tag:blogger.com,1999:blog-8529580665294663953.post6957295700492724488..comments2023-10-27T04:26:57.609-07:00Comments on InvestorCentric: Critics Examine Buffett’s Gold ClaimsNuWire Investorhttp://www.blogger.com/profile/02512928198926080436noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-8529580665294663953.post-84655543627073080142012-03-05T16:03:57.606-08:002012-03-05T16:03:57.606-08:00Buffett is a smart guy and correct in suggesting t...Buffett is a smart guy and correct in suggesting that gold can't be valued like cash flow producing assets, even other tangible assets such as farmland. However he is failing to understand why gold is valuable. Aside from the many uses of this remarkable material (virtually corrosion proof, super malleable, etc.) it is a tangible asset that is ultra liquid. Most tangibles are not particularly liquid. Hence gold can serve as safe harbor when the ultra liquid assets we normally hold in order to facilitate transactions, the national currencies, are being debased. <br /><br />There is a widely held class of assets which are in fact inherently worthless...every national currency in the world. For the first time in human history all national currencies are totally fiat, backed by absolutely nothing, hence subject to debasement. They are literally IOU nothings, not truly liabilities of the various central banks, and are held only because people believe somebody will take them later in exchange. Today most currency isn't even printed. National currencies are largely created through nothing more than accounting entries. Imagine a world in which we could log on to our bank accounts and add zeros. How long would it take to add a dozen zeros to your account? How much wealth is created when you add those zeros? Anyone see the problem with this option?Unknownhttps://www.blogger.com/profile/03550180075733773862noreply@blogger.com