Tuesday, September 28, 2010

Charlie Munger on Gold

Warren Buffett’s partner, Charlie Munger, is a very smart and well-informed guy with strong opinions on a wide range of topics, financial and otherwise. He recently commented on several subjects including investing in gold.

Munger believes we have a “moral obligation to become rational,” that hoarding gold is irrational, and that “even if it works, you’re a jerk.” It sounds like Munger won’t be getting any Christmas cards from gold bugs.

On other subjects, Munger believes that our best option for alternative energy is solar and that running cars on corn is crazy. He believes that stocks are a better bet than government bonds at current rates. A good quote was his reference to “the nutcase that runs North Korea.” It must be great to feel comfortable enough to say what you really think.

The rest of the article quoting Munger's remarks is definitely worth a read.

8 comments:

  1. I always thought Munger deserved more attention.

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  2. This is a gem of a find. Thanks for linking.

    After a quick Google search, I found this video of the event (I think):

    http://rossmedia.bus.umich.edu/rossmedia/SilverlightPlayer/Default.aspx?peid=4d215177cbe44b1e8e94d0dd68f5058f

    Enjoy!

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  3. @Larry: I agree. Even when he is talking about non-financial issues, he deserves more attention.

    @CC: Glad you liked it. I'm looking forward to watching the entire interview. Thanks for the link.

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  4. I'll send him a postcard, but I still believe that the "gold rush" is here to stay. A few years back (2005, if I am correct) everyone was depressed because the US deficit was 440 billion dollars. In 2009 it was 1400 billions and everything seems fine. In Europe, again, hundreds of billions left and right. Where is this money coming from?! I guess we all know that the printing machine is on and running hot. Yes, it's a bubble, yes, it will go down at some point but I personally don't think it's going to be overnight but only as the economy goes back to the basics.

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  5. @Andi: I have no idea what will happen to gold prices, but I am sure that gold has little intrinsic value. Those who hold gold must hope that others continue to want gold.

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  6. You're quite right, Michael, and I subscribe to this point of view - while there is industrial value in it, it's not enough to justify 1300$/ounce. But let one try to explain this to their wife who wants that shinny rock for 6000$, that it's just carbon or one explaining to their teenager that an mp3/mp4 player it's not worth 500$ just because it has a certain brand stamped on it. In the times of hedge funds, of derivatives, who really knows what is the real value of something? We make educated guesses and in the end what's important is to not bet the farm on those guesses :)

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  7. I invest to increase my wealth. Over the last 5 years one of the best ways to do this has been to buy gold or the ETF , GLD. Over this period , it has beaten Brk.B easily. Of course neither stock pays a dividend, so I guess both stocks are similar in that regard

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  8. @Anonymous: The important thing now is what will happen over the next 5 years.

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