Why Buffett Derides Gold But Likes Silver

In Berkshire Hathaway's 2006 annual presentation, Warren Buffett was asked how he assessed the value of precious metals. Buffett replied that he had once made an enormous bet on silver, when global demand was outpacing supply by perhaps 100 million ounces a year. "Silver was out of balance," he concluded, to explain his 1997 purchase of 111 million ounces.By acting on this supply and demand imbalance, Buffett made $97 million from his bet when he unloaded his silver in 2006. It was the second silver purchase of Buffett's career. In the 1960s, he bought silver as a way to play silver's demonetization by the U.S. government. Yet Buffett has disdained gold over the years, deriding it as a non-producing asset that "won't do anything... except look at you."Why does Buffett view the two precious metals so differently? The answer has to do with specific uses for silver, which meet Buffett's criterion that investments must produce something like earnings and dividends or a bond yield (or, say, crops in the case of farmland).Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool