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Wanna store value? Buy actual value - that is things that make the wealth. Stocks in major companies, real estate, land in places people want to live in. The co

Wanna store value? Buy actual value - that is things that make the wealth. Stocks in major companies, real estate, land in places people want to live in. The concept that buying promises is a good way to store value is a bizarre concept to me.

from 6y ago
This has always perplexed me too. There's a nice Buffett quote on this (https://www.berkshirehathaway.com/letters/2011ltr.pdf https://www.berkshirehathaway.com/letters/2011ltr.pdf): "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 $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? Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices. A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond. Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B." I have noticed that people who advocate for this "store of value" idea have this tendency to insinuate that cash is the only alternative to gold or bitcoin or whatever it is. There has always been alternatives to letting your savings be eroded by inflation (stocks, bonds, etc) and part of the reason for inflation is to incentivize people to invest their money in these productive things.
- cachvico 6y ago
  Fantastic post.
- dmingod666 6y ago
  Gold held it's value before we started counting the years from the death of christ. It was valuable when britain was pairing criminals and prostitutes in handcuffs and shipping them to the US to populate the damn place. It is valuable even today when there are people willing to risk death just to reach its shore.. I am willing to bet it will remain being valuable even when America becomes an irrelevant once-was in a few decades.. I want to know which asset class will survive the collapse of the US dollar and the fall of US influence...? If your answer to that question is, "that's just absurd, never going to happen in my lifetime.." I can just smile and wish you all the best..
  - delaaxe 6y ago
    > britain was pairing criminals and prostitutes in handcuffs and shipping them to the US to populate the damn place What can I Google to know more about this? I though it was also the case about Australia
    - dmingod666 6y ago
      My bad, It was the french, not the british: http://www.jocelyngreen.com/2017/01/09/louisiana-and-france%E2%80%99s-forced-colonization-experiment http://www.jocelyngreen.com/2017/01/09/louisiana-and-france%...
  - helen___keller 6y ago
    Farmland has also been valuable that long
- d0gbread 6y ago
  Share this quote with someone in Venezuela with a straight face. Or the countless unbanked that have access to a divisible digital gold but not stocks, bonds, gold, or enough to direct invest.

from 6y ago

This has always perplexed me too. There's a nice Buffett quote on this (https://www.berkshirehathaway.com/letters/2011ltr.pdf https://www.berkshirehathaway.com/letters/2011ltr.pdf): "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 $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? Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices. A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond. Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B." I have noticed that people who advocate for this "store of value" idea have this tendency to insinuate that cash is the only alternative to gold or bitcoin or whatever it is. There has always been alternatives to letting your savings be eroded by inflation (stocks, bonds, etc) and part of the reason for inflation is to incentivize people to invest their money in these productive things.

cachvico 6y ago
Fantastic post.
dmingod666 6y ago
Gold held it's value before we started counting the years from the death of christ. It was valuable when britain was pairing criminals and prostitutes in handcuffs and shipping them to the US to populate the damn place. It is valuable even today when there are people willing to risk death just to reach its shore.. I am willing to bet it will remain being valuable even when America becomes an irrelevant once-was in a few decades.. I want to know which asset class will survive the collapse of the US dollar and the fall of US influence...? If your answer to that question is, "that's just absurd, never going to happen in my lifetime.." I can just smile and wish you all the best..
- delaaxe 6y ago
  > britain was pairing criminals and prostitutes in handcuffs and shipping them to the US to populate the damn place What can I Google to know more about this? I though it was also the case about Australia
  - dmingod666 6y ago
    My bad, It was the french, not the british: http://www.jocelyngreen.com/2017/01/09/louisiana-and-france%E2%80%99s-forced-colonization-experiment http://www.jocelyngreen.com/2017/01/09/louisiana-and-france%...
- helen___keller 6y ago
  Farmland has also been valuable that long
d0gbread 6y ago
Share this quote with someone in Venezuela with a straight face. Or the countless unbanked that have access to a divisible digital gold but not stocks, bonds, gold, or enough to direct invest.