I read an article this morning by Warren Buffett in CNN Money, also published in The Telegraph, which content has been taken/translated into French on this website.

My comment on this very “light” article about gold valuation methods is published here

Given the problems of presentation/display on that French website, here is my comment below :


An article close to disinformation about gold valuation methods, including the analysis of Warren Buffett, who has been wrong (deliberately ?) on gold since the beginning of the bull market.

Said bull market only revealing the collapse of fiat currencies, which are not convertible (in tangible assets), and the end of the current monetary system.

Buffett has his reasons and, especially, some financial assets to protect.

Quote : “Ridiculously over-valued asset!”

- Contrary to what you are saying, gold is not over-valued. A summary analysis of certain ratios measuring gold against other assets easily confirms this : the Dow/gold ratio, actual inflation rate adjustment, etc.

- How can we be talking about a gold bubble phenomenon when less than 2% of global savings are invested in gold today, whereas the long-term average has been from 10 to 15% ? Very few investors actually own physical gold today.

- Do you seriously believe that gold is under-valued in relation to the amount of money in circulation (an amount literally exploding as the bailout plans are being put into effect) ?  When adjusted to the real rate of inflation, the price of gold should be much, much higher.

Finally, Mr. Buffett puts himself in the position of an investor a hundred years from now : “An investor having chosen the first option (gold) would only have his 170,000 tons of gold and nothing else."

- What is the average lifespan of a company ? What is the current PER (price/earnings ratio) that would justify buying stocks at this moment ?

- Don’t you think that, a hundred years from now, the nominal value of gold won’t be much higher ? That 170-ton gold cube will likely buy twice what Warren Buffett announced…"

In conclusion, here is the point of view of Howard Buffett, Warren’s father : “ Human Freedom Rests on Gold-Redeemable Money.”

Sometimes the apple falls far from the tree…

You can read ZeroHedge’s analysis of Howard Buffett’s comments here.