Warren Buffett: Gold is for Losers, Stocks are for Winners

In the latest issue of Fortune, Warren Buffett gave a sneak peek into his upcoming annual shareholders letter. In the article, he expresses his preference for investments in real productive enterprises over gold (NYSEARCA:GLD).

Buffet paints a picture of the world’s gold stock as a cube that would fit in a baseball infield and would be worth $9.6 trillion. This he calls “pile A.” He then visualizes “pile B” as an equal amount, where you could buy all U.S. cropland and Exxon Mobil (NYSE:XOM) and still have $1 trillion left over. His thinking is, “Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

He also states that, “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 equilibrium at present prices.”

A hundred years from now all of the above-mentioned farmland would produce plenty of crops and keep producing. Exxon Mobil will most likely produce trillions of dollars in dividends and will have assets in the trillions as well. The gold on the other hand will still be unchanged and will have produced nothing.

Here’s how shares of SPDR Gold Trust ETF are trading now:

SPDR Gold Trust (NYSE:GLD): GLD shares recently traded at $169.76, up $1.26, or 0.75%. They have traded in a 52-week range of $132 to $185.85. Volume today was 430,364 shares.

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