I know he is speaking literally, but really...silver and gold have been the traditional store of wealth and value since the beginning of civilization.
No, aside from some pure metal uses in electronics there is little you can “make” from gold.
And yes, when I see the dopes on TV hawking gold, I appreciate what Buffet means about it spiking.
But, don’t ya just hate people that are that literal, in the face of reality?
No, I don't.
That was the case because at all times wealthy people (kings, lords, merchants, etc.) existed who had use for this gold. They wanted it as jewelry, they wanted it as coins - which translated into other earthly goods.
However in war times - as recently as World War II - people in the trenches gladly preferred food or ammo or medicines over any amount of gold. You can't use gold if you are dead.
And that is exactly what Buffett is saying here. Gold has little physical use in the modern society. Sure it is essential in electronics, but even those volumes are microscopic.
You can make coins out of gold, just as it was done before. People might take those coins thinking them to be reliable money - because gold is hard to counterfeit and easy to test. But ... no more. Today's technologies allow to counterfeit gold bars, coins and any other shapes. Plating over worthless metals can be done, so accurately that the correct density of the composite will be preserved. How do you test for those coins? Cut them in half? Not feasible. Use some ultrasound reflectometer? Not feasible. So gold coins are the same fiat currency to a common man - issued by someone in quantities unknown and rising.
Buffett is saying that instead of hoarding metals he prefers to invest into things that people need. Food was already mentioned; but it is not a very convenient barter item; it perishes, it is not very expensive per unit of volume, it can be easily produced, it has variable demand. But there are items of value that will keep their value far longer than a stick of salami. For example, the factory that makes salami, or the farm where pigs are growing up, or the railroad that the cattle is transported on. Those are his coins. Perhaps not everyone is wealthy enough to use those, but that's what he does.
So what would be the perfect store of wealth today? I wish I knew; I'd be hoarding that. For the moment the best store of wealth I can think of is my own knowledge and skills. Not only it pays for my daily bread, it also ensures that whatever dark future we might find ourselves in my skills will be always in demand.
It is very difficult to find the perfect store of wealth because it has to depend upon the fact that whatever material you buy today will be in greater demand tomorrow, or it will be harder to obtain. However as the society develops every material good becomes cheaper and cheaper with every day. Think what would happen if robots are producing everything; what would be the price of that? Ideally, zero. Aluminum, when first produced, was more expensive than gold. That changed as soon as efficient production technologies were invented. Today aluminum is dirt cheap (being dirt to begin with :-)
There is of course the consideration of some calamity that the society may experience. Then your supplies of daily items become priceless. But calamities are rare, fortunately, so I can't seriously suggest buying tons of salt or beans. If the calamity doesn't come to pass then all that salt becomes cheaper and cheaper with every day. It may well be that the only material investment that doesn't become cheaper every other day is investment in production of goods. And even that has to be rotated as technologies change.