Gold Surges To Nominal Euro & Pound Record– Jim Cramer Critiques Warren Buffett On Anti Gold Bias

Tyler Durden's picture

From GoldCore

Gold Surges to Nominal Euro & Pound Record– Jim Cramer Critiques Warren Buffett on Anti Gold Bias

Gold has risen to new record highs in pounds and euros as concerns about contagion in the eurozone and stagflation in the UK deepen. The euro has fallen sharply in international markets and is down 1.5% against gold so far this morning. European Council President Herman Van Rompuy has called an emergency meeting of top officials dealing with the euro zone debt crisis as concerns deepen over the sovereign debt crisis spreading to Spain and Italy.


Gold in USD and Berkshire Hathaway A Class Shares in USD – January, 2000 until July 2010 (Daily- Rebased to 1)

Gold has risen to record nominal highs at EUR 1,100/oz, GBP 971/oz and at $1,549/oz is only a few dollars or some 0.5% from the record high close of $1,556.70 seen on April 29th. The very poor U.S. employment numbers Friday suggest that the very tentative U.S. recovery is tottering and a recession looks very likely which is leading to safe haven demand.

Gold has had another period of correction and consolidation and is looking well positioned to eke out further gains as we move into the seasonal strong Autumnal period which begins in August. 

Cross Currency Table

Spain’s 10-year yield spread over Germany widened to a euro-era record of over 300 basis points. Italian and Portuguese bonds are also under pressure with Portuguese 10 year yields surging to 13.4%.

The risk of contagion affecting European and international banks and a new banking crisis rises by the day.

Meanwhile, in the U.S., President Obama is seeking a massive $4 trillion in a deficit reduction package. Failure to do so may lead to a U.S. and global sovereign debt crisis.

Jim Cramer Critiques Warren Buffett Over Anti Gold Bias

Jim Cramer, the host of "Mad Money" has critiqued the Sage of Omaha, Warren Buffett, and his anti gold bias. Buffett has said that gold isn't a sound long term investment because the precious metal has no ‘utility’.

Cramer says that he has heard from people saying they will not invest in gold since it was $700 per ounce because they “missed it” or because “someone like a Warren Buffett has said how valueless or silly it is”.

(GoldCore Editors note: George Soros cryptic comments about gold are similarly used by so called financial experts to dissuade people from owning gold)

“No one goes to Warren Buffett and says how have you done versus gold in the last 10 years. That is verboten. You are not allowed to ask him that.”

Cramer said that this “makes it very difficult to make headway with people” about owning gold.

While Buffett snubs the value of gold, Cramer emphasizes the limited amount of gold bullion available and gold’s rarity (see GoldNomics video), as well as the lack of new gold being mined. Cramer says that there is far less gold than there is Berkshire Hathaway B shares and that Buffett can just print the shares.

“Against all that is a grey beard investor who has already made a lot of money, who frankly could have his money devalued and still have a lot and I feel like  …  you know what Warren  … give other people a chance to make some money here ok.”
“Give other people a chance to protect their assets, give people a chance to buy insurance.”

“I would rather buy the insurance policy of gold than the insurance policy of Geico    … pretty simple.” (to laughter)

“It is such a shame that he (Buffett) does that, I mean all he has to do is say that I don’t really understand it. “

“He did with Tech, like I saw when Intel was the equivalent of $2 and Microsoft was  …  before the big run. I understood … listen he said ‘I don’t understand tech’. That’s fine.”

He should say “I don’t understand gold”. He shouldn’t pick Keynes, who of course got the gold market wrong repeatedly. He should just actually say “I don’t understand it.”

“He would does us all  …  he is doing everyone a disservice by saying that it’s a beauty contest.”

Conclusion

Cramer is a divisive figure and liked and loathed by investors but these are excellent points about Buffett’s and Munger’s anti gold bias – points we have made previously.

Cramer’s assessment of Buffett and his lack of appreciation of gold as financial insurance and bias against gold is an accurate assessment.

Buffett deserves the title ‘Sage of Omaha’ and is to be respected but his failure to appreciate gold’s importance as a diversification in a portfolio and his repeated negativity towards gold (in contrast to his father Howard Buffett), will not be judged kindly in history.

