2. Greater Fool Assets

Unlike most Indians, Buffet is dead against investing in gold. To him, gold is a part of ‘greater fool assets.’ To Buffet, these will “never produce anything, but that are purchased in the buyer’s hope that someone else, who also knows that the assets will be forever unproductive, will pay more for them in the future.” He further says, “What motivates most gold purchasers is their belief that the ranks of the fearful will grow.” Indians might even strongly disagree with this belief but this is what Buffet has faith in.

It is again quite intriguing to know this philosophy of his as Berkshire Hathaway had made a good deal of investment in expensive metals in the past. Though Buffet is a huge supporter of blue-chip firms, like - Johnson & Johnson and Wal-Mart, and has invested billions of dollars in them, he does dip his hand in precious metals from time to time. What Buffet questions about investing in gold is how long can the ‘fear trade’ exist. To him, investing in gold is not profitable as this provide a fixed value only after a long time. This spells out a dry period of no returns, with our money held up in fixed assets. As he says, “investing is forgoing consumption now in order to have the ability to consume more at a later date.”