Warren Buffet and Class A Berkshire Hathaway Shares vs. Gold and Silver
If you set a gold or silver coin or bar in a chair, in a trading room, right next to the average fund manager, the gold or silver coin would have outperformed the average fund manager over a 10 year period. In fact since going off the gold standard, a block of gold or silver would have also outperformed the average fund manager and all major stock indexes from 1971 until present. The time-frame, of course is, lends itself to precious metals, there were time periods where precious metals underperformed equities within this range.
Well what about the greatest investor of all time, the Oracle of Omaha, Warren Buffet. Let us take a look at how currency devaluation can erode even a great company's returns in real terms. Berkshire has returned over 50% since 2002, the extent to which I'll graph the weekly candles. If you would have realized this 50% gain with a $100,000 initial investment, the gain would have brought you over $150,000, but in real terms you would only have $119,000+ in purchasing power. While you have made almost a 20% in this time period on your original principle, you have lost over 20% on the whole through inflation. While over the same time period, gold gained over 450% and silver gained over 750%. Let's look at these returns.
Based on a $100,000 investment.
BRK.A - $150,000 - $119,000 in 2002 purchasing power
Gold - $450,000 - $360,000 in 2002 purchasing power
Silver - $750,000 - $560,000 in 2002 purchasing power
precious metal bull market winning, big time
ReplyDeleteThis is a really unique post. I have not seen anyone compare Berkshire to commodities even through this bull. Very interesting. He should have held on to those millions of ounces of silver in the 90s.
ReplyDeleteThank you, yes if Buffet kept the silver through thick and thin, estimating a $6/oz basis he would have gained over 14% per year for 14 years.
ReplyDeleteInanimate objects outperforming the greatest investors. This is what they mean when you hear, "the trend is your friend."
Yes anonymous, and it will continue to "WIN" for thee foreseeable future, negative interest rates provide no safe haven for capital, debt troubles will not be solved by kicking the proverbial bucket down the road.
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