atans1

Buffett on Gold

In Commodities, Gold on 14/02/2012 at 2:30 pm

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce — gold’s price as I write this — its value would be about $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

(Apologies for not crediting where I got this from: feeling tired)

  1. The only problem is that you can’t realistically purchase all U.S cropland without driving up the cost. You will exhaust your gold first and still not own all farm land in the U.S. Also if there were 16 Exxon Mobils, you should be able to acquire them cheap because they would not be making any money with such an abundance of oil!

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