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Berkshire Hathaway’s Munger: “Civilized people don’t buy gold”

Berkshire Hathaway’s Munger: “Civilized people don’t buy gold”

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.


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Ragspierre | May 6, 2012 at 1:07 pm

We’ll be charitable, and will not speculate that “civilized people” and “Jewish families in Vienna” were not meant to be exclusive of each other.

Apart from that, people should put THEIR money any FLUCKING where they want.

Holding SOME physical gold is part of a well-diversified portfolio. Silver and platinum are good, too.

People of all types are waiting out Obama and his hatred of capitalism.

Meanwhile, Munger’s daughter is heading up a campaign in California to raise taxes on the evil “rich.”

Same old story. The elites despise the pragmatism and perdurable resourcefulness of the unwashed. That we don’t roll over and surrender to their superior wisdom and diktats makes us “uncivilized.”

Midwest Rhino | May 6, 2012 at 1:37 pm

Civilized economies have a stable currency. When even Bernanke lies to we the people about quantitative easing, it is time to seek a “currency” that will hold value.

Since the whole world now runs on fiat currency, and everyone is racing to print, gold is the safest “currency”. It is also harder for Obama’s redistribution government to confiscate or tax away, if people sew it into their garments or bury it.

Gold may correct a little more, but could also double easily, since printing more is the only card Obama/Bernanke seem to have, since trillion+ deficits are their way to buy votes. If people quit accepting our funny money, gold could skyrocket.

It would be a lot clearer which businesses were productive and were going to remain so if the gangster government would let up on the cronyism, and stop punishing success.

The left’s problem is they assume markets are some kind of morality play, so they jump in and start executing righteous justice.

But markets are just a means of communication, telling people how much things are worth, how good a plan seems to be, where the risk is.

People are buying gold because leftist lunatics have turned the stock exchange into a damned circus.

I don’t have money to buy gold or invest in companies, but if I did have the latter I would certainly be hesitant with Obama and his minions in power. The uncertainty would likely cause me to bury my money in a tin can in the backyard until a more business/free market friendly government came to power. And no amount of guilting by people like Munger or Buffett could talk me out of it.

    tjonnyc in reply to angela. | May 7, 2012 at 1:38 pm

    Problem with storing away money is that it will lose its value through inflation. Precious metals, on the other hand, only gain in value during times of crisis. The more unstable the stock market / political situation is, the higher the prices spike. Look at the price of gold during the 80’s – you can see exactly when the S&L crash happened – that’s the day gold took off like a rocket.

    If you don’t have the $$ to invest in gold – buy silver. It’s at ~30 bucks an ounce now and going down for a bit. If it hits 25, I’m buying a bunch. 😀

    $ 20 in a tin can will be worth $ 19 next year.
    $ 20 in a silver bar will be worth $ 25.

Escaped from RI | May 6, 2012 at 2:10 pm

I’m just a stupid rube. I was one of those morons who bought gold back when it was $695 an ounce. Against the advice of my moral and intellectual superiors, like Anthony Weiner (remember him) who wanted to hold Congressional hearings on whether Glenn Beck was causing us slope headed mouth breathers from fly over country to go broke buying over valued gold.

My gold is physical, not ETFs. Being a rube, I don’t trust paper gold, probably because just like 1933, there is more paper than their is gold.

As for that family in Vienna, if they waited until 1939, thanks to the feckless Chamberlin and Roosevelt, they were murdered by the Nazi’s and their gold went to the Nazi government. Another liberal with a firm grasp of history to go with his mile wide anti-semetism streak.

I invest in guns, ammo, food, water. Am I civilized?

    I’m invested in the equipment that is able to PRODUCE guns, can make Ammo with the right geological conditions, and have land to produce food and water.

    What does that make me?

    Escaped from RI in reply to xthred. | May 6, 2012 at 3:49 pm

    I do have a fairly significant investment in other metals, mostly brass and lead, in 5.56mm and .45 inch increments. The price on those have gone up drastically as well. Last year I was able to get 1,000 rounds of 5.56 from Lucky Gunner for about $375. Now (if they have 5.56 in stock, and they’re having a hard time keeping on the shelves) it goes for $460.

I think that we are in the same situation as the Jews in Vienna in 1939. In other words, it is going to hit the fan in the next few years. But I am surprised at the guy’s lack on knowledge in history. The favorite commmodity was stones, not gold.

great unknown | May 6, 2012 at 2:53 pm

Civilized people in a civilized society don’t buy gold. Civilized people in an uncivilized society do.
I suspect that Munger assumes that he will be on the “right side” when the hammer falls. And in any case, he has many places to escape to and resources to escape with.

radiofreeca | May 6, 2012 at 3:16 pm

Let’s assume Munger is right – perhaps there are a lot of people who feel like they’re Jews in Austria, and it’s 1939… The problem with knowing history, is you get to see it repeat itself.