It is never too late to do the right thing and to ensure his legacy Buffett should acknowledge gold has intrinsic value, has utility as money, as monetary asset, a finite currency and as financial insurance in a portfolio.

Cramer’s interview is a must watch and it can be watched on the GoldCore YouTube Channel 

NEWS

(Reuters) -- Gold in pounds hits record, debt crisis deepens
http://www.reuters.com/article/2011/07/11/markets-gold-sterling-idUSL9E7EL00H20110711

(Nine News) -- European Crisis Escalates
http://finance.ninemsn.com.au/newscolumnists/greg/8271592/european-crisis-escalates

(Bloomberg) -- Gold May Advance for a Sixth Day as Growth Concern Fuels Demand for Haven
http://www.bloomberg.com/news/2011-07-11/gold-may-advance-for-a-sixth-day-as-growth-concern-fuels-demand-for-haven.html

(Wall Street Journal) -- Heirs Battle US Mint Over Prized Gold Coins
http://online.wsj.com/article/SB10001424052702303812104576438063536976274.html

(The Telegraph) -- Italy debt contagion fears hit markets as top EU officials meet
http://www.telegraph.co.uk/finance/financialcrisis/8629228/Italy-debt-contagion-fears-hit-markets-as-top-EU-officials-meet.html

COMMENTARY
(SilverSeek) -- Could silver one day be worth more than gold?
http://news.silverseek.com/SilverSeek/1310240710.php

(ZeroHedge) -- What An American Bank Run Would Look Like
http://www.zerohedge.com/article/what-american-bank-run-would-look

(The Telegraph) -- Italy and Spain must pray for a miracle
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8628939/Italy-and-Spain-must-pray-for-a-miracle.html

(DailyWealth) -- Ireland: One of the Saddest Stories in the World: A Lesson We Can All Learn From
http://www.dailywealth.com/1778/One-of-the-Saddest-Stories-in-the-World-A-Lesson-We-Can-All-Learn-From

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66Sexy's picture

No debt ceiling hike = 14th amendment. 14th amendment = Federal Reserve debt illegitimized.

 There will be a debt ceiling hike.

SheepDog-One's picture

Who is there to believe that we borrowed $2 trillion from someone? So we'll monetize the debt some more and thats supposed to be beneficial...theyre just painted into a corner thats all.

Thisson's picture

On my tumblr I link to a Michael Pettis article that includes four solutions to our debt problems.  Reading the article carefully, you'll conclude that the US will eventually devalue it's currency.

The article is linked to as a post today on Thisson.tumblr.com

 

dlmaniac's picture

Warren Buffet makes Crammer look like a genius. LOL

cossack55's picture

Let it burn, baby, burn.

Pladizow's picture

If the debt ceiling was represented by a building, it would be 93 stories tall - as this is how many times it has been raised through out history!

MGHJFHD's picture

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Caviar Emptor's picture

Today the market is screaming Ponzi off!

 

Gold continues to decouple from metrics that have dominated the price action in recent months: dollar up, oil down are no longer an issue. I suspect that trend will continue and pick up steam. 

That's because gold is reclaiming its top-of-the-food-chain status in the face of full-on global currency uncertainty that, yes, even reaches the dear old dollar. US sovereign debt issues are now on full display and the politics are getting thick. An imminent rise in the debt ceiling comes at a badly timed juncture that only raises the specter of global competitive devaluations (and inflation). US unemployment has quashed any fears of a rate hike. And dollars may soon be spewing out of the fire hose as the new phase of the crisis unfolds

And there's also the sneaking suspicion of interbank liquidity drying up fast out there as numerous, interdependent global mega banks are falling into the shadowland of counterparty suspicion. Who will be the first domino? Will it be a Spanish bank? An Italian, Belgian or even a UK, French or German bank? Japan is imposing electricity rationing just as China has a failed debt auction. 

Hang on to yer gold. If you don't have any, get it. If you have extra Bennie Bux, convert them. Gold will help navigate the choppy waters of the new unfolding reality which continues to go down the slippery slope anticipated since the crisis began in 2007. 

