When it comes to gold, I agree with Warren Buffett and I disagree with him. I agree that there are plenty of other productive assets to own that are inherently more attractive than the precious metal… most of the time. I disagree, however, when he implies that this is true ALL of the time.
There are times when productive assets are simply unattractive. At the top of their respective bubbles real estate and stocks were simply unattractive as investments. Now Warren would tell you that during these times you’d be better off just holding cash or maybe short-term treasuries. Normally, I would agree completely.
But when you have central bankers around the world who are desperate to stimulate their own economies by competing with one another to see who can print money the fastest then cash can also become an unattractive place to keep your money.
Warren Buffett also likes to say, “be fearful when others are greedy and greedy when others are fearful.” Right now gold is in the midst of a panic. This fear creates an opportunity for those interested in owning a hedge against competitive devaluation and at a depressed price.