How long do you think this gold dip will last?

[guerilla]

Berkshire Hathaway is a far better hedge against inflation than Gold.

Berkshire Hathaway is denominated in dollars.

Right now you're buying gold at a time when demand is sky-high from all the tin-foil hat 'mericans.

That's why they are installing gold bar vending machines in Germany, and the banks of India and China have been ratcheting up their gold reserves. Because it's all Americans, AMIRITE?

To sustain the current price level demand needs to stay at the current high level.

No, they only need to keep monetizing US government debt.

When (if) panic over inflation subsides, demand for gold will fall.

The panic is rational as the FED keeps increasing it's balance sheet. WHy would the "panic" subside?

I am no gold bug, I only hold dollars.

 

[guerilla]

1. Gold has always been a safe haven and it always spikes when there are looming economic problems, nuclear fears etc. Why buy at a cyclical peak?

Strong fundamentals.

2. I think the risk that gold is in a bubble exceeds the risk of your dollar denominated investments devaluing.

What risk? Dollar denominated assets devalue every day due to inflation and gold keeps going up, and you just said the risk of this was low.

Does anyone here understand economics at all?

Most investors think businesses (stocks) are the best hedge against inflation because they can simply raise prices inline with inflation.

Those are people who don't understand business cycle theory.

This is why I recommended Berkshire, they're businesses (A) have pricing power (B) Are in general not asset heavy (C) earn sufficiently high returns to overcome the inevitable cost of inflation.

Inflation is not inevitable, it is inevitable in a fiat money system.

Berkshire's entire valuation is dependent on the fiat dollar which is being depreciated daily.

 

[TheBrozar]

Here is the real deal.

There are something like 42 elections in the world in 2012. Everyone is printing money and doing whatever they can to stimulate their economies to get re-elected.

The idiots will take their money out of gold and silver thinking that the economy is fixed or getting better. I will buy more gold and silver in the dip.

2013 and 2014 the shit will hit the fan and precious metals will sky rocket.

The FED is out of control. I would hold onto Gold and Silver unless Ron Paul gets elected.

 

[-joe-]

Pop.

 

[stockfire]

Berkshire Hathaway is denominated in dollars.

I'll refute one of your points. The others are in a similar vein.

Berkshire Hathaway is denominated in dollars but so are its products. And since Berkshire companies have pricing power they can raise their prices with inflation. Their costs will of course also rise with inflation.

The problem with Berkshire is not that it is denominated in dollars because of the above reason, but because of the cost of inflation in maintenance capital expenditures & required investments in working capital.

The hedge comes from the fact I believe Berkshire's value will rise at a higher clip than inflation.

 

[guerilla]

Berkshire Hathaway is denominated in dollars but so are its products. And since Berkshire companies have pricing power they can raise their prices with inflation. Their costs will of course also rise with inflation.

That's irrelevant because an increasingly worthless dollar is still worthless whether you have 100 or 10,000.

The hedge comes from the fact I believe Berkshire's value will rise at a higher clip than inflation.

You're the speculator amigo.

 

[slayerment]

Which Berkshire are you guys talking about? This one? Berkshire Hathaway Inc.: NYSE:BRK.A quotes & news - Google Finance The one that's up 10% the last 5 years? Or perhaps the S&P? How are they holding up to gold? Company Comparison - Google Finance

The only bubble is debt. If gold is in a bubble then debt is in a bubble. Are we in less debt than we were when gold was $1900/oz? Is it possible to get out of debt knowing that we pay interest on every dollar that is lent into creation? Is it possible to get out of debt when the Fed monetizes its own debt? Why has gold gone from $250 to $1600 the last 10 years? Is it fear or is it debt? Why has an ounce of gold and a share on the Dow not reached parity yet? You do realize that nothing has been changed for the better insofar as the economy is concerned. What made gold go up in the past has not been fixed. Supply and demand is right. There is an infinite supply of debt, there is only a finite supply of gold. You guys do understand that the debt bubble has to pop before the gold bubble...