 

66Sexy's picture

This may surprise alot of folks, but gold and silver are historically adversarial. Gold is bankers money, silver the peoples money.

We know what happened to Lincoln, Andrew Jackson, Grover CLeveland, JFK.

Theres only 2 reasons to assasinate a president: Money, and money.

 

SheepDog-One's picture

Could be, but silver will hitch a ride all the same, certainly wont go in opposite direction to gold.
They can candy coat as many turds as they like and use whatever sprinkles to dress it up, fact is the good times are over.

Caviar Emptor's picture

It was the 'currency of kings' for good reason. And yes, in a major upheaval gold will outperform

Long-John-Silver's picture

Gold is the currency of Kings.

Silver is the currency of Gentlemen.

Barter is the currency of Peons.

Debt is the chain of slavery.

Thomas's picture

All I know is that silver is consumed whereas gold is not. Silver suffers from its hermaphrodicity as an industrial and monetary metal (at times). If the numbers showing that 14 billion ounces of silver bullion in 1900 have now been consumed down to about a billion ounces of bullion are correct, then silver will have more days in the sun. I have days in which my 20% physical gold and overall 55% metal-related investments seem like the results of psychosis and days in which my psychosis wants me to get longer (and more physical). I may be the dupe sitting at the table or one of the visionaries; only time will tell.

kumquatsunite's picture

Oh please...silver is not "consumed." Stop pumping...silver is being produced more than ever: see: mines of Mexico and Peru and elsewhere. Also, the silver in All electronics is recycled via the metal recyclers who strip it out of computers, et al. Gold and silver have significant problems: 1. They are enormously boring: put em in the ground, take 'em out. Rinse. Repeat.

My "money" is in those things that spin wonderfully...aka "investments" that create new things for our culture and planet and make our lives better. Gold and silver sit there. And sit there. And sit there. 

Central Bankster's picture

Keep smoking the hopium buddy, history does not agree with you.

RockyRacoon's picture

...the silver in All electronics is recycled...

You keep repeating this, and I've replied to it with references in the past.  It's apparent that you have no facts, just opinions, and they are of the particularly odious type.

Zero Debt's picture

the silver in all electronics is recycled

Source, please

Urban Redneck's picture

"the silver in all electronics is recycled"  --  It isn't.

Macro #s:

http://www.silverinstitute.org/supply_demand.php

Americans put tons of electronics into luxury landfills each year - they don't have the same Rubbish Nazi regimes that Europe does, and they aren't as poor (yet) as the developing world.  Electronics is also only a portion of industrial demand (batteries are more problematic). 

 

IF YOU WANT TO RECOVER SILVER FROM ELECTRONICS:

The best technology, with high recovery rates, no chemical inputs, no toxic outputs, and minimal CO2 production- comes from Switzerland- so buy it before it becomes the CHF makes it unaffordable.

 

http://www.swissredux.ch

 

(I don't have personal experience with their product, but came across their management team through the EPFL business development community- so I'm doing my part and plugging small local businesses.)

Bay of Pigs's picture

I was wondering which troll would open his mouth and stick his foot in first. 

BTW, gold at a new all time today in USD as well @ $1555.50 (London PM fix). 

LudwigVon's picture

Of course it sits there. It is money. Do you expect your currency to do jumping jacks as well? IGNORANT.

Hulk's picture

He's famous now, expanding his horizons! 

qussl3's picture

Is it weird if im rooting for the TPTB to whack gold so i can buy more?

hondaicivic's picture

Nope. It seems logical for guys like you and me.

Twindrives's picture

Hey Warren, just croak already with your long time bung hole buddy Charlie Munger.

Thomas's picture

the technical term is "butt buddy"

Archimedes's picture

I don't know who Felix Zulauf is but he just laid out a pretty accurate scenerio for how this plays out.

http://mcalvanyweeklycommentary.com/wp-content/uploads//ica2011-0706.mp3

 

 

 

 

THE DORK OF CORK's picture

This big rise in Euro gold came one week too late for the Euro systems quarterly revision of Gold which would have helped to increase the Euro base a little......

Do the Euro masters want to create a crsis in the periphery - me thinks yes.

SilverDosed's picture

If Buffet hates gold so much then it doesnt really make sense that he would have invested so much in silver. Something very fishy here.

