American Consequences - September 2020

By Bill Shaw


The financial media likes to label precious metal investors as gloom-and- doomers... goldbugs... and doomsday preppers.

At least until gold starts heating up – and the economy looks dangerous.


That’s when gold investors start to hear from friends and family. For example, a few questions I’ve been asked in recent weeks: “Should I be selling stocks and buying gold?” “How do I buy gold? And... what should I buy?” “Do you think gold will keep going up?” Normally this level of interest might give me pause. After all, I’ve known these folks for years – and they never seemed to care about my thoughts on gold before. Could the trade be getting overheated? Is this a “sell” signal? My bet is no. Not even close. If you’ve been investing for long, you’ve probably heard plenty from gold’s detractors. The arguments are always the same... Gold doesn’t pay interest or dividends. It just sits there. It’s a “barbarous relic,” as legendary investor Warren Buffett has put it in the past, that has no place in today’s world. As Buffett said in a speech at Harvard in 1998...

Gold 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. It has no utility. Anyone watching from Mars would be scratching their head. So the finance world was shocked to learn last month that Buffett’s holding company Berkshire Hathaway plowed more than $500 million into gold miner Barrick Gold (GOLD). The news made headlines across the industry, even though it’s a relatively small position for Berkshire’s overall portfolio. And it came just days after the price of gold broke through $2,000 per ounce for the first time. Suddenly, everyone is interested in gold. And while there are still plenty of staunch gold skeptics, my guess is that most folks fall into the same category as my friends and family. That is, they understand that gold holds some sort of importance but may not understand why. That’s what I’d like to explain in brief today...

American Consequences


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