Quote:
Originally Posted by macker
It will also show you returns back to inception. I don't think Buffett likes Gold because it is stable/safe and cannot be easily manipulated with news broadcasts, rating agencies, or the crash and burn of a CEO. Gold is Gold and there is a limited supply on the planet. When Gold goes up it is for a very good reason as it is a sign of financial unrest because it is a stable item. Buffett knows how to play/manipulate the market and knows how the media, government or management short commings can cause a stock to rise or fall. He can also cause fluctations in the market as he sees fit. In the hearings before congress (WHICH HE HAD TO BE SUBOENED FOR) he was asked how the rating agencies could make such large mistakes when rating the banks that failed. He answered that it was all a mistake. Rating companies are paid by the companies they rate so how would you rate a company that is paying you millions of dollars to give them a stock rating. The companies received good ratings because they were manipulated by the rating agencies, which Buffett has also been heavily invested in (13% shareholder of Moodys : top shareholder) and the stock holders. I can see why Buffett doesn't like Gold....It cannot be manipulated in this fashion and therefore it is not an investment tactic used by people like Buffett.
http://blogs.reuters.com/felix-salmo...s-pr-disaster/ |
That hearing is a giant red herring though. I attended the AGM this year and he explained things very well not only regarding the credit rating agencies, but also regarding Goldman Sachs. I also read the linked "article" when it came out and found it laughable at that time. Fact is that as Moodys largest shareholder he had no actual say in how the business was conducted and wasn't calling the shots for Moodys. Berkshire Hathaway doesn't use an outside rating agency at all, and Moodys was simply an investment. Its easy for the media or those with more of an agenda to say "this guy is the largest shareholder, has made a lot of money and clearly must have been in on something", but simply hoping that isn't the case doesn't make it so.
As far as gold the reasons for his dislike are not anything to do with control. It has to do with utility (there is none for gold, whatsoever), and the fact that we can't eat it, don't burn it and other than dig it out of the ground in one country to put it in a vault in another its pointless. (I'm not entirely sure of the point of that exercise either, but allegedly there is one!).
I'm curious as to the real value of the physical commodity as well. I think that if times got really hard and I had to sell my wedding band I would be lucky to get a couple hundred bucks....I have no clue, but it just doesn't strike me as something worth a whole lot of money. According to the price of gold though that thing is worth a lot more! In fact theoretically that ring should be worth a lot more today than when I bought it right? Sounds great, except I doubt you could actually sell it for more than what it was purchased for! The whole thing reminds me of the saying that "diamonds are a girls best friend"....because they have to be. Once you buy the diamond for her, no one else will buy them from you! This situation isn't a lot different really...except that according to the goldbugs it should be?