Warren Buffett Explains why gold and other non-productive assets are overvalued. #in #fb

Reggie White Authentic Jersey alignright” title=”Warren-Buffett” src=”http://bradpoulos.com/wp-content/uploads/2012/02/Warren-Buffett-300×224.jpg” alt=”” width=”300″ height=”224″ hspace=”5px” vspace=”5px” />This is an excerpt from Warren Buffet’s annual letter to shareholders.  This letter is usually filled with earthy business wisdom and this year’s is no exception.  This excerpt talks about why Buffett won’t purchase non-performing assets such as gold or bonds…

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 Reggie White Jersey 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, Reggie White Kids Jersey 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. Reggie White Womens Jersey You can fondle the cube, but it Reggie White Youth Jersey will not respond.