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Warren Buffett and the Giant Gold Cube

Observant1
edited February 27 in Other Investing
Warren Buffet has not been a proponent of gold as an investment.
He wrote that all the gold in the world—approximately 170,000 metric tons in 2011—would form
a 68 foot per side cube then worth $9.6 trillion. One could have purchased all the U.S. cropland
and 16 Exxon Mobils with this amount of money leaving $1 trillion in change.
Mr. Buffet pointed out that it was unlikely that these assets, plus their income,
would be worth less than gold in 100 years.
Was the Oracle of Omaha too pessimistic about gold as an investment?

https://trk.wsj.com/view/6965296053e1c001a9787e7bqfikt.a9ed/0ede42d4

Comments

  • yogibearbullyogibearbull
    I asked AI to update this - the cube is a bit larger, but value is much higher.

    The "Buffett Cube" Evolution
    Your 2011 figures refer to Warren Buffett's famous shareholder letter comparison between gold and productive assets:

    2011 View: 170,000 tons = 68-foot cube = $9.6 trillion.
    Context: Back then, this could buy all U.S. cropland plus 16 ExxonMobils.

    2026 View: ~220,000 tons = 73-foot cube = ~$37.4 trillion
  • DrVenture
    edited February 27
    2011 U.S. total GDP = $15.6 trillion
    2025 U.S. total GDP = $30.5 trillion

    15 years has added 50,000 tons, apparently. But the price per ton, as a function of total GDP, is still about the same. The ratio has not changed much. In 2011 terms, the value of that 68-ft cube would be around $16.3 trillion.

    And that is after one heck of a run up in gold's price. Would we still use XOM as a benchmark? Or something more like AAPL or NVDA? Is 220,000 tons of gold worth more than all U.S. farmland today, plus 16 AAPLs? That would be between $65-70 trillion.

    Compared to NVDA, gold does even worse. Buffett's thesis still appears to hold up. At least, in my back-of-an-envelope calculations.
  • Old_JoeOld_Joe
    All of the above is true.

    Still, in four months my silver hoard has increased in value by 54.81%. It's just a teeny little silver cube, but If I don't get too greedy and I manage to sell before it collapses I can sure live with that.
  • masterd
    edited 6:46AM
    When Warren and Charlie took over Berkshire Hathaway, gold sold for $20/oz and Berkshire $15/sh. Gold is now roughly $5,300/oz and Berkshire $757,000/sh. Warren and Charlie wanted to own productive assets. Gold is not a productive asset.
  • masterd
    edited 7:15AM
    yogibearbull said:

    I asked AI to update this - the cube is a bit larger, but value is much higher.

    The "Buffett Cube" Evolution
    Your 2011 figures refer to Warren Buffett's famous shareholder letter comparison between gold and productive assets:

    2011 View: 170,000 tons = 68-foot cube = $9.6 trillion.
    Context: Back then, this could buy all U.S. cropland plus 16 ExxonMobils.

    2026 View: ~220,000 tons = 73-foot cube = ~$37.4 trillion

    Warren said you would also have $1 trillion “walking around money”, in addition to all the U.S. farmland and 16 Exxon Mobils. Farmland is much more expansive as compared with cropland.
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