"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."
Stupid. There is only one Exxon and its oil fields are being depleted. Farmland is subject to topsoil errosion and hardened due to pesticide use. Besides, Warren has made big investments in precious metals in the past. He bought one million ounces of silver around $4.00 ounce. So don't buy into all the drivel from the old man.
Actually I believe WB is on track by NOT investing in Gold. I am just saying that his argument is weak. Instead he should tell everyone the truth ,that there is a lot more Gold out there than is discussed. What we see in the marketplace is only 15% of what is actually in the World already mined. I am sure that Warren is smart enough to know this but would rather use this flimsy argument to justify not investing in Gold rather than exposing the truth.
This makes no sense because if there were that small amount of gold and the other cube that represents real growth and production in the World is constantly growing then there would be a greater demand for that gold by those growing populations of wealth.
That would be true if gold was money. If gold was money, just about all the benefits associated with real growth would go to the holders of gold. Thankfully, gold is not money. It will retain its earnings power, but its value will not keep up with the growth of the economy in the long run.