This is taken from the following article:
My first question, as I sit there on the couch in his office, is: "What about gold? Is this a classic bubble or what?"
"Look," he says, with his usual confident laugh. "You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?"
Okay, so gold is not a screaming buy to Buffett. What should a typical upper-middle-class person in the U.S. buy to prepare for retirement?
"Equities," Buffett answers without a moment's hesitation.
It is remarkable how Buffett has a simple way of putting things. I have recently been recommending anyone who owns gold to sell.
I know some value investors have have large gold holdings, but my question is how do you know if gold is over or undervalued? Demand is high because of the poor state of the economy, but that can change quickly.
If I were to take a guess, I think gold may have some more room to run. My theory is that demand will grow because everywhere I turn I hear about gold. It's on TV, radio, papers, home parties, and recently booths in the mall buying gold jewelry.
Gold is becoming a little too speculative for this value investor. If I can't value it, it gets tossed.