Disagreeing with Buffett is an express ticket to Looking Stupid. But.
As Buffett notes, gold demand is an index of fear. And yes, generally returns on gold reflect the extent of fear. Were this the only return case, the whole thing would be subject to tautological collapse.
But it's not the only return case. Sometimes fears come true. Governments debase or revalue currencies, regimes collapse entirely, equity assets are appropriated. (Anyone care to guess what happens if foreign investor interests in the Chinese stock market collide seriously with vital state interests?) In these edge cases, gold is one of the few assets that carries value across the transition.
To which comes the reply, if the U.S. government falls you'll have worse problems than asset preservation. Certainly true. But when those problems get resolved, asset preservation will work its way back up the priorities.
It strikes me as lousy investment vehicle -- but I think it's a mistake to dismiss its political and economic importance entirely because it doesn't make sense in our particular context. The whole point of its importance is its commentary on that context.
As Buffett notes, gold demand is an index of fear. And yes, generally returns on gold reflect the extent of fear. Were this the only return case, the whole thing would be subject to tautological collapse.
But it's not the only return case. Sometimes fears come true. Governments debase or revalue currencies, regimes collapse entirely, equity assets are appropriated. (Anyone care to guess what happens if foreign investor interests in the Chinese stock market collide seriously with vital state interests?) In these edge cases, gold is one of the few assets that carries value across the transition.
To which comes the reply, if the U.S. government falls you'll have worse problems than asset preservation. Certainly true. But when those problems get resolved, asset preservation will work its way back up the priorities.
It strikes me as lousy investment vehicle -- but I think it's a mistake to dismiss its political and economic importance entirely because it doesn't make sense in our particular context. The whole point of its importance is its commentary on that context.