NC Mountain Girl | May 6, 2012 at 5:02 pm

A few cases of beer can be one of the best things to have on hand for barter during short term emergencies such as the aftermath of a hurricane, earthquake etc. when power is down, stores closed and outside access is iffy.

    great unknown in reply to NC Mountain Girl. | May 6, 2012 at 5:05 pm

    Agreed. But keep some fifths of stronger stuff around for the long term – beer gets stale. I suspect we’re in for the long term, unfortunately.

I recently started reading ZeroHedge, and have learned just how much of a “capitalist” Warren Buffet is, a crony capitalist. Both he and Munger, who I’ll assume made a bigotted statement without realising what he actually said.
Warren Buffet was someone I used to respect until I realised how much he plays footsy with the people in power that smaller companies have no way to access or compete with. So much for the 1% like Munger and Buffeet, of course they poo-poo the industries, like gold, that they cannot control, us “bitter clingers” have some chance of real actual free market based “fairness”.

” For decades, Warren Buffett has been called ‘the Oracle of Omaha’ for his well-timed stock trades and seemingly psychic abilities when it comes to the future performance of corporations. Looking back over the past half decade however, it’s been clear how Buffett has made his billions in profits, and it isn’t pretty. The upcoming issue of Reason is the latest to expose the billionaire investor for not just his insider trades, but his influence on the men who controlled the outcome of those trades.

Warren Buffett is making billions in profits off the very programs he’s advising President Obama on. Image courtesy of TIME.
Based on the article by Peter Schweizer in the March, taxpayer watchdog groups have launched a public relations blitz against the grandfatherly investment icon. In addition to detailing the mountain of insider trades Buffett has made in the last five years, Schweizer goes so far as to compare him to a ‘bootlegger’. Based on this author’s past investigations on the subject, calling Warren Buffett a bootlegger is generous.”

    BannedbytheGuardian in reply to alex. | May 7, 2012 at 12:10 am

    Yes Peter Schweitzer is Palin’s economic advisor -which explains the block.

    Further I can’t believe the Dow represents the US economy.No way should it be so high.

    Other OECD countries which are faring much better have their index at about 1/2 way between the highs of 2006 & the lows of 2008 (Which are also about equal to the mid 90s. )

    So they are about 25% higher than mid 90s which equals a growth rate at 2.5 % .

    USA = 2006 . Not logical & either a bubble or a parallel world.

People whose last name is “Munger” need to learn to shut up.

southcentralpa | May 6, 2012 at 5:38 pm

Gold is a lot like guns. I’m sure that Jews in Vienna did not NEED a gun until the Anschluss, but once the Anschluss happened, they could not get one.

And I’m sure they would have laughed at you just five years earlier at the very thought of such a thing happening.

Better to have things like gold and guns and never need them, than the reverse.

    johneastborough in reply to southcentralpa. | May 7, 2012 at 3:30 pm

    “…they could not get one” – and with the Kristallnacht raids, those who DID have guns suddenly lost them.

    When the Nazis came to power, with typical German attention to detail, they went through the firearms registration lists, cross-referenced with Jewish names, and confiscated the guns under the pretext of pogroms.

The uncivilized Jews of Vienna in 1939. Them again. Just think, they could have invested in Krupp, or Farben. The more these people talk the bigger fools they make of themselves.

    johneastborough in reply to Owego. | May 7, 2012 at 3:32 pm

    Or Bofors, the cover operation that allowed Germany to re-arm without violating the treaty. “Oh, so we can’t produce armored vehicles in Germany? Well, we’re just going to buy a Swedish company and stockpile tanks and APC’s there!”.

What really bothers Munger, and many others in investment ‘houses’ is the lack of volume in the common markets. What is driving the DOW (and all others) these days are not common citizens willing to entrust their dollars, or euros, or yen into a market that is clearly run to the benefit of folks like Munger and his boss – with the added advantage of crony capitalism, and a utterly prejudiced tax code.

Buying gold instead of Berkshire Hathaway? Damn you prolls.

BannedbytheGuardian | May 7, 2012 at 12:19 am

The uncivilized Jews of Vienna Budapest Berlin Prague Paris etc tried to store their gold & money in Swiss Banks.

Many were successful in that but not successful in the lottery of Life. As they never turned up at the teller & had no forwarding address into the next world the Swiss banks kept their money & kept silent.

It was not until the 2!st Century & much denial was some of that squeezed out of them.

Behind all that neatness & fake neutrality is evil.

When Charles Munger says “civilized people don’t buy gold” what he really means is “you peasants must do what is best for me”.

He deserves a reply utterly devoid of courtesy, respect, or even tolerance.