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GOLD:$1426.20 -0.20

It’s been kind of fun following gold and the different gold stories over the last six or seven years, but all of a sudden we are hitting a point where we notice a few things. All of a sud- den, people are talking about $5000 gold and another high profile gold bug is talking about 20 years of bliss for the gold bugs.

Starting to remind me of the other bubbles we’ve seen over the last decade—first high tech stocks that went to un- supportable levels and for longer than seemed reasonable and recently the other bubble of real estate in the United States. Things get to a point that they don’t make sense and then reality hits.

As we look at all the potential gold projects being looked at there and the grades getting ever skimpier...if gold ever dropped a couple of hundred bucks...would reality ever hit!

One thing for sure, bubbles always last longer than you would think possible and always go farther, but for those wanting to look at the other side of the gold chit-chat, why don’t you listen to none other than Warren Buffett and his take on gold.

Here are some quotes from his talks on gold:

- “So there's two types of assets to buy. One is where the asset itself delivers a return to you, such as, you know, rental properties, stocks, a farm. And then there's assets that you buy where you hope somebody else pays you more later on, but the asset itself doesn't produce anything. And those are two different games. I regard the second game as specula- tion.

Now there's nothing immoral or illegal or fattening about speculation, but it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something you expect to produce income for you over time. I bought a farm 30 years ago, not far from here. I've never had a quote on it since. What I do is I look at what it produces every year, and it produces a very satisfactory amount relative to what I paid for it.”

- “if you took all of the gold in the world it would roughly make a cube 67 feet on a side. So if you took all the gold in the world, we could have a cube that went down there 67 feet... 67 feet high and that would be the whole thing. Now for that same cube of gold it would be worth at today's market prices about $7 trillion. That's probably about a third of the value of all the stocks in the United States.

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So you could have a choice of owning a third of all the stocks in the United States or you could have a choice of owning that little block of gold, which can't do anything but kind of shine there and make you feel like Midas or Croesus or something of the sort.