Not All Billionaires Love Gold
| by Michael Locklear
August 28, 2012 – In his annual letter to the Berkshire Hathaway shareholders gold was not popular with Warren Buffett. He cited the precious metal as “forever unproductive” as an asset. As Soros, Paulson and Rothschild head towards gold as a shiny future, Buffett will not be joining the group.
Why then is gold moving up in the hearts and minds of so many others? Well for one thing they’re not making any more of the stuff. It is true that gold doesn’t produce anything, but it’s also true that investors love it because no one will be making any of it.
In a world where more and more people are uneasy about the future of paper money, their trust goes back to an old reliable friend. Gold is where they put their faith, because that’s real money.
Over the last 11 years gold has been on a steady rise and it has now outperformed the holdings of Berkshire Hathaway. Now in all fairness the last 10 years have not been the best time for monetary stability and the global stock picture has at times been a real nightmare. It is also true that the world currencies have a lot of people very, very nervous.
In response to the shaky economic outlook in Asia, Europe, and the US it is easy to understand why an increasing number of investors are moving into hard assets such as gold. Now most people still favor the Buffett approach to making money and gold is still a wallflower in the asset dating game.
In the short term most people still enjoy a comfortable relationship with the stock market and unless there is a major scare this will continue to be so. Meanwhile another billionaire, Bill Gross may be hinting at a lean towards gold.
Known as the “Bond King” , Gross is the founder of PIMCO a trillion dollar financial firm that manages bond portfolios. Last month he said “recent central-bank behavior, including that of the US Fed may as well induce inflationary distortions that give rise to commodities and gold as a store of value alternatives when there is little value left in paper”.
Out beyond the mere billionaires of the world is another great lover of gold and it’s got more money than God, as the saying goes. So who is the multi-trillion dollar gold financier who has the whole world all abuzz? Well it’s China. China is not only the world’s top producer of gold, it is also the world’s leading importer of gold.
China is also is one of the largest holders of US treasury bonds. The interesting thing is that China is moving out of US bonds and into gold. In fact the Chinese central bank is rumored to be making even bigger moves on gold as it is believed to be ramping up to 5,000 to 6,000 tons of the stuff in the very near future.
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