Comment: Mmmmm, cherries!

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Mmmmm, cherries!

You're comparing some of the best years for gold with some of the worst for Buffett. But if you had purchased gold at the lowest price over the past 150 years, and sold it at the highest, you wouldn't have done nearly as well as Buffett did over the long run. If Buffett had put his money into gold instead of investing in businesses that he was convinced were good long-term investments, he'd be poorer by billions of dollars.

That's because gold is a *store* of value, and the point of investments is to try to gain value, but to do that you have to risk losing value.

Gold is, however, an excellent store of value. I'm not in any way minimizing that, just explaining the limitations on what that means. As a store of value it's amazing really. You can put the price of a good suit of clothes away today, and have high confidence that in a hundred years it will still be worth, roughly, the price of a good suit of clothes, in whatever currency tailors are accepting at the time. An ounce of gold will store the value of a high-quality suit of clothing (more or less) in the face of inflation, war, economic collapse, anything, and the proof is in the fact that it has done so for millennia.

If some distant ancestor of yours in ancient Rome had put the price of a good suit of clothing into a lump of gold, and arranged somehow for you to inherit that lump of gold today, the value of that suit of clothing could have been preserved for thousands of years. That's really pretty amazing when you think about it. But it also illustrates the limitation on simply storing value, rather than trying to increase value (with the inherent risks).