(Kitco News) – What would happen if billionaire Warren Buffett made his first investment in gold instead of shares? Well, according to Buffett himself, he would have lost billions, Berkshire Hathaway chairman said in an annual letter to shareholders.
"On March 11, it will be 77 years since I first invested in American business. The year was 1942, I was 11 and I went all out, investing $ 114.75, I began to accumulate at the age of six. What I bought came from three stocks of the best promo "City Service", ̵
This historic purchase sent Buffett in the direction in which he wanted to go. "I became a capitalist and he felt good," he wrote.
Now, imagine Buffett being concerned about the American economic situation and buying gold, rather than protection from inflation and market risks.
"To protect yourself, you may have avoided shares and decided instead to buy 3 1/4 ounces of gold with your $ 114.75. And what is this anticipated protection? You now have assets worth about 4200 USDA, less than 1% of what would have been realized due to a simple uncontrolled investment in US business. "Magic metal did not fit into American expressiveness," Buffett concluded.
This comparison is particularly relevant in the days when American public debt reached new record highs on an hourly basis, now stands at over 22
"Those who regularly preach deaths due to the state budget deficit (as I have been doing myself for many years), I could point out that the state debt of our country has increased by about 400 times during the last 77 years of my life. It's 40,000%! Let's suppose you anticipate such an increase and panic at the prospect of a shortage of fugitive and ineligible currency, "he said.
In his annual letter, Buffett reminded investors that America's impressive financial achievements can not be forgotten. When I made my purchase, the nation expects post-war growth, persuasion, which proved to be reasonable. In fact, the achievement of a nation can best be characterized as breathtaking. Let's put the numbers to this statement: if my $ 114.75 were invested in the S & P 500 index fund and all dividends were reinvested, my bet would have increased to $ 606,811 (previous taxes) on January 31, 2019 … This is a profit of $ 2,288 for 1 ", – he wrote.
Buffett also stressed that there is always fear and chaos. But at the end of the day, markets prevail.
"Since 1942, we had seven republican presidents and seven democrats. In the years they served, the country at different times acted with a long period of viral inflation, 21% of the basic rate, several controversial and expensive wars, the resignation of the president, the widespread fall in values at home, paralyzing financial panic and many other problems. All generated terrible headlines;
Buffett Sheet Received as Berkshire Hathaway, which invests heavily in companies such as Apple, American Express and Bank of America, in the fourth quarter amounted to $ 25.39 billion net loss, or $ 15,467 per share of class A, reflecting more than $ 27.6 billion in investment losses.
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