Buffett Gets 'Comeuppance' After Gold Outperforms
Source: Seeking Alpha, Mark O'Byrne (6/5/09)
"Perhaps gold's utility is in balancing a portfolio?"
Our research shows that not only has gold vastly outperformed the revered Buffett's Berkshire Hathaway shares but investors were also rewarded with considerably less volatility (gold at 16% and Berkshire H shares at 23%) than Berkshire shares and most national indices. as the Nikkei, FTSE and S&P500.
Buffet himself emphasized the non-productive aspects of gold in a speech in 1998: "It gets dug out of the ground in Africa or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it."
As Marc points out and financial advisers in the UK and internationally are belatedly discovering - "Perhaps gold's utility is in balancing a portfolio?"
This is why high net worth individuals, institutions and central banks including the People's Bank of China are becoming net buyers of gold again. Berkshire Hathaway Inc. Chairman Warren Buffett is getting his "comeuppance" after rejecting gold as an investment four years ago, according to Marc Westlake, head of wealth management at Dublin-based bullion brokerage Gold & Silver Investments Ltd.
Gold more than doubled since May 2005, while Berkshire Hathaway's Class A shares gained 6.8%. Buffett said at the company's annual meeting in May 2005 that he wouldn't get rid of assets for "a hunk of metal which had no real utility other than to people that are fleeing the dollar."
The point is gold has preserved a chunk of wealth that would have been otherwise taken down with other financial instruments," Westlake said by phone from Cork, Ireland, on June 1. "Maybe what we're seeing is Warren Buffett's comeuppance."