Buffett's Right Hand Man Says Civilized People Don't Buy Gold

[craigr]

anyway to know if they are trying to accumulate a large position for themselves (without millions of investors vying for the same metal)?

That would surprise me.  Presumably it would show up in BRK's SEC filings at some point.

What wouldn't surprise me though is to find out Buffet and/or Munger held some hard assets offshore somewhere. It may even be gold for all we know. If it were privately held there would be no need to disclose to the SEC.

[hoost]

His view is that a productive business with a lot of economic goodwill (strong brand, patent protection, etc.) is much better to hold during inflation.  I think he looks at gold in isolation and sees the wild fluctuations in price and that deters him.

And yet Buffett's 1990s silver trade was one of the largest precious metals speculative plays in history.

He just sounds like a hypocrite to me.

What he should say is "I happen to be one of the largest precious metals speculators in all of history, but I just don't happen to like the current risk/reward situation in the precious metals space right now."  That would be the truth.

I either wasn't aware of or forgot about the silver trading in the 90's.  I'll have to look back and see what he said about it.  I recall he was beginning to hedge the dollar with the euro a while back, but he did it by buying euro-denominated securities.

He's normally been pretty consistent in the past.  For instance, after saying that having a company plane was a horrible waste of shareholder money.  He bought a plane and named it the Indefensible.  He didn't even bother trying to justify it, which I found refreshing.

[MachineGhost]

And yet Buffett's 1990s silver trade was one of the largest precious metals speculative plays in history.

He just sounds like a hypocrite to me.

He lost money on that trade (while I profited), so it's just sour grapes.

MG

[smurff]

What wouldn't surprise me though is to find out Buffet and/or Munger held some hard assets offshore somewhere. It may even be gold for all we know. If it were privately held there would be no need to disclose to the SEC.

I suspect that the Buffett and Munger families have privately held assets (including hard assets) scattered in banking centers all over the world.

[smurff]

In a private equity/joint venture manifestation of the Dry Bones song ("the leg bone is connected to the knee bone, the knee bone ...") I found out that Berkshire Hathaway bought 80% of a company in 2006, IMC (International Metalworking Companies). IMC is investing in tungsten mining through Woulfe Mining, a company whose S. Korea plant, Sangdong Mineral Resources, is building/has built/is drilling in the tungsten mine.   This was from a presentation of the Hard Assets NY conference, which I'll describe in a separate section later.

Woulfe Mining also has the Muguk Gold Corp. in S. Korea, the Yeonwha Mining Corp., and in their literature they include the BRK company IMC on a confusing corporate structure diagram, indicating also that they are a major stake holder (along with Commonwealth Bank of Australia, Korea Zinc Corp Ltd, and Pinetree Capital).

So Berkshire Hathaway may or may not be invested in gold through this joint venture.  I find it interesting that the main metal of IMC's interest is gold's almost-twin-density-brother, tungsten.

http://www.woulfemining.com/s/Home.asp
and
http://www.imc-companies.com/index.html

Woulfe is very proud of their IMC connection.  In their literature ("Woulfe Mining:  Moving back to Production Tungsten-Molybdenum Gold-Silver Lead-Zinc") they refer to IMC Companies as "Warren Buffet's IMC Corp." (sic)

[Greg]

Just came across a great article in response to this topic:

http://dailycapitalist.com/2012/05/08/g ... nvestment/

That gets my vote for the best linked article posted in the last week.

Ditto.  What a great read.  And now we know why we hold gold in our portfolios.

I was just looking back on this post and thought of it as an interesting thought experiment of how would I get gold out of the country if the government suddenly took over everything. I would probably need a bunsen burner or something along those lines to get gold hot enough to melt. After that point, I'm not sure what I would do:

1.) Hollow out heels of boots/shoes and fill with gold
2.) Sew into garments (not sure how easily this could happen and would it provide odds weights to the clothing in various spots)
3.) Ingesting to get it over the border into Canada, etc.
4.) Another shoe idea since normally they can be heavy. To melt the gold into the bottom of a shoe portion and cobble it together to a regular shoe and paint it the same color as your shoe already.

Any other hypothetical ways to get it out of the country if the government goes full-on corrupt?

[PP67]

[craigr]

Any other hypothetical ways to get it out of the country if the government goes full-on corrupt?

Yes. Already have some stored outside the country to begin with!

[6 Iron]

Any other hypothetical ways to get it out of the country if the government goes full-on corrupt?

Yes. Already have some stored outside the country to begin with!

Is this a teaser for the book ?

[MediumTex]

Any other hypothetical ways to get it out of the country if the government goes full-on corrupt?

Yes. Already have some stored outside the country to begin with!

Is this a teaser for the book ?

Craig did most of the work on the gold storage sections of the book and I think it turned out really well.  Unlike a lot of the other stuff in the book which has been covered on this forum at some point, there is gold storage information in the book that we really haven't gotten into here much at all.

[Ad Orientem]

Is this a teaser for the book ?

Craig did most of the work on the gold storage sections of the book and I think it turned out really well.  Unlike a lot of the other stuff in the book which has been covered on this forum at some point, there is gold storage information in the book that we really haven't gotten into here much at all.

That's a "yes."

[MediumTex]

Is this a teaser for the book ?

Craig did most of the work on the gold storage sections of the book and I think it turned out really well.  Unlike a lot of the other stuff in the book which has been covered on this forum at some point, there is gold storage information in the book that we really haven't gotten into here much at all.

That's a "yes."

Craig did what you might call a bit of "gold storage tourism", which added a lot to his analysis.

[Greg]

Is this a teaser for the book ?

