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Warren Buffett on gold [1]: "I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same

Warren Buffett on gold [1]: "I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today's market prices about $7 trillion – that's probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (NYSE:XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I'll take the farmland and the Exxon Mobils." [1] http://www.minyanville.com/trading-and-investing/commodities/articles/Warren-Buffett-brka-gold-investing-investing/10/3/2012/id/44617#ixzz4MAd3l9GE http://www.minyanville.com/trading-and-investing/commodities... Gold has no utility. This quote changed the way I think about gold when I first heard it.

underdown 10y ago
Gold has lots of utility - just not enough to justify the speculative price.
downandout 10y ago
I don't often say this about Warren Buffett quotes, but that is one of the most idiotic things I have ever heard anyone say. If you owned this 67 ft. cube - all of the gold in the world - you would be able to extract any profit you wanted from the vast majority of all electronics sold in the world, along with a long list of other products. Your $7 trillion would turn into...whatever you wanted it to. Buffett is showing his age and publicly admitted lack of understanding of technology.
- fooker 10y ago
  People would just switch to some other material for industrial uses if you demamd an exorbitant price. Gold, while useful is not indispensable.
  - downandout 10y ago
    It would take long enough to effectuate such a switch in all products across the world that you could extract enormous sums of money in the meantime - far more than your $7 trillion. At the very least, industrial gold usage has not decreased in the face of the historically highest market price of gold. You could start at that price, and increase it until you reach the optimal price.
    - nikdaheratik 10y ago
      And then what would you do with your gains? You already have all the gold in the world, so what would you buy after that if you want to increase your return on investment?
- HillRat 10y ago
  I think you're taking this a bit too literally. Consider a less extreme case; given a choice between a pound of gold or the current financial equivalent in Berkshire Hathaway equity (about 150 shares), which is more likely to provide higher returns over the long run? Buffet is basically making an optimistic case for the American economy, arguing that gold is a hedge, while market investment is a strategy.
  - downandout 10y ago
    Yes, I understood what he was trying to say, but his comparison was too far over the top and inaccurate to not be called out. His wording introduced and failed to account for the idea of someone having a monopoly on gold.
- luckydata 10y ago
  It would be challenging to find a better example of the reason why Buffet is one of the world's richest man and you're spending your time on HN than your own comment.
jackmott 10y ago
But something I've learned is that it doesn't matter if it actually has utility. What matters is if you can predict how insane humans will perceive its' utility. Which I can't do, so I am poor. (well not poor but I have to work)
fma 10y ago
Cash has no utility either. At the end of the day, cash, gold, silver..are monetary instruments. To say a monetary instrument needs to have utility is a bit ridiculous. Do we want to go back to the days of carrying around bags of salt? I don't know how many cubic feet $7 trillion of US dollar takes up...but if I have a cubic feet of $7 trillion anything I would take it, convert it and purchase whatever I want with it.
- kajecounterhack 10y ago
  I think encapsulated in the quote (and what the point was) is the idea that Gold isn't going to do much but sit there and retain its value, whereas Exxon and farmland are going to grow in value over time and produce useful things. Befitting an investor's quote. It's not saying gold has to have utility. Which it actually does fwiw as a commodity.
  - fma 10y ago
    With all investments there's no guarantee it will value over time or produce useful things...You can buy Theranos, a company once valued at $9 billion, and the next day it's worthless because you found out it's all smoke and mirrors.
oh_sigh 10y ago
It's valuable exactly because all of it in the world only makes a cube 67 feet on a side. Compared that to, say steel production, where the world has produced a cube 1900' on each side. And that was just in 2015.
jokoon 10y ago
People argue that gold has value in case of a world war or some kind of apocalyptic economic crash, like a nuke going off in Manhattan. So ultimately people trust gold because they believe WW3 will start soon.

underdown 10y ago

Gold has lots of utility - just not enough to justify the speculative price.

downandout 10y ago

I don't often say this about Warren Buffett quotes, but that is one of the most idiotic things I have ever heard anyone say. If you owned this 67 ft. cube - all of the gold in the world - you would be able to extract any profit you wanted from the vast majority of all electronics sold in the world, along with a long list of other products. Your $7 trillion would turn into...whatever you wanted it to. Buffett is showing his age and publicly admitted lack of understanding of technology.

fooker 10y ago
People would just switch to some other material for industrial uses if you demamd an exorbitant price. Gold, while useful is not indispensable.
- downandout 10y ago
  It would take long enough to effectuate such a switch in all products across the world that you could extract enormous sums of money in the meantime - far more than your $7 trillion. At the very least, industrial gold usage has not decreased in the face of the historically highest market price of gold. You could start at that price, and increase it until you reach the optimal price.
  - nikdaheratik 10y ago
    And then what would you do with your gains? You already have all the gold in the world, so what would you buy after that if you want to increase your return on investment?
HillRat 10y ago
I think you're taking this a bit too literally. Consider a less extreme case; given a choice between a pound of gold or the current financial equivalent in Berkshire Hathaway equity (about 150 shares), which is more likely to provide higher returns over the long run? Buffet is basically making an optimistic case for the American economy, arguing that gold is a hedge, while market investment is a strategy.
- downandout 10y ago
  Yes, I understood what he was trying to say, but his comparison was too far over the top and inaccurate to not be called out. His wording introduced and failed to account for the idea of someone having a monopoly on gold.
luckydata 10y ago
It would be challenging to find a better example of the reason why Buffet is one of the world's richest man and you're spending your time on HN than your own comment.

jackmott 10y ago

But something I've learned is that it doesn't matter if it actually has utility. What matters is if you can predict how insane humans will perceive its' utility. Which I can't do, so I am poor. (well not poor but I have to work)

fma 10y ago

Cash has no utility either. At the end of the day, cash, gold, silver..are monetary instruments. To say a monetary instrument needs to have utility is a bit ridiculous. Do we want to go back to the days of carrying around bags of salt? I don't know how many cubic feet $7 trillion of US dollar takes up...but if I have a cubic feet of $7 trillion anything I would take it, convert it and purchase whatever I want with it.

kajecounterhack 10y ago
I think encapsulated in the quote (and what the point was) is the idea that Gold isn't going to do much but sit there and retain its value, whereas Exxon and farmland are going to grow in value over time and produce useful things. Befitting an investor's quote. It's not saying gold has to have utility. Which it actually does fwiw as a commodity.
- fma 10y ago
  With all investments there's no guarantee it will value over time or produce useful things...You can buy Theranos, a company once valued at $9 billion, and the next day it's worthless because you found out it's all smoke and mirrors.

oh_sigh 10y ago

It's valuable exactly because all of it in the world only makes a cube 67 feet on a side. Compared that to, say steel production, where the world has produced a cube 1900' on each side. And that was just in 2015.

jokoon 10y ago

People argue that gold has value in case of a world war or some kind of apocalyptic economic crash, like a nuke going off in Manhattan. So ultimately people trust gold because they believe WW3 will start soon.