Sell Gold - Buffett And Morgan Stanley Agree - Price target $1050
Gold- Buffett And Morgan Stanley Agree
Jan. 31, 2014 10:16 AM ET |
If there was ever a good time to invest in gold (IAU), it has likely now passed. During the recent recession, rising gold prices (see chart below) convinced many that precious metals (FCX) were finally viable investments. In fact, during those heady days, some indeed made money in gold-based ETFs (GLD); however, far more lost substantial sums during 2013's protracted gold crash. In 2013, gold lost 28% of its value, leading to widespread consternation.
Famous investor and commentator Warren Buffett (BRK.B) hasn't shied away from releasing "I told you so" statements with regards to gold (GDX). Whether one finds Buffett (BRK.A) refreshingly forthright or simply overbearing -- events have played out according to his predictions. Buffett has questioned the status of gold for some time as a practical medium for investment. Even more than stocks or currencies - precious metals are subject to the dictates of public paranoia: high gold prices depend on pundits convincing enough people that the global economic system is about to face a crisis of near-apocalyptic proportions. See our prior Buffett story on Gold here.
FYI...Buffet has always been a naysayer on gold citing the tired old argument of "it has no utility". He was vocally pessimistic about gold in 2004-2005 and a few years later was left befuddled as he missed out on 300% gains at which point he admitted his mistake. You don't need pundits to convince people to be paranoid and worry about markets collapsing as long as there are Fed created asset bubbles and slow economic growth, the markets will at some point, collapse and create panic. History proves this out. The other thing that history proves is that gold has outperformed every other asset class since we left the gold standard in 1973, including real estate, albeit with major pullbacks and volatility. Gold is also a great hedge right now as recently it has behaved inversely to the broader market.