Buffett launches scathing attack on gold bulls

Why are we listening to anything Derks says?

http://www.hedgeweek.com/2009/02/16/interview-michael-derks-arch-financial-products-very-opportune-time-be-invested-private-f

It’s simple Warren, if I bought gold coins in 2001 and held them in my portfolio. Say I also bought credit default swaps on sovereign debt issued by a European country.

Eleven years later I want to use those assets for something else, the gold has appreciated, and the ISDA has determined that the European country's sovereign debt I bought did not trigger a default event when it paid 30 cents on the dollar. So my default swaps were worthless.

Gold is not a fear trade, it’s a confidence and trust trade based on God, history and mother nature.

Gold is money and the very best there is, and also no one could ever buy all the gold in the world.

By the time they approached owning 50% of it, the price would be so high and appreciating so fast that no one would sell or part with it.

Dream on Warren. My challenge to you, is to try and buy say even 5% of the worlds known gold.

It is true the price of gold has risen from about $250 in the early 2000s to the heights of $1700 today, but the dollar has fallen significantly in value against most major currencies in that time and the amount of dollars in issue has risen dramatically also, 2.6x, I believe, since the financial crisis in 2008. Surely the nominal change in the price of gold is deceiving in this context? Or am I missing something?

I remind the gold haters that it was up 10% last year when equities by 7%-20%.....

Hands up who can see any evidence of central banks stopping printing money?? As soon as they stop, the bubble collapses and the whole financial edifice falls down...all you need to understand is the bigger economic picture - to look at the debt/GDP figures, future promises of healthcare and pensions, knowing that the grey tsunami is unlikely to vote to reduce these - so govts. need alternatives - inflation/financial repression is perfect.

We are hostage to a grand corrupted Keynsian experiment - socialise the losses of the banks over a 10-20 yr period by inflating central bank balance sheets - in the meantime hoping that we all play nice and don't take the toys away. Hopefully it will work, but it's not guaranteed. It does appear that gold works better as an inflation play than in deflation, but even then it would outperform equities.

Eventually cuts will be made in the future along with an effort to reduce the debt, BUT QE will be an ongoing tool as part of a suite that will be used to effectively steal peoples money through inflation. In that sense you can rely on currency debasement - therefore it makes complete sense to hold at least a small part of your portfolio in gold. Asian central banks will continue to be buyers knowing the rules of the game and the path of least resistance faced by western governments.

Generally people who don't like gold don't own any and never have. Saying that, gold is a trade, not a religion.

Anyway, if people want dividends they can buy gold equities which are cash rich and massively undervalued vs the physical commodity.

To those who say the price of gold is determined by the 'next fool' - equally one can make that argument about any asset. It is only worth what someone is prepared to pay based on their perception of value/risk.

An interesting view and one that I concur with. A simpe question to ask if you think gold is in a bubble is, who owns it as an investment? I suspect the vast majority have very little or no exposure which is not typical of a bubble in the asset class.

It's a brave man who argues with Buffett. Those who have over the many years of his phenomenal success end up in a retirement where they have to watch the pennies , instead of counting their riches . Let's see .

When bubbles are rising close to the top the logic denials start, remember "new paradigm". Gold is over valued, has been for two years and anybody holding for the long term is taking a huge risk in my view.

That's interesting, why two years? And how do you value gold? Buffett has always hated gold, he isn't going to change his view now because one day he will be right.