Gold coins get a bad rap as an investment vehicle, and when that rap comes from Berkshire Hathaway’s Warren Buffet it gets the intention of individual investors.

March 24, 2011 – Gold coins get a bad rap as an investment vehicle, and when that rap comes from Berkshire Hathaway’s Warren Buffet it gets the intention of individual investors. Once again Mr. Buffet has appeared on CNBC in synch with Berkshire Hathaway’s annual investor newsletter.

With Buffet’s record in the stock market there is plenty of reason to pay close attention to his interviews. But it is equally important to understand the context.

Mr. Buffet makes no bones about his distaste for speculation, but he also makes it clear that is just his personal strategy. He is interested only in assets that produce income – price growth is irrelevant – but he also dislike bonds. And when he labels gold investments as speculation he always refers to short positions.

Where individual investors get lost is comparing their situations with that of Buffet. His goal is to continually move billions of dollars around the stock market and capitalize on incremental gains in returns. That strategy hardly lends itself to long-term growth assets or long-term fixed interest instruments.

Individual investors, however, typically look to grow their wealth over time while protecting what they have. The long-term trend for gold coins makes them ideal for the purpose, and entry costs are minimal. Better still, over the past decade gold coins handily outperformed Berkshire Hathaway – in both returns and cash generated.

Assume you put $1,000 into your assets at the beginning of each year from 2001 to 2010. A Berkshire Hathaway holding would be worth around $17,500 today, but your gold coins would be worth some $28,700. And if you chose to cash in your earnings each year, gold coins would have produced nearly $11,000 in cash – more than double that of Berkshire Hathaway shares.

Cautious investors can do no better than investing in gold coins’ long-term trend.

Kevin Johnson

Senior Staff Writer – GoldCoin.net