Warren Buffet was being intentionally obtuse. Of course gold is a bad investment. Because gold is not supposed to be an investment. It's money. It's a store of value, not a means to acquire a return on existing capital.
Don't think of gold in relation to a stock or a bond, think of it in relation to currencies. Gold is a unique currency that has no nationality, and which cannot be printed into existence. In the age of fractional reserve banking and fiat currencies, gold stands totally apart in this regard.
People don't understand gold because they have been intentionally misled to view it as an investment rather than as currency. Gold is real money (which stores value over time) that can act in the function of currency (which allows for transactions and payments).
To understand the purpose of gold, consider the following. Imagine you opened a time capsule that had been sealed one-hundred years ago in 1914. Inside the time capsule were three things: $1,000 worth of paper U.S. dollars from 1914, a $1000 stock certificate from a major corporation in 1914, and $1000 worth of gold in 1914.
What would each be worth in 2014?
Well, your $1000 in 1914 cash wouldn't be accepted as currency. You might be able to sell them to a collector for a few hundred bucks. Your $1000 stock certificate would most likely be to a company which no longer existed, and if the company did still exist after countless mergers and ownership changes, they would simply laugh at your ownership claim and tell you to sue them if you had a problem.
The gold would be worth about $75,000 though. Did it appreciate it value? Was it some amazing investment? No. It just didn't lose value. It did exactly what it was supposed to - it stored value over time. Your $1000 worth of gold in 1914 is worth $75,000 today, or put another way, your 2014 dollar is worth 1/75th of a 1914 dollar.
Don't think of gold in relation to a stock or a bond, think of it in relation to currencies. Gold is a unique currency that has no nationality, and which cannot be printed into existence. In the age of fractional reserve banking and fiat currencies, gold stands totally apart in this regard.
People don't understand gold because they have been intentionally misled to view it as an investment rather than as currency. Gold is real money (which stores value over time) that can act in the function of currency (which allows for transactions and payments).
To understand the purpose of gold, consider the following. Imagine you opened a time capsule that had been sealed one-hundred years ago in 1914. Inside the time capsule were three things: $1,000 worth of paper U.S. dollars from 1914, a $1000 stock certificate from a major corporation in 1914, and $1000 worth of gold in 1914.
What would each be worth in 2014?
Well, your $1000 in 1914 cash wouldn't be accepted as currency. You might be able to sell them to a collector for a few hundred bucks. Your $1000 stock certificate would most likely be to a company which no longer existed, and if the company did still exist after countless mergers and ownership changes, they would simply laugh at your ownership claim and tell you to sue them if you had a problem.
The gold would be worth about $75,000 though. Did it appreciate it value? Was it some amazing investment? No. It just didn't lose value. It did exactly what it was supposed to - it stored value over time. Your $1000 worth of gold in 1914 is worth $75,000 today, or put another way, your 2014 dollar is worth 1/75th of a 1914 dollar.
[size=8pt]"For I reckon that the sufferings of this present time are not worthy to be compared with the glory which shall be revealed in us.”[/size] [size=7pt] - Romans 8:18[/size]