Warren Buffet, who is undeniably one of the greatest investment minds of modern times, isn’t keen on gold investment. He concedes, however, that gold has its place in a well-diversified portfolio. Not so, says his man Friday, Charles Munger.
“I think civilized people don’t buy gold,” Munger says. “They invest in productive businesses.” Munger’s remark underscores the severity of the disconnect between modern economic thought and the lives of everyday people. He might just as well have said that frugality and prudence are passé.
The implication is that we are serfs, put here to serve the greater good of corporations. When the Supreme Court ruled that corporations are people, that sentiment became the law of our land
Gold vs Berkshire
The lives of humans, however, are finite. Our needs go far beyond the income statement, and our wealth cannot be sheltered behind any veil. Gold investment serves the primal need to provide for our progeny after we are gone.
That is in no way anachronistic or uncivilized. To the contrary, it is a defining attribute of our species and the hallmark of civilization. It also makes us very different from corporations.
We created corporations for the same purpose we created governments. Without them we could never have progressed so far in so short a time. That notwithstanding, corporations and governments are but inanimate legal entities whose purpose is to serve humankind, not the other way around.
Without us there would be no corporations. That is not selfish and it is not vain. It is our duty to humanity to ensure not only that our species will survive, but that it will thrive. Gold investment is simply a practical means to that end.
This chart compares the growth of an annual investment in Berkshire Hathaway to an equal investment in gold:
Munger infers that we should sacrifice that sizeable difference in wealth for the good of corporations. But our first obligation must always be to the well being of our families. Everything else is secondary.
Munger’s comment is just one more example of the all-or-nothing rhetoric that pervades every major issue we face today. In the real world there are shades of gray.
In a civilized world there is a place for gold investment, just as there is a place for Berkshire Hathaway.