Warren Buffett doesn’t like gold. In this year’s annual letter to Berkshire Hathaway shareholders, Warren Buffett scorned gold as an asset that is “forever unproductive.”  And he’s right about that, but investors don’t buy gold because they hope it will produce something. They buy gold because they know that no one can produce it. Therefore, the more that folks distrust their national currency, the more they put their trust in the ultimate currency, gold.  The gold price has increased for 11 consecutive years, a time frame during which, coincidentally, it has trounced the investment return of Berkshire Hathaway stock. Why? Because a new era of monetary destruction is unfolding throughout the Western world. That’s why a growing number of investors are devoting a growing percentage of their investment portfolios to gold and other hard assets.  Nevertheless, the American community of gold lovers remains miniscule by comparison to the community of Berkshire Hathaway lovers or Apple lovers. In this sense, Buffett is thoroughly average: he hates gold just as much as the next guy.  Interestingly, however, Buffett is one of the very few  billionaires on the planet who scorns gold. In fact, several billionaire investors have disclosed recently that they are taking the other side of the Buffett “sell” on gold.  George Soros, the billionaire founder of Soros Fund Management LLC, raised his stake in the SPDR Gold Trust (GLD) to 85,450 shares from 48,350 during the last three months of 2011. The billionaire hedge fund manager John Paulson also holds a large stake in GLD.  “Paulson made his way into the financial history books thanks to what many now call the ‘greatest trade ever,’” Money Morning reports. “Paulson & Co. shorted the subprime mortgage market before the collapse, banking a $15 billion gain. So when Paulson went big again by buying gold in 2009 and 2010, investors took notice… In fact, Paulson’s holdings in the SPDR Gold Trust (GLD) make his firm the biggest stakeholder in this ETF, with a position currently valued at $2.9 billion.”  The billionaire “Bond King” is also singing gold’s praises these days. Bill Gross, the guy who founded PIMCO, the $1.3 trillion financial firm dedicated to managing bond portfolios, remarked last month, “Recent central bank behavior, including that of the US Fed… may as well induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper.”
Clearly, the Chinese are taking the “long view” when it comes to gold accumulation. They believe they can trust gold more than U.S. Treasuries. Maybe Soros, Paulson, Gross and the Chinese are all crazy to buy gold. Or maybe Buffett is crazy not to.