This Friday Charles Munger of Berkshire Hathaway addressed the growing interest by Americans in investing in gold. Munger, Warren Buffett’s “right-hand man,” and the vice chairman of Berkshire Hathaway made his comments on CNBC:
Gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939…but I think civilized people don’t buy gold, they invest in productive businesses.
Gold ETFs, which have almost tripled over the last five 5 years have proved to be an enticing way for Americans to take cover from the dismal and uncertain prospects of the stock market.
In fact, even the Chinese government tells its citizens to buy gold.
And contrasted with the Dow, it seems to make some sense that people are seeking out commodoties rather than companies. However, analysts are saying that the gold bull market might be over–and Capitalist Pig’s Jonathan Hoenig warned in April that the gold market was falling.
But what Munger’s implying has less to do with the ROI of investing in gold than the state of America (and Americans) in general.
You can’t blame Americans for looking out for their own self-interest and investing according to their levels of risk, view of the market, and overall expectations for economic prospects.
While Munger calls it “uncivilized,” some might just say that it’s smart. Yet when we fail to invest in companies, and pull our capital out of creating new wealth, we are following the path of the countries and cultures who left to come here in the first place.
So the ramifications of our uncertain economy–and more money under mattresses rather than in the market–take on yet another dimension.