“There are only two people who understand gold: One is a director in the Bank of England, and the other an obscure clerk in the Bank of France. Unfortunately, they disagree.” Nathan Meyer Rothschild (1777-1836)
"I really have no ability to forecast gold prices. I have been in the business for 30 years, and it occupies my mind day and night.” Peter Munk, chairman of Barrick Gold
“The history of the metal [Gold] cannot hold a candle to investing in productive assets” Mohnish Pabrai
"The thing about gold is that if you told me gold has a price of $100, that's fine. If you told me it's $10,000, that's fine as well. It can be any price. Gold is worth exactly what people think it's worth" Colm O'Shea
“I’ve never been particularly comfortable with gold as an investment. Once it’s discovered none of it is used up, to the point where they take it out of cadavers’ mouths. It’s less a supply/demand situation and more a psychological one – better a psychiatrist to invest in gold than me.” Julian Robertson
“There is nothing intelligent to be said about gold. Nobody can tell you the right price for an ounce of gold. People will tell you it should go up or go down. To make any intelligent statements about investments you have to know what the right price is. You can’t do that with an asset like gold, which doesn’t produce any cash flow. So you can buy it out of superstition or ignore it because you are an atheist but you cannot buy it with an analytical foundation.” Howard Marks
"I’ve never believed that gold is an investment asset. Would you rather have faith in that, or McDonald's (MCD), which has 32,000 stores?” Bill Ackman
“Some folks think it [gold] as the last bastion of preserving assets and instead of having dollars under your mattress and such, it is better to have gold. I prefer having investments in businesses that to the Martian look like something productive was going on versus taking it out of the ground and putting it back in the ground. I would probably take a pass on gold forever for that reason. It just seems to make more sense to have ownership stakes in productive assets or businesses or productive natural resources like oil over gold” Mohnish Pabrai
"I have lived through or studied hundreds, possibly even thousands of bull and bear markets. In every bull market, whether it is IBM or oats, the bulls always seem to come up with reasons it must go on, and on and on. I remember hearing hundreds of times "We are going to run out of supply". "This time is going to be different" "Oil has to sell at $100 a barrell." Oil is not a commodity [he laughs]. "Gold is different from every other commodity. Well, damn, for 5,000 years it has not been different from every other commodity. There have been periods when gold has been very bullish and other periods when it has gone down for years. There is nothing mystical about it. Sure it has been a store of value, but so has wheat, corn, copper - everything. All of these things have been around for thousands of years. Some are more valuable than others, but they are all commodities. They always have been, and they always will be" Jim Rogers
“Gold bugs, generally speaking, are some of the craziest people on the face of the globe.” Julian Robertson
“If you have the opportunities of Berkshire, an investment in gold is dumb” Charlie Munger
"If your neighbor owns some gold, and you think you’re smarter than he is, and you didn’t own any, and your wife says to you, you know, “How come that jerk next door is making money, you know, and you’re just sitting here?” It can start affecting behavior. And people like to get in on things that have been rising in price and all of that. But over time, that has not been the way to get rich." Warren Buffett
"Gold is special, magical, and great. It's not. But if people believe it, they buy it. And if they buy it, it goes up. That's why there's a bull market. You can't go to a meeting without someone saying "What do you think about gold?". You know the dot-com bubble is over when it starts going down. It will be the same thing with gold" Colm O'Shea
"At its current high of $1400 an ounce, gold prices are 74 times higher than they were 100 years ago— an annual return of 4.3% versus for 3.3% for inflation. So gold has slightly outperformed inflation over this period (though if we used gold prices from 5 years ago, we would have a return equal to inflation). It is worth noting that stocks have returned 1,300,000% over the same 100 years— approximately 200 times better than the performance of gold. An unequivocal truth stems from taking an historical perspective: in the long term, gold has not been a better investment than stocks and barelyoutperforms Treasuries. Once inflation is taken into consideration, the source of wealth creation has been stocks.
There is a certain logic to all of this. The activity of lending money to governments does not create wealth. Owning a few kilograms of a yellow metal in a safe doesn’t either. Businesses create products that meet the needs of consumers, new technological tools that improve our lives, new medicines that allow us to live longer, and services that help us better manage our activities. And we must admit that the capacity of businesses to develop new ways of entertaining us seems without limit. To own an economic participation in these businesses is an authentic source of wealth creation. And the long-term performance numbers adequately illustrate this.
But this doesn’t prevent people from speculating on gold these days. The most often invoked reason behind the rise of gold prices is the loss of confidence in our capitalist system. No one knows the future (regardless of what “they” say) but, historically, betting against the progress of humanity and the improvement of our standard of living as always been a losing proposition. The desire to progress and build a better life for ourselves is bound within the genes of a human being. I believe that those who speculate on gold will eventually lose capital—or as a better outcome, hold on to an asset that will standstill for several years. Nothing gets built in the long term with pessimism.
I would be remiss to not share with you a quote from Charlie Munger, Warren Buffett’s long time partner: “I don't have the slightest interest in gold. I like to understand what works and what doesn't in human systems. To me that's not optional; that's a moral obligation. If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you become rational hoarding gold.” Francois Rochon
"You can have all the gold in the world and all you could do is polish it. Since it’s an unproductive assets, you’re really just hoping that someone pays you more money for this asset in the future." Warren Buffett
"I haven't made a dollar out of gold. I just never felt the odds were in favour of buying gold bullion or gold-bullion shares. I have considered them many times over 40 years, but each time other things seemed to be more reliable and less subject to political problems" Sir John Templeton
"Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end." Warren Buffett