Posted on 03/07/2011 5:20:00 AM PST by blam
Richard Russell Calls Buffett Ignorant, And Says Gold Is On Its Way To $6,000
Gus Lubin
Mar. 7, 2011, 7:11 AM
With gold breaking to record highs, Dow theorist Richard Russell takes on the world's most famous gold bear:
When investment "geniuses" like Warren Buffet displays his ignorance by denouncing gold, it adds little to his legacy. (Warren's dad, Howard supported the gold standard). Warren Buffett's problem is that he only understands balance sheets and earnings. The value of a Picasso or a gem diamond or a bar of gold is outside Buffett's understanding. Which is sad, because Buffett's lack of understanding has kept many an American on the sidelines while gold surged higher in terms of Buffett's beloved paper currencies.
Russell says gold is on its way to $6,000:
This time, gold has, so far, only multiplied five times -- from 255 to 1430. If gold was to repeat its 1970 performance and multiply 24 times, it would rise to over 6,000. But there's a difference between the two gold bull markets: This time the other half of the world's population (China, India, Asia) has been added to the mix. And this time, the very viability of fiat currencies is a part of the picture.”
Buffett riled up the goldbugs with various comments last week on CNBC. For instance:
"If you took all the gold in the world, it would make a 67 ft cube. It would be worth about $7 trillion, about a third of the value of all the stocks in the U.S. So you can own gold, which can do nothing, or stocks. You could also have farmland. If you gave me the choice, between all the farmland in the country, stocks like ExxonMobile, or gold, I'd choose the stocks and the farmland."
(Excerpt) Read more at businessinsider.com ...
I don’t know why Goldbugs are supposed to be riled by Buffett preferring something worth “three times the value of all the gold in the world” to “all the gold in the world”.
All of us would pick the more valuable option, no matter what our feelings on gold. It’s a daft question.
I'd have to say that gold is tremendously under-valued.
If we see “Gold - $6000”, it will be as a point on the way to “Gold - $10million/billion/trillion”, since, at some point, long before $6000, the dollar will have lost all value and dollar-denominations will be a meaningless joke....
Gold isn’t “headed to $6000”,
the dollar is headed towards 1/6000th oz of gold.
ie, worthlessness.
Yup...and, I'll be having my neighbor over for dinner.(ahem)
No, not really.
This is what I keep trying to get at when I don’t buy into the gold-bug scenario for SHTF economic preparations. Having some gold/silver for that possibility is nice, but it isn’t as useful as having stuff that can produce RESULTS.
Own stuff that can produce results (steel, copper, lead, iron, diesel fuel, land, etc) and if the SHTF in a for-real manner, you have have all the gold and silver you want, because the goldbugs will have to pawn off their metal(s) for stuff they actually need... and which a producer has.
Buffett knows this. History has rewarded him beyond the bounds of academic theories for identifying solid, but boring businesses, and maximizing their value. Take his most recent high-profile acquisition: Burlington Northern. With BN, Buffett now has two out of three components necessary for a huge vertical integration of the midwest power generation business: he owns power companies that need coal, and he owns the railroad that hauls the coal to those plants.
All he needs do now is buy a coal mining company and he controls the profit margin for power in the midwest at EVERY major step along the way from the ground to power outlets in the midwest.
He can get all the gold he wants if the SHTF simply by keeping the lights on.
Smith argues in "Wealth of Nations" that the only true wealth is in manured fields. While the notion has changed slightly with the invention of the Haber process, the underlying position that only food is real wealth is still sound.
Have enough gold to get you through until the fall harvest and seed for the next year with maybe enough left over to buy your lovely bride a gift. Man does not live by bread alone.
Agreed, but why is he such a cheerleader for this regime and 'The W0N'? The only explanation I can come up with is his heavy investment in insurance (e.g. GEICO). I think he knows 0bamacare is going to be a bust and people will be needing all kinds of gap and long term care insurance. He's only supporting Hussein in the hopes of future profits for himself. I'd be happy to hear a better theory.
Unless gold is increasing relative to other commodities, it means little that it will increase relative to an assumed drop in the value of the dollar.
By this reasoning, my John Deere cap will also skyrocket in value from $1.45 to well over $6.00. It hasn’t really become more valuable relative to anything else, but it will fetch more devalued dollars.
I fully agree with having commodities to trade if/when the dollar is devalued, but the only way gold beats the spreadin the meantime is if it’s pumped and dumped.
I will agree with Mr. Russell that Warren (tax the rich when they die) Buffet, despite his holdings, is quite the ignoramus.
I was not championing Buffet, just observing that the time and the stopped watch were in sync.
“Have enough gold to get you through until the fall harvest and seed for the next year with maybe enough left over to buy your lovely bride a gift. Man does not live by bread alone.”
Well said, clap, clap, clap. That is my only reason to buy gold and silver, as a bridge to get me to a safer place (farmland and crops).
So was real estate. :-)
Not saying you're wrong. But there was that whole thing.
Bingo!
Like Sam Walton said, “It’s only paper.”...................
but why is he such a cheerleader for Obama?
Let me offer this as one reason Buffet gives money to Obama.
Bill Gates learned from Bill Clinton that if he did not make political contributions to the Democrats, that Clinton could litigate Microsoft for monopoly practices.
In the same vein Buffet controls a number of huge companies. Buffet pays money to Obama to keep the trust busters from breaking up Berkshire Hathaway.
The Democrats are expert at political extortion.
my John Deere cap will also skyrocket in value from $1.45 to well over $6.00
If your cap is made of cotton it will skyrocket in value. Cotton is limit-up today as it was on Friday. Cotton is $2.20 a pound.
I have 50 Large Tulip Bulbs that I will sell to Mr. Russell or anyone else that will pay $5,000 per unit! That’s cheaper than gold per oz.! Tulips are lower priced today than years ago. Price will rebound.
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