If you had listened to Warren Buffett on gold a year ago you would have made a lot of money
Joe Weisenthal, Business Insider | Mar 1, 2013 10:05 AM ET
Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?
Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.
A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.
…other than loosing to his company, i forget which one it is, and to Conoco-Philips…!
…i do agree on Group A and Group B…!
…if currency goes up, gold goes down…! if wars occur and bad economies, gold goes up…! if petroleum is up so is gold…!
THESE RULES ARE QUITE “STANDARD”! How could they vary…?
As to if you little guy are going to make money in Stocks like Exom Mobil or Gold of some sort! We are not at any bottom that I may know of!
THE LAST DROP OR STRAW ON THE “CAMELS BACK”…! Rules vary, when BANKS go broke, and where did all your money got to…! Or gold false gold bullion’s…! OR TRUE GOLD in your safe or a safe place…!