Short and Sweet

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Is Buffett wrong about gold?

“While I very often agree with Warren Buffett’s views regarding, for example, the level of cash in portfolio or migration from growth to value stocks,” says Independent Trader for ETF Trends, “I absolutely can not agree with what he wrote in the letter to shareholders about gold, once again showing how badly it performs in comparison to the US shares.” The article goes on from there to do a good job of debunking Buffett’s latest attack on gold  – one of many he has conducted over the years – while drawing on cyclical analysis to lay out a solid longer-term future for the metal. It concludes with the opinion that Buffett’s stance on gold is “part of a deal with the establishment of the United States.”

That could be true, but it could also be little more than an old professional bias on Buffett’s part going back decades combined with a classic talking of one’s book.  We counter with a single chart that refutes his arguments at a glance. It tells the story of gold and stocks in the times in which we live – the historically distinct fiat money era that began in 1971 – not some other timeline that carries little relationship to the present.  To make a very long story short, gold has appreciated 3,399% since January 1971. Stocks have appreciated 2,884%.  What’s more stocks are bumping against all time highs while gold looks like it might be in the early stages of a new bull market run.

Chart courtesy of MacroTrends

Repost from 2/20/2020

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