Whats more curious, in my opinion, is how he bashes gold in his 2011 annual shareholder letter, but in the 1997 annual letter he discusses buying over 100 million ounces of silver because "Charlie and I concluded that a higher price would be needed to establish equilibrium between supply and demand" (As a side note I love how he always ropes in Charlie when a point is debatable.)
So under the right conditions Buffett will buy commodities as an investment, but apparently only when supply and demand conditions suggest that the market price is deeply undervalued, and not as a growth investment or inflation hedge.
Well silver has more real world applications than gold but of course price was the most importance factor. Silver wasnt a huge money maker for berkshire, being bought between $4-5/ounce in 1997 and sold for about $7.50/ ounce in 2006, but it was a lot safer than buying it in the 30s or 40s
Are you kidding me? Let's try to give you a concrete example to demonstrate what should be obvious. Let's arbitrarily take the last two year period and call it Tale of 3 Investors. All three invest $100,000 2 years ago as follows:
2012 Gold closed at 1664 and we earned 8977 or 5.4 oz of gold.
2007 Gold closed at 836.5 and we earned 8548 or 10.2 oz of gold.---Last good year before crash.
2002 Gold ------------343 and ------------2795 or 8.15 oz of gold.
1997 Gold-------------287 and----earned 882 or 3 oz of gold.
1992 Gold-------------333 and----earned 355 or 1.07 oz of gold
1987 Gold------------486 and--earned--205 or .42 oz of gold-- Closing price of BRK in 1987 was about 2700/sh
I've been posting BRK' earnings per share in terms of gold for some time over on the BRKA message board.
Actually, I should have been a bit more clear on what I meant by income. I was referring to dividends.
In other words, stocks that pay dividends are producing income, as soon as you get the dividend check in your hot little hand. So, in this sense, Berkshire-Hathaway shares like gold doesn't produce any income. At this point, Berkshire-Hathaway is all about price appreciation.