Monday, November 1, 2010

The Truth Will Set Warren Free

By now everyone knows that Warren Buffet stated a couple weeks ago that he would recommend avoiding gold and buying stocks.  Here's why:

See the problem?   "Hat tip" to my colleague Hal for this chart.  As you can see, Buffet's primary wealth vehicle (that we know of) has substantially underperformed gold for the past 10 years.

To have a great understanding of why gold/silver will start to accelerate in price vs. everything, please read the latest posting from Jim Willie:  LINK  This essay does an epic job of explaining why the U.S. banking/financial system is on a catastropic precipice and what to watch for in terms of the impending massive monetization that is about to be implemented by the Fed/U.S. Government.

JW explains the Fannie Mae will be used as the vehicle to monetize the mortgage fraud.  For the record myself, along with a couple long-time colleagues, have been predicting that this would occur since 2002.


  1. Hi Dave,

    All of GATA people & you are invested in GOLD & Silver since year 2001 onwards. On those days circumstances (monetizing for dotcom bubble & Gold Fractional reserve accounting in LBMA) all of you were calculating possible Gold price of of USD 1000 & above.

    Then came Sub prime crises in 2007 & new projected Gold price due to various monetize-san scheme (AIG, Bear Stance, JPM etc)is now around USD 3000 to USD 5000.

    Now newer & newer monetization scheme is introduced almost every 6 months to delay the inevitable collapse of the present monetary system.

    So according to your conservative estimate as on date what will be the possible price of Gold & Silver(please exclude mass madness factor)?



  2. Isn't it better to buy physical silver and gold instead of say SLV/GLD or the Sprott physical funds because you dont have to pay tax on gains?

  3. pgd, i've ceased and desisted from putting time frames and definitive forecasts on the price of the metals, and the markets in general.

    Quite frankly, from a fundamental perspective, the Dow belongs under 3000 and gold belongs who-knows-how-high...

    Here's what I have come to believe. Eventually China or China + others will roll out a gold/silver-backed currency. At the same time, they will revalue the price of those metals substantially higher in order to create a solid backing of the new currency with the gold/silver they possess. I don't know what price that will be. Eric King did a radio broadcast in like October 2008 I think, you might be able to find it on his website or on Puplava's website archives. In that interview he justifies a $38k price of gold based on assuming Central Banks will revert to using 40% of their reserves as gold. I believe his number is derived from taking the current reserve levels of all CB's and applying a 40% backing of gold and then backing into what the price would have to be in order to imbue enough value into that gold for achieve the 40% backing.

    This is a topic of heated debate. All I know is that gold/silver are going much higher for quite some time.

  4. just ponder of how HUI outperformed albeit with far more volatility and with the anchor of a couple of large hedged companies in the index.

  5. Hi Dave,

    Thanks for your input.

    As per your theory both Gold & Silver will rise as any normal investment instrument till any Gold back currency is evolved. (no time frame)

    Then overnight it will revalued as per Central Banks reserve position at that time. (40% or about Gold Reserve)

    Am I correct? And what about Silver? Will it be valued at that 16:1 ratio?

    I know any forward looking price projection is a function of many futuristic events but what I am trying to do is just understand the different scenarios that may take place & how it will affect the Gold & Silver price?

    Hope I am not disturbing you.



  6. in all fairness to Warren, despite the fact he does not like Gold, he does like Wells Fargo and he did like selling 36 billion of (notational value) index puts back in December 2007. These were 20 years puts or something like that so there is plenty of time for inflation to bring up the indices. And he gets to use the difficult to decipher mark to fantasy accounting for those puts.

  7. Buffet pays a dividend... Gold, none