Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20
Gold Gann Angle Update - 10th Jan 20
Gold In Rally Mode Suggests Commitment of Traders (COT) Data - 10th Jan 20
Disney Could Mount Its Biggest Rally in 2020 - 10th Jan 20
How on Earth Can Gold Decline During the U.S. – Iran Crisis? - 10th Jan 20
Getting Your HR Budget in Line - 10th Jan 20
The Fed Protects Gamblers at the Expense of the Economy - 9th Jan 20
Last Chance to Get Microsoft Windows 10 for FREE! - 9th Jan 20
The Stock Market is the Opiate of the Masses - 9th Jan 20
Is The Energy Sector Setting Up Another Great Entry? - 9th Jan 20
The Fed Is Creating a Monster Bubble - 9th Jan 20
If History Repeats, Video Game Stocks Could Soar 600%+ - 9th Jan 20
What to Know Before Buying a Land Rover Discovery Sport in 2020 - 8th Jan 20
Stock Market Forecast 2020 Trend Analysis - 8th Jan 20
Gold Price at Resistance - 8th Jan 20
The Fed Has Quietly Started QE4 - 8th Jan 20
NASDAQ Set to Fall 1000pts Early 2020, and What it Means for Gold Price - 8th Jan 20
Gold 2020 - Financial Analysts and Major Financial Institutions Outlook - 8th Jan 20
Stock Market Trend Review - 8th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Buffett Says "Right To Be Fearful" of "Paper Money" Favours Stocks Over Cash, Bonds and Gold

Commodities / Gold and Silver 2012 Feb 10, 2012 - 08:49 AM GMT

By: GoldCore


Best Financial Markets Analysis ArticleGold’s London AM fix this morning was USD 1,715.50, EUR 1,295.21, and GBP 1,084.25 per ounce.

Yesterday's AM fix was USD 1,733.00, EUR 1,304.77, and GBP 1,094.20 per ounce.

The pattern of gold trading higher in Asia and falling just before or at the open in Europe continued again today. Gold ticked a little higher in Asian trade prior to sharp falls before the open at 0800 GMT when gold fell quickly fell from $1,729/oz to $1,715/oz.

A cut in COMEX gold trading margins by the biggest operator of U.S. futures exchanges, the CME Group, failed to start a rally in gold but is short term bullish.

The tragedy that is the Greek debt crisis continues. Although Greek political leaders inked a form of deal in the 9th hour, the bailout is still pending approval of international lenders, leading to jitters amongst investors which should support gold.

European ministers declared that Athens did not meet all targets and demanded more within a week in exchange for a 130 euro billion “bail out” to stave off bankruptcy – at least in the short term.

The Troika gave the debt ridden country yet another ‘deadline’ - until the middle of next week to find an extra €325 million in savings, and pass the cuts through a divided parliament. They will also seek “written guarantees” that brutal austerity measures will be implemented even after the elections of a new government in April, said Jean-Claude Juncker, the Luxembourg prime minister who chaired yesterday’s meeting of finance chiefs of the 17 euro countries.

US International trade numbers hit the market at 13.30 GMT.

Buffett: "Right To Be Fearful" of "Paper Money" - Favours Stocks Over Cash, Bonds and Gold

Warren Buffett, the billionaire chairman of Berkshire Hathaway, has released an interesting, if contradictory, adaptation from his upcoming shareholder letter - Warren Buffett: Why stocks beat gold and bonds .

In it, Buffett again extols the virtues of stocks over paper money, bonds and gold.

The Oracle of Omaha acknowledges and correctly warns that investors are "right to be fearful" of "paper money." Buffett said low interest rates and inflation should dissuade investors from buying bonds and cash. "They are among the most dangerous of assets."

Buffett again reaffirmed his opinion about gold’s “significant shortcomings.” He said that gold is “neither of much use nor procreative.” He also suggested that gold was a bubble and compared it to the internet stock and housing bubbles.

Buffett Incorrect Regarding Gold

Buffett’s thoughts regarding gold are a rehash of similar negative views on gold repeated in recent years.

Buffett criticises gold for having two shortcomings – it is “neither of much use nor procreative”.

This is true, however Buffett completely ignores gold’s primary use throughout history and today which is as finite money, a monetary safe haven asset, as financial insurance and as a store of value.

Buffett contradicts himself by suggesting that those who buy gold are fearful and they believe “that the ranks of the fearful will grow.”

However, in the same article, he says that investors are “right to be fearful” of “paper money.”

Buffett should have a chat with James Grant or other monetary authorities who realise gold is the ultimate form of cash. As Grant says "nothing beats a little cash in a bear market, of course, and the oldest form of cash is gold."

Buffett suggests that gold is a bubble and that the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. He writes that as "bandwagon" investors join any party, they create their own truth -- for a while.

His article also shows a lack of knowledge regarding gold - Buffett says that gold is “currently a huge favourite of investors.”

The data and statistical evidence shows that gold remains a fringe investment and remains under owned by retail investors in the western world. This is beginning to change and ownership has increased in recent years but ownership remains miniscule when looked at in historical context and when viewed versus ownership of stocks, bonds and cash today.

Buffett compares gold to the internet stock and housing bubbles.

This is a highly simplistic and dubious comparison. The very uncertain world of 2012, with a myriad of significant investment risks is leading to continuing strong fundamental demand for gold bullion amid constrained global supply.

These real fundamentals driving today’s gold market were absent in the final years of the dotcom and property bubbles.

The fundamentals driving the gold market are not going to disappear in the foreseeable future and may be with us for the rest of this decade.

Also, gold so massively underperformed in the 1980s and 1990s (after huge outperformance in the 1970s and a parabolic price move in late 1979, January 1980) that gold has in effect been playing “catch up” with other assets in recent years.

The charts and tables show that gold’s performance, since the start of Buffett’s Berkshire Hathaway, has been equivalent to that of stocks (MSCI World and S&P 500) and with similar volatility.

Berkshire’s Hathaway’s performance has been phenomenal and must be respected, however Buffett’s over concentration and allocation on stocks since 2000 has cost him and his shareholders dearly – and may do so again in the coming years.


Buffett shows once again he does not understand gold and he does not understand real diversification. He does not or chooses not to understand gold as a safe haven asset in a portfolio.

He does not or chooses not to understand gold as an important diversification. He does not or chooses not to understand gold as a finite currency, as a monetary asset and as money.

"What the wise man does in the beginning, the fool does in the end."

Buffett is correct when he says that the old proverb will be confirmed once again.

However, today wise men, women and institutions in the US, Europe, Asia and internationally are diversifying into gold because of concerns about “paper money” and other macroeconomic, geopolitical and systemic concerns.

The less informed continue to have a blinkered anti gold bias. They continue to focus solely on gold’s nominal price and assert it is a bubble.

They continue to posit silly “either or”, “stocks good; gold bad” arguments rather than seeing the merits of each asset class.

The uninformed continue to not understand gold as a form of financial insurance in a diversified portfolio. This is changing slowly with a very gradual growing appreciation of gold’s importance as a safe haven asset and money is a world of massive paper and digital money creation.

Putting all your eggs in any one basket in a world beset with risk is unwise. Whether that be in agricultural land, Exxon Mobil, Berkshire Hathaway, stocks, bonds, cash and even gold

For the latest news and commentary on financial markets and gold please follow us on Twitter.


'GoldNomics' can be viewed by clicking on the image above or on our YouTube channel:

This update can be found on the GoldCore blog here.

Yours sincerely,
Mark O'Byrne
Exective Director




IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160


WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

GoldCore Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules