Bucket vs. Thimble

A recent Forbes article chronicled the world’s richest people. Though not the first in the list, Warren Buffet remains in the top five, actually number three in the list, at $47B in net worth.

Interestingly, the article quotes from Buffet’s recent annual shareholder letter, “We’ve put a lot of money to work during the chaos of the last two years. When it’s raining gold, reach for a bucket, not a thimble.”

Without the context of the whole letter but interpreting what is said, one perceives his mention of “gold” to mean “opportunity.” As the one of the driving forces behind the highly profitable Berkshire Hathaway, Mr. Buffet certainly knows how to leverage opportunity. For example, research in wikipedia says, “Berkshire Hathaway stock produced a total return of 76% from 2000-2010 versus a negative 11.3% return for the S&P 500.”

But, think about his comment from a numismatist’s perspective. Gold, that yellow, shiny metal, also offers opportunity, especially in today’s economic environment. It’s not just the US economy that drives gold today. The world’s economy and global interests in gold help drive the value too.

Thinking literally for a moment, using a bucket for gold presents a problem. The metal is just too heavy for a good sized bucket!

Pulling tongue back out of cheek, Mr. Buffet’s advice could easily be applied to gold investments.

One should do their homework and be wise in their investments, yet they shouldn’t be overly cautious (using a thimble) when faced with the gold opportunities.

Of course, most people do not have the financial resources (buckets) available to them that a Berkshire Hathaway or Warren Buffet does.

To be a successful gold investor, you don’t need huge resources to start. Many gold vehicles exist for investment depending on your interests and your wallet.

You can invest in physical gold. Coins start at 1/10 ounce, or bullion bars up to 400 ounces. The large bars generally go to central banks or to ETFs. ETFs (Exchange Traded Funds) for gold are backed by physical metal. Then, you can also invest in the variety of gold mining companies as well.

The point here is don’t wait to do your homework and to begin investing. The ultimate rule is “buy low, sell high.” Many metal market analysts predict the metal will soon break through the current ceiling and began climbing in value.

Are they right? Perform your own research – not only on gold – but on the economy and on your assets. Do you want to be without gold in your portfolio?