When the World's Wealthiest Man Says a Really Silly Thing

There is nothing like throwing over 6,000 years of history out the window with one statement. I call that silly. It’s even sillier when a man with the wealth of Warren Buffett says it, as he recently called physical gold a “valueless asset”. The UK Telegraph picked up the comment in reporting that Fortune Magazine had interviewed Mr. Buffett on this subject. Also from the UK Telegraph article, their writer Emma Wall wrote the following last Friday:

“Buffett's attack comes as private bank Coutts predicts that the gold price will hit "new highs" by the end of 2012. In a report from the bank, that counts the Queen among its clients, gold is confirmed as a "key asset in investment portfolios".

Hmmm….. I think it is fair to say that the Queen of England knows her history. Also, one of the wealthiest men the world has ever known Mayer Amschel Rothschild, who was named by Forbes magazine as “the founding father of international finance” said “Wealthy men have always collected rare coins”. He probably knew his history too. Rothschild said that back when coins had value and were primarily physical gold or silver. Guess what modern founders of finance, like Richard Fisher, the President of the Dallas branch of the Federal Reserve are doing with their own money – investing in gold! Fisher’s disclosure of investment was recently released by the Federal Reserve as well as the holdings of the other Fed branch presidents. Another hmmm….. If the Fed presidents have so much faith in paper money, then why does Fisher own more than $1 million in gold and another $50,000 in platinum?

Back to Warren Buffett. If he thinks that gold is a “valueless asset”, then why did he say this on 8/19/09: “Unchecked greenback emissions will certainly cause the purchasing power of currency to melt.”? Combine that with his firm Berkshire Hathaway’s investments in silver a decade ago (did he think that the other monetary metal was also a “valueless asset”?) and an investor would have to conclude that Warren likes to speak out of both sides of his mouth. Sorry Warren, I appreciate your head-fake, but I’m going to continue to measure my stack of gold coins. I don’t know what your agenda was with your comment from last week, but I know that history is on my side. I’m buying more physical gold from Lear Capital!