RSSWarren Buffett = Dunce
J.J. Jackson | November 27, 2010
Warren Buffett is one of those guys that so many people turn to for sage advice. The problem? Well, Warren Buffett is pretty much a dunce that has allowed his own desires and prejudices to cloud his judgement. In the MSN article, “What’s Buffett got against gold?” we see clearly why anyone who thinks that Buffett is thinking clearly should pause.
Buffet bemoans gold because:
“(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
That was in 1998. Well I guess when you want to be against something so badly you have to make up reasons to be against it. This entire statement is best described as claptrap.
Gold has value because people want it for a variety of reasons. Be it jewelry or its use as an industrial metal, gold has a myriad of uses. The fact that we cannot just, for the most part, walk around and scoop it off of the ground wherever we may be means that it takes time, energy and money to get this metal that people want. Therefore, like all things that people want it becomes valuable.
In fact gold has to go through the same process as every other metal that is in demand. Iron for steel, cobalt, tungsten, copper, and so on all must be mined before they can be used to be turned into whatever they are to be turned in to. If gold is essentially worthless, and Mr. Buffett implies, then so are these metals. But as we can see in reality they all command a price on the open and free market and are not worthless.
Mr. Buffett seems to have deeper issues with gold because it is clear to see why it has value. Its relative rarity also increases that value. What are those deeper issues? Who really knows. But they are illogical whatever they are.
Whether or not gold has value however should not be assumed to mean that its current value on the open market is undervalued, fair or even in a bubble state at the current moment. When gold was $300 an ounce many people thought it to be grossly under valued. Now that gold is well over $1,000 an ounce many people think it is over valued. In truth, only the long term market determines which is right.
Gold is one of those things that causes people to have strong feelings either for or against it. Generally speaking those who favor gold as a backup to paper currency have a stronger leg to stand on because over the centuries we have indeed seen that in times of strife gold has been widely accepted as a universal term of barter. But those who dislike gold bemoan how one would ever use gold at $1,400 or $2,000 an ounce to buy a loaf of bread.
They do this by forgetting that there are other precious metals such as silver, which I personally prefer, that are lower in value per ounce and make sense for small transactions. They also tend to forget how gold has actually been used when the price of the metal has exceeded the cost of common items. At such times coins were usually shaved. Since the actual value of the coin was in the weight of the gold and not the denomination of the coin or the bar, the weight of the gold is all that mattered. If you had a one ounce gold coin marked as worth $20 (because it was minted 100 years ago for example) but the actual value of the gold was $100 and an item was $1, then the proper amount of gold was shaved from the coin to pay for it. This of course led to problems later on when people tried to pass off a shaved $20 gold piece to others since there was no longer $20 worth of gold in the coin.
The end conclusion here though is that Warren Buffett and all of those that decry gold as an item of barter and value are fools. They are fools who are letting their own prejudices interfere with logic to the point where they will just make up reasons why they are not fond of gold and other precious metals.
In a day still yet to come when the currency of America collapses due to inept leadership from Washington there will be certainly many things that people will turn to as valuable and worthy of exchange for other items that they need. Gold will be one of them. Whether or not Mr. Buffett thinks so or not.
Copyright © 2006-2010
J.J. Jackson is a libertarian conservative author from Pittsburgh, PA who has been writing and promoting individual liberty since 1993 and is President of Land of the Free Studios, Inc. He is the Pittsburgh Conservative Examiner for Examiner.com. He is also the owner of The Right Things - Conservative T-shirts & Gifts. His weekly commentary along with exclusives not available anywhere else can be found at LibertyReborn.com (Digital Fingerprint: libertyreborn123456789)
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