lockers" when I need money for food!!!!!! I do not plan on having
any discussion with those who do not see what is happening in this
world ------ nothing is forever but right now you have to be able to
see what is value and that is GOLD.
It is 4:10 p.m. here in Florida and I am trying to keep up with the AU
market as well as the French Open. I feel that gold will be my
trade for at least 4 more years! It is always a challenge when
taking a new path----Buffett and Munger are long term players & that
is why they feel as they do-------I do not believe that long term is to
anyones advantage. Sorry for the name----I used to be fat & family
called me Moo-------middle name is ann-----!
Right now gold value is tracking what is the most risk laden currency on earth: the Euro. Really strange because there are few things more solid than gold and few things more risky than the socialist based Euro. This is a very short term correlation and will break down soon. Gold will skyrocket in value relative to all types of bonds and paper currencies.
Just wondering have you been watching whats been happening in Europe, just curious.
The point though is that all this arguing about what gold is or isn't is a major waste of time. For want of another word, it's a commodity. It has value. The value fluctuates. Just like stocks, bonds, women's hemlines, and just about everything else.
As Rodney said: Can't we all just get along?
In fact, in his article, he mentioned:
"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)."
Sorry Einhorn. You make a stupid point. Furthermore, to the poster above who mentioned Berkshire holding cash, do you know anything about how insurance companies work? They can't invest all their float, they need liquid cash on the spot when disasters happen, and they have to pay claims, especially since Berkshire's reinsurance division, run by Ajit Jain, insures freak incidents that are statistically very unprobable but could still happen and demand large payouts. Furthermore, I believe are regulations regarding how much liquidity insurance companies must hold (no, for quick instant cash in this case, stocks don't count as liquid assets)..someone correct me if I'm wrong, but I'm pretty sure Buffett has mentioned it.
Fine if the S&P has gained more than gold since 1965. That is a good thing. I like to see companies grow and prosper. I am not down on the equities market. I invest and trade stocks on a frequent basis.
For me alone, I would not buy and hold any currency as an investment or long term store of value. Same goes for bonds. Bonds are just a promise to pay back a loan in currency. Gold is much better for that purpose. That's just me.
I do have a few Series-E savings bonds. I purchased one per month for 25 years at work because I was the "bond drive chairman" one year. LOL. These are paying 1.4% to 5% and the interest accumulates tax free. I have thought about trading them for silver, or at least the ones paying only 1.4%, I just have never gotten around to it.
I am calling out people for making points about gold and silver that are not relevant to it's value like: "gold does not produce anything" or "gold does not pay dividends or interest" True, but it doesn't matter. It's totally not relevant to the value.
I wish more people would give gold it's place and stop hating on it. I also agree with the comment: "Why can't we all just get along."
As you mentioned Buffett specifically says you SHOULDN'T hold cash for investment purposes. However, anytime somebody mentions an asset class that may be a better investment for the future the gold bugs heads explode and they talk nonsense that has nothing to do with the discussion at hand.
Mmmmmm guess you will come back with rhetoric....know the type
My whole point which I say yet again paper is just that paper which has been manipulated for too long and that worthless paper is about to collapse, that's why dare I say it, certain Governments world wide notice I said Governments (plural) are scrambling to purchase physical gold and silver. The INTELLIGENTS of the world have got us in the .#$@% and they took us away from the gold standard, but if gold has lost its importance then why is the accumulation world wide now so important?
I'm not debating with you about what makes money in the short term all I'm saying those things will soon disappear......surely you are watching Europe and you do realize what is happening there will affect you and me and the beloved paper share market they cant keep plugging the holes when the dam wall is about to bust. Anyways people can only believe what they want to believe that's why we all have freedom of choice ......well for the time being anyway. Take care id.
http://bit.ly/MUUSDn
David Einhorn follows everything Warren Buffett says and tries his hardest to come up with witty responses so people will pay attention.
Warren Buffett has never heard of David Einhorn.
Good luck!
P.S. "A witty statement proves nothing" - Voltaire
P.S. "Paper money eventually returns to its intrinsic value: zero." -- Voltaire
http://bit.ly/MUUSDn