Gold vs. Stocks: The Magical Metal No Match for American Mettle & # 39; – Warren Buffett

  Gold Vs. Equities: & # 39; The Magical Metal No Match For American Mettle & # 39; - Warren Buffett

(Kitco News) – What would have happened if billionaire Warren Buffett made his first gold investment instead of stocks? Well, according to Buffett himself, he would have lost out on billions, wrote the Mayor of Berkshire Hathaway in an annual letter to the shareholders.

"On March 11, it will be 77 years since I first invested in a US business. The year was 1942, I was 11, and I went in and invested $ 114.75. I had begun to gather in an age Of the six, what I bought was three shares of Cities Service preferred stock, "Buffett said.

The historic purchase sent Buffet in the direction he wanted to go. "I had become a capitalist and it felt good," he wrote.

Now let's imagine that Buffett would have been worried about the US economic situation and instead buy gold as a protection against inflation and market risk.

"In order to" protect "yourself, you may have disappointed stocks and opted to buy 3 1[ads1]/4 grams of gold with $ 114.75, and what would it be assumed that the protection had delivered? You will now have an asset worth About $ 4,200, less than 1% of what would have been realized from a simple uncontrolled investment in US business, the magic metal was no match for the US met, "Buffett concluded.

This comparison is particularly relevant in the days when US government debt reached new record highs of one hour and now stands at $ 22 trillion.

"Those who regularly preach doom because of state budget deficits (which I regularly did myself for many years) may note that our country's government debt has risen about 400 times over the past 77 years. That's 40,000%! Suppose you had anticipated this increase and the panic on the prospect of loss and a worthless currency, he said.

In the annual letter, Buffett reminded investors that America's impressive financial results cannot be forgotten. bought my purchase, waited for the nation after the war, a belief that proved to be well-founded. In fact, the nation's achievements can best be described as amazing. Let's put numbers to that claim: If my $ 114.75 had been invested in a S&P 500 index fund without charge and all dividends had been reinvested, my stake would grow to be worth (pre-tax) $ 606,811 on January 31, 2019 … There is a gain of 5 288 for 1, "he wrote.

Buffett also pointed out that there is always fear and chaos, but at the end of the day, the markets say.

" Since 1942 we have had seven Republican presidents and seven democrats. In the years they served, the country landed at various times with a long period of viral inflation, a 21% prime rate, several controversial and costly wars, a resignation of a president, a pervasive breakdown in home values, a paralyzing economic panic and a host of other issues . All came scary headlines; everything is now history, he says.

Buffet's letter comes as Berkshire Hathaway, which has large investments in companies such as Apple, American Express Company and Bank of America, reported a net loss of $ 25.39 billion in the fourth quarter or $ 15,467

Disclaimer: The views expressed in this article are the author's and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. or the author cannot guarantee such accuracy either. This article is for informational purposes only. It is not a call to make exchanges in goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept liability for any loss or damage arising from the use of this publication.

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