Berkshire Is All Wrong About Gold

 | May 07, 2012 | 3:50 PM EDT  | Comments
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I don't know about you, but I am tired of the Berkshire Hathaway (BRK.B) team's endless trashing of gold. We heard all morning about how Warren Buffett simply doesn't believe gold is an investible asset. He only wants to invest in what he calls productive assets.

But the killer statement against gold came from his right-hand man, Charlie Munger: "I think gold is a great thing to sew into your garment if you're a Jewish family in Vienna in 1939, but civilized people don't buy gold, they invest in productive businesses."

Ouch!

Putting aside a close reading of that statement which would clearly imply that pre-Holocaust Jews weren't civilized, it just seems wrong to me for both these two gentlemen to throw stones at gold.

They live in a glass house. Especially when you compare their digs to gold.

Here are the real data. In the last decade, gold has gone from $280 to $1,600. Berkshire's B-stock has gone from $49 to $81.

Berkshire has underperformed not just gold. It has underperformed the S&P 500 for the last 10 years, up 60%, vs. 90% for the index.

Yet not for a minute do Munger or Buffett ever change their tune. They never seem to deal with the facts of the matter, the huge discrepancy between how gold has done compared with how Berkshire Hathaway has done.

Why is this?

I search for a reason.

Is 10 years not long enough? I think that's a long time. Maybe these two gentlemen have been at it for so long that 10 years doesn't mean anything. But gold has outperformed all other assets in the world in the last 10 years. All other assets!

Shouldn't that matter?

I think they say it because they can. I think they say it because they can get away with it. I think they say it because they don't care.

To me it's just painful. Especially the Jewish comment. Poor taste. Poor judgment.

And just plain wrong.

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