Quote:
Originally Posted by brainz01
Gold is money. But like all currencies it fluctuates in value based on supply, demand, and perceived value.
In an environment where yields are low, the stock market seems overvalued, and governments world wide are printing lots of money (and/or incurring debts they can't pay), then the value of gold will increase.
Buffett buying a gold miner is a bit surprising. He's historically loved to hate on gold the commodity, preferring cash. But alas, the NIRP environment likely makes cash that much less attractive. And he's a value investor, and this doesn't look like a value market. So buying a gold miner allows him the fig leaf of "not buying an asset with no inherent income potential" but rather the business that produces more gold in a market that's like to demand more gold.
Makes sense.
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YEP
When governments prints money to save their azz regardless to the damage of it's intrinsic value it is time to bail out of that currency.
He is seeing a decline in the value of the USD, because of the wanton printing and spending..he is moving to an asset that produces the stuff that is perceived as being the stuff that has historically been the money since time began...
Demand for that producers stock will provide appreciation as the demand for gold grows as the situation becomes ever more unstable politically, economically an socially.
It is in essence a BET AGAINST THE USD, the STABILITY of America and the Global economy..call it hedging his bets.
With this move he has gotten out of Dodge and is headed for the high ground.
That is the import of his move.