Why Invest In Gold When Warren Buffet does not?
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Gold is an inflation hedge. Adding gold or a gold mining company to a portfolio is ment to partially offset the drag on the portfolio that very high inflation can have on it. It also is considered a safety net in severely turbulent times (we're talking nations collasping and anarchy). Which is why after 9/11 and an already weak U.S. economy took another hit gold began to skyrocket. Now its probably staying high as developing economies like China & India are using it to back up their currencies & promote stablity.
Investing in gold is an investment you hope doesn't do well as its there to counteract the declines you see in the portfolio in severly turbulent times.
Either way, I'm not a huge fan of gold investments, but as you can see it has a purpose. Also, gold isn't the only one, I believe a while back can Buffet made a large investment in silver.
Gold has had a terrific run in recent years, but over the last quarter of a century it's been an absolutely abysmal investment. It has yet to get back to its all time high of $850/oz reached in April, 1980. Whether you buy gold depends in large part on whether you expect the recent trend to continue or for gold to revert back to its long term under-performance.
In any case, why worry about what Warren Buffet thinks about gold? He's had a lot more hits than misses in his career, but he's certainly made his share of bad calls too.
It depends on your investing personality. Ask yourself how much risk you are willing to take ?
He does what he knows best! that does not mean gold is not a good investment. He owns some gold and has bought derivatives believing the dollar is going to fall (against gold)
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