The Great Buffett-Gold Lie

How the world’s greatest investor LIED about the role of gold in finance

In his 2009 letter to Berkshire Hathaway shareholders, Warren Buffett penned an oft-quoted critique of gold. Here’s the bulk of it:

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce — gold’s price as I write this — its value would be $9.6 trillion. Call this cube pile A. Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

Gold, as Buffett correctly pointed out, does not yield cash flow.

But why compare these two asset classes: gold vs. stocks?

It’s a bizarre comparison. Were Buffett to pen a similar critique of say, the US dollar, it would illuminate the strangeness of his…