Craig did most of the work on the gold storage sections of the book and I think it turned out really well.  Unlike a lot of the other stuff in the book which has been covered on this forum at some point, there is gold storage information in the book that we really haven't gotten into here much at all.

That's a "yes."

Craig did what you might call a bit of "gold storage tourism", which added a lot to his analysis.

That seems like a great idea although never heard of that idea before for gold. I've heard of medical tourism or going to other countries to get procedures done on the cheap but never a way to store gold. I'm looking forward to when this book comes out.

As a sidenote, rather than paying for the price of the book through cash, would you rather us just send you a half a gram of gold in an envelope? 

[Ad Orientem]

As a sidenote, rather than paying for the price of the book through cash, would you rather us just send you a half a gram of gold in an envelope? 

That is cash. Just a different currency. 

[Greg]

As a sidenote, rather than paying for the price of the book through cash, would you rather us just send you a half a gram of gold in an envelope? 

That is cash. Just a different currency. 

Well to be perfectly nice to them, they should tell us which rebalancing band they are closer to 15% with. That way we either give them gold or cash based on that and save them some tax money on delaying a rebalance.

[craigr]

Is this a teaser for the book ?

Oh not really. Just saying that getting gold outside the country is a lot easier if it's already there! Definitely best to do that kind of thing well before you need it.

But yes, the book covers easy ways for people to safely put gold outside the country if they want with little hassle in allocated storage. Not just for big dollar accounts either, even very small accounts will have options. And by small I mean you could use one service and put a single gold coin under your name and they'd do it for you. But the main criteria really for us was to have ways to implement this strategy with very little risk. Also without any shady guys hawking gold storage in places where you can't drink the water.

[hoost]

I was just looking back on this post and thought of it as an interesting thought experiment of how would I get gold out of the country if the government suddenly took over everything. I would probably need a bunsen burner or something along those lines to get gold hot enough to melt. After that point, I'm not sure what I would do:

1.) Hollow out heels of boots/shoes and fill with gold
2.) Sew into garments (not sure how easily this could happen and would it provide odds weights to the clothing in various spots)
3.) Ingesting to get it over the border into Canada, etc.
4.) Another shoe idea since normally they can be heavy. To melt the gold into the bottom of a shoe portion and cobble it together to a regular shoe and paint it the same color as your shoe already.

Any other hypothetical ways to get it out of the country if the government goes full-on corrupt?

These might work if you're driving, but not flying.  The density imaging would pick it up.  Someone posted a link, I believe here, to a series of threads on a different forum from a gentleman who was emigrating to Australia.  Lots of good info on those threads.  Although it's possible it may not be that easy in the future.  I think he shipped his silver and carried his gold.  Just had to make sure to make the proper declarations for customs.

[cabronjames]

for me, being diversified is very important, whereas I give less than a care/importance that some Douche that works with Buffett thinks my "Civilized status".

If said Douche can produce historical transactional records showing he beats the Perm Port on a risk-adjusted return basis from 1980-2012, & also matched a real (CPI-adjusted) 4%+ real return in each decade 80s, 90s, & 2000s, maybe I'll be interested in hearing more of his investment advice.

[MachineGhost]

Any other hypothetical ways to get it out of the country if the government goes full-on corrupt?

Its called Brinks or Via Mat.

Even in 1934, individuals got to get away with their personal gold in de facto terms.  It was the institutions that were FUBAR.  Only one person was ever prosecuted and he won anyway.  Lesson learned: don't store your gold with domestic financial institutions.

Unless there is a flight to safety into gold away from collapsing FRN's and Treasuries, the idea of confiscation again makes no sense.  People flee to money in a deflation not assets, and in an SHTF scenario, you better have some canned food, water, ammo, soap, cigarattes, etc..

[Ad Orientem]

Any other hypothetical ways to get it out of the country if the government goes full-on corrupt?

Its called Brinks or Via Mat.

Even in 1934, individuals got to get away with their personal gold in de facto terms.  It was the institutions that were FUBAR.  Only one person was ever prosecuted and he won anyway.  Lesson learned: don't store your gold with domestic financial institutions.

Unless there is a flight to safety into gold away from collapsing FRN's and Treasuries, the idea of confiscation again makes no sense.  People flee to money in a deflation not assets, and in an SHTF scenario, you better have some canned food, water, ammo, soap, cigarattes, etc..

The world is too interconnected economically. Gold held in any country is often owned by people from many other countries. Gold confiscation by a major state is almost impossible to imagine unless that country wants to isolate itself from the rest of the world.

[Greg]

http://seekingalpha.com/article/696911- ... hedge-ever

The more I've been learning about gold, the more all of these types of articles slur into themselves with the same arguments...

[Ad Orientem]

http://seekingalpha.com/article/696911- ... hedge-ever

The more I've been learning about gold, the more all of these types of articles slur into themselves with the same arguments...

Same tired arguments, that have been debunked a thousand times over. Gold is not merely a commodity. It is a currency. Point in fact, it is the only major currency (conceding that silver could also be used here) that is impervious to the depredations of central bankers and their magic printing presses. Can it go down? Of course. But it can also rise violently. And it tends to do just that during any period where the sovereign paper currency is being manipulated or threatened in any way.

Seriously, I don't want to sound uncharitable, but if ignorance were a virtue this guy would be a saint.

[MachineGhost]

http://seekingalpha.com/article/696911- ... hedge-ever

The more I've been learning about gold, the more all of these types of articles slur into themselves with the same arguments...

Like perma-bears, these guys are right twice a day.  But they just don't understand what use that gold or real assets have within a portfolio or economic regime context.

Commodities are a zero-sum game long term.  That includes gold.  But as Keynes famously said, "in the long run we're all dead", so you gotta deal with the short and intermediate term.