Friday, June 8, 2012

I like Warren Buffet but I am happy...

I am happy to see his sticking to his knitting.  You can see his from his attitude towards gold in the article from January where he said:

“I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion dollars – that’s probably about a third of the value of all the stocks in the United States.”

“For $7 trillion dollars…you could have all the farmland in the United States, you could have about seven ExxonMobils (XOM, quote), and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland (DBA, quote) and the ExxonMobils.”

I am happy because the performance of his stock, Berkshire Hathaway, shows the effect of our present economic condition on the best-in-class of the US economy.  This is what gold will (and is being albeit in the background at present) be used to fix.  The effect of the accumulated shared debt is a knot so tight all growth is being strangled.  It simply must be loosened.  The debt will be reduced in value.

This is why inflation is a good thing.  The alternative actually is austerity which handled poorly will lead to depression and which if handled well by large sainted masses of participants will crawl along much like the chart below for a long time.

The present potential for a bottoming of gold equities offers the greatest leverage for returns on investment within this range and so is, in my opinion, a fertile sector for some stock research. Best of luck everyone.


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