 

[stockfire]

There is an infinite supply of debt, there is only a finite supply of gold.

Maxims like this are dangerous.

First of all, for our purposes there is not a finite supply of Gold. When the price of any commodity rises the supply increases. When Gold rockets it is suddenly economical to mine lower grade Gold from deeper, harder to get to places.

In the past 5 years there are has been a whole bunch of new gold mines coming online. This increases the supply, these mines cannot be shut down immediately. So the supply is semi-fixed at quite a high level.

At $1,600 gold, demand and supply are currently in equilibrium at a high level. i.e. a high demand for gold is meeting a high supply of gold at $1,600 an ounce.

If (and it is not a big if) demand for gold starts to slip - Supply cannot be cut back easily, so supply will stay at a similarly high level. But demand is falling. Econ 101 will tell you what happens next.

The Fed isn't going to suddenly double the money supply. Yes they will continue to print, but I don't think it will reach the proportions that support swapping benjamins for gold at this high a level.

 

[guerilla]

The Fed isn't going to suddenly double the money supply. Yes they will continue to print, but I don't think it will reach the proportions that support swapping benjamins for gold at this high a level.

You need to learn about fractional reserve banking.

Then you will sell all of your shares and live in the mountains like me.

 

[TheBrozar]

Maxims like this are dangerous.

First of all, for our purposes there is not a finite supply of Gold. When the price of any commodity rises the supply increases. When Gold rockets it is suddenly economical to mine lower grade Gold from deeper, harder to get to places.

In the past 5 years there are has been a whole bunch of new gold mines coming online. This increases the supply, these mines cannot be shut down immediately. So the supply is semi-fixed at quite a high level.

At $1,600 gold, demand and supply are currently in equilibrium at a high level. i.e. a high demand for gold is meeting a high supply of gold at $1,600 an ounce.

If (and it is not a big if) demand for gold starts to slip - Supply cannot be cut back easily, so supply will stay at a similarly high level. But demand is falling. Econ 101 will tell you what happens next.

The Fed isn't going to suddenly double the money supply. Yes they will continue to print, but I don't think it will reach the proportions that support swapping benjamins for gold at this high a level.

In order for US to pay all its debt obligations it is going to have to print a shit ton of money. They will inflate the money supply to pay off the debt with worthless money and the world will drop the dollar as the reserve currency.

Gold will go up.

 

[stockfire]

You need to learn about fractional reserve banking.

Then you will sell all of your shares and live in the mountains like me.

Make sure you take enough Ammo!

 

[erect]

Right now you're buying gold at a time when demand is sky-high from all the tin-foil hat 'mericans. To sustain the current price level demand needs to stay at the current high level.

The demand for tech, jewelry & investment won't go anywhere since there's nowhere else to invest.

When (if) panic over inflation subsides, demand for gold will fall. The price will fall. That's not to mention the fact supply has risen precisely because the price of gold is so high.

High supply, lower demand = price fall.

Actually, the interest rate returning to market rates will trump supply and demand regardless of what they are (IF it's allowed to happen) ... this will cause more savers to save in dollars and loan to entrepreneurs .. which will cut into the invested amount. That might cut into the demand for gold ... but keep in mind that with higher interest rates dollars would be in more demand, not gold losing it. Gold is just something that's tangible & unwavering ... exactly as it's been for centuries including this current generation long "bull market".

IMO this is a pretty important point because if you don't get that gold never changed, you'll never figure out why prices on assets fluctuate and your portfolio, regardless how diversified it is, will fail

Realistically, raising interest rates not going to happen until these states have a bankruptcy sale and we no longer use FRNs anymore. It is what it is guys, to think that we live in the old country where paper investments can be deemed "safe" is foolish.

The Fed isn't going to suddenly double the money supply. Yes they will continue to print, but I don't think it will reach the proportions that support swapping benjamins for gold at this high a level.

It was tripled in 2008

 

[guerilla]

Make sure you take enough Ammo!

We're loaded for bear.

Seriously, you need to understand how the banking system works.

