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(Kitco News) – What would have happened if billionaire Warren Buffett had made his first gold investment instead of stocks? Well, according to Buffett himself, he would have lost billions of dollars, wrote the president of Berkshire Hathaway in an annual letter addressed to the shareholders.
"On March 11, it will be 77 years that I invested for the first time in an American company. The year was 1942, I was eleven years old and I invested all my resources by investing $ 114.75 that I had started to accumulate at age six. What I bought was three preferred shares of Cities Service, "said Buffett.
This historic purchase sent Buffet in the direction in which he wanted to go. "I had become capitalist and it was nice," he wrote.
Imagine now that Buffett was worried about the American economic situation and instead bought gold to protect himself from inflation and market risks.
"To protect you," you may have avoided the stock and opted to buy 3 1/4 ounces of gold with your $ 114.75. And what would this supposed protection have provided? You would now have an badet of about $ 4,200, less than 1% of what would have been achieved through a simple unmanaged investment in a US company. The magic metal was no match for American determination, "Buffett concluded.
This comparison is particularly relevant at a time when US public debt reached new highs on an hourly basis, now reaching more than $ 22 trillion.
"Those who regularly preach the loss because of the government's budget deficits (as I have been doing regularly for many years) could note that the national debt of our country has multiplied by 400 over the last of my years. 77 years. That's 40,000%! Suppose you have forecast this increase and panicked at the prospect of uncontrollable deficits and a worthless currency, "he said.
In his annual letter, Buffett reminded investors that the impressive financial achievements of the United States can not be forgotten.
"In 1942, at the time of my purchase, the country was expecting growth after the war, a belief that has been well founded. In fact, the achievements of the nation can be described as breathtaking. Let's put some numbers to this statement: if my $ 114.75 had been invested in a S & P 500 Index Fund without fees and all dividends had been reinvested, my interest would have increased to $ 606,811 (pre-tax) on January 2019 … It's a gain of 5,288 for 1, "he wrote.
Buffett also pointed out that there was always fear and chaos. But in the end, the markets prevail.
"Since 1942 we have had seven Republican Presidents and seven Democrats. During their years of service, the country has experienced at various times a long period of viral inflation, a preferential rate of 21%, several controversial and costly wars, the resignation of a president, a widespread collapse home values, crippling financial panic and a host of other problems. All gave rise to frightening titles; all are now part of history, "he said.
Buffett's letter comes from the fact that Berkshire Hathaway, who holds major investments in companies like Apple, American Express Company and Bank of America, reported a net loss of $ 25.39 billion at the end of the year. fourth quarter, or $ 15,467 per Clbad A share, reflecting an investment of more than $ 27.6 billion in losses.
Warning: The opinions expressed in this article are those of the author and may not reflect those of the author. Kitco Metals Inc. The author has endeavored to ensure the accuracy of the information provided. However, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. This is not a solicitation to exchange merchandise, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept liability for losses and / or damage resulting from the use of this publication.
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