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Book Value of BRKB vs Price of Gold


RRJ
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I ran into this link today amid all the hubbub about gold's recent rise:

 

http://seekingalpha.com/article/172441-buffett-s-aversion-to-gold-could-cost-him

 

The quote from the 1979 shareholder letter got me thinking about the relationship between Berkshire's book value per share and the price of gold.  Right now, my back of envelope calculation shows that a share of Berkshire, at book value, is worth about 68 ounces of gold.  That's a heck of an outperformance from the half ounce of gold that it would have bought in 1979, which was near gold's previous high.

 

Can we properly surmise from this that stocks are better than gold generally, because earning power is more valuable than a commodity without earning power?  I'm not sure.  I do think it is proper to surmise that capital in the hands of a superior capital allocator is a much superior investment than a non-earning commodity like gold.

 

Disclosure:  I do own a small % in gold, as insurance against currency devaluation, but have a much greater percentage with the capital allocators favored by this board. 

 

 

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