AmCockerSpaniel's picture

It may be that Buffet does not dislike gold, but just likes silver more (for it's utility).

wombats's picture

Silver is an industrial commoditity in addition to being a monitary metal.  I suspect he wants it for its use in electronics, biomedical manufacturing.

RockyRacoon's picture

Gold would be used by many manufacturers if it were at a price that made it economically feasible.   It is used in many high-value instances in electronics (and is usually touted as such "gold plated contacts", etc.).    If it were as common, and priced, as silver it would be used extensively.

It is incorrect to say that it has no utility, whereas, it would be more accurate to say that it's too costly to use in common applications.

Thisson's picture

Gold's utitility is that it works very well as money.

Do you think Warren would admit that money has no utility?  That's absurd.

 

Thisson's picture

Gold's utility is that it works very well as money.

Do you think Warren would admit that money has no utility?  That's absurd.

 

Thisson's picture

Gold's utility is that it works very well as money.

Do you think Warren would admit that money has no utility?  That's absurd.

 

GoldBricker's picture

The story I heard is that he bought 120 million ounces in the late 90s, then wrote covered calls against it for years before finally being caught out in a rally and forced to sell (sometime in the mid-2000s). Very profitable business model. At any rate, the story goes that his hoard is in other hands now.

Zero Debt's picture

gold = insurance

buffet = insurance

gold = competitor

competitor = bad

bad = discredit

Madcow's picture

the senior currency strengthens in deflation.  

 

SheepDog-One's picture

Dollar strengthening is Bernank/Wall St's worst nightmare.

mayhem_korner's picture

Maybe.  But if the alternative is playing chicken/limbo with the imploding Euro, what choice is there?  Stealth printing is one thing, but swapping out the $100 plates for $10000 would crash the whole complex instantly.

Beastmanager's picture

Those are unequivocal signs of a short term top, I have sold my last gold and silver futures just a few moments ago. I just keep the physical gold. I expect a big correction in July/August.

wombats's picture

It is very hard to criticize Buffet's investing decisions.  The results speak for themselves.  However, lets be thankful that he doesn't want gold.  Just imagine what he could do to the price of gold if he truely wanted to hoard it.  I cannot afford shares of Berkshire, but I for one will continue buying gold, silver while I still can.

f16hoser's picture

If Buffet is slamming Gold you can bet your ass he's covertly buying Gold Bullion. That's how billionaires do things. QUIETLY!!!!

GoldBricker's picture

Countries do that too. Sell off publicly, accumulate quietly. You don't want to have everyone front-running you, for one thing. Shoot, why not announce that you're actually selling and push down the market a bit before you scoop it up (like Soros).

The Chinese and Russians are the masters. They buy up the production of their domestic mines, so the metal never registers on market radar.

gwar5's picture

Warren Buffet has a self-serving bias towards currency. He couldn't get out of his positions denominated in fiat currency if he wanted to. He's trapped. And if media darling, Buffet, started buying gold right now it would start a stampede. 

Buffet's father was a congressman who was an avid gold-bakced currency supporter. Tragically, Warren was dropped on his head as a child and lost his integrity gene.

 

"I warn you that politicians of both parties will oppose the restoration of gold, although they may outwardly seemingly favor it, unless you are willing to surrender your children and your country to galloping inflation, war and slavery then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money. There is no more important challenge facing us than this issue — the restoration of your freedom to secure gold in exchange for the fruits of your labors."  --- Howard Buffet, in speech to congress, 1940's

 

 

 

monopoly's picture

GM all. Well, is this really any surprise to long term ZH folks here? Not much to say. This puzzle is taking shape and looking just about right. Glad they are moving into American confetti, wow, that is smart. We are in line with the rest, just in the back, and will take time to get to the front of the line.

What a day for gold to hit an all time high. Anyone see the "brillant ones" lately.

SheepDog-One's picture

No one except us dorks follows currencies, the important thing and what keeps the sheeple placated is their 401K's, stocks.

monopoly's picture

good point sheepDog, I guess it is game over when they all get religion and advise, currencies?, Hmmm, maybe I should pay attention. Until then, buy LULU.