I hope you understood my calling you a speculator.

I can articulate the fundamentals behind the rise in gold demand GLOBALLY, you have a hunch that Berkshire Hathaway will outpace inflation, (neither the future profit or inflation rate do you know) and be a good source of earnings.

Well, not only does Berkshire Hathaway have to outpace inflation, it has to outpace gold as well. And gold is the multi-millenial hedge against inflation.

Gold is not an investment. It is a store of value. Speculating about gold is radically different than hedging against dollar devaluation. What you call the panic trade is not profit driven. It is driven by the fundamentals of a debt money economy entering it's last phase.

 

[Unarmed Gunman]

Berkshire Hathaway is denominated in dollars.

Berkshire's share price is denominated in dollars. There is a huge difference between capital and dollars though, and Berkshires value (or Chevron, or Intel or whichever company) lies in it's capital. Why would it matter if that capital is measured in dollars, euro's, yen or reniminbi? Or Gold?

At the end of the day they control an enormous amount of capital and that is far more important than any store of value including gold, is it not?

 

[charlesmartel]

I hope it lasts for a while. I haven't hit my acquisition target yet. Gold FTW, bitches! Keep dollars to wallpaper your bathroom!

 

[guerilla]

Berkshire's share price is denominated in dollars.

Yes.

Why would it matter if that capital is measured in dollars, euro's, yen or reniminbi? Or Gold?

Because when the dollar goes POOF so does Berkshire Hathaway.

At the end of the day they control an enormous amount of capital and that is far more important than any store of value including gold, is it not?

What capital does Berkshire Hathaway own?

B.H. owns shares in other companies. Shares denominated in USD.

Look, Gold is up double since 2008. Is Berkshire Hathaway up double since 2008?

If it is such a valuable company, why not? Are you guys really trying to tell me that a relatively small portion of the population (mostly "fearmongers") are outpacing the world's stock markets on a panic trade lasting 10 years?

 

[Dresden14]

ive mentioned several times how many suisse bars of gold i have bought through ebay. I got in mostly at around the $1k mark as my average. Personally, I stopped investing in gold and started to do more investments in led (bullets/guns). If the dollar goes poof as stated above, I dont think you'll be worried about gold to buy food, etc. It would be complete chaos. After all, with my guns i can take your gold, you know?

Unless of course your not looking at this in a crazy person/prepper, dollars gonna fall point of view and only as an investment purpose to try and get a 25% flip or something.

 

[Unarmed Gunman]

Because when the dollar goes POOF so does Berkshire Hathaway.

What capital does Berkshire Hathaway own?

B.H. owns shares in other companies. Shares denominated in USD.

It's not that simple. Most of what Berkshire owns is entire companies - not shares in companies. For instance, they just bought BNSF a couple of years ago, so now they own half the railroads west of the Mississippi. I don't think it matters what store of value we use, food will still need to be shipped from the breadbasket to the eastern seaboard. They can charge in dollars or conch shells, but since they control so much of the capital, infrastructure and means of production in this country I don't see how inflation hurts them.

Look, Gold is up double since 2008. Is Berkshire Hathaway up double since 2008?

If it is such a valuable company, why not? Are you guys really trying to tell me that a relatively small portion of the population (mostly "fearmongers") are outpacing the world's stock markets on a panic trade lasting 10 years?

You can selectively take any period of time and make one investment look more favorable than another. For instance - let's look at the last 6 months:

Gold is down almost 10%
Berkshire is up almost 14%

Or we can go longer term and look at the prices since 1990:

Gold has gone from $399/oz to $1,690 which is an increase of over 400%.
Berkshire has gone from $7,455 to $121,074 which is an increase of over 1,500%.

Or look at a company like Chevron whose stock price is up over 550% since 1990, but on top of that they actually have paid increasing dividends every quarter since 1970 so you not only have an increase in value but a consistent return on your investment as well. How much in dividends does gold pay?

 

[guerilla]

It's not that simple.

LMAO

 

[Unarmed Gunman]

LMAO

I'll take that as a concession.