Attention Gold Owners: You're All "Jerks"!

Charlie Munger

I'm having a hard time jiving Charlie Munger's well received parable published in Slate earlier this year about the all-to-easily recognizable Basicland (a thinly disguised critique of the U.S.'s current financial and regulatory framework) and some of his recent public statements.

First there was his widely reported comment to "suck it in and cope", aimed at the approximately 25 million unemployed Americans. Now he's fired a derogatory missile directly at gold owners. Skip six minutes into this clip for thoughts from the Oracle of Omaha's longtime business partner on what he thinks about those who own gold.

What's odd to me is that if you agree with the views Munger expressed in his Basicland piece you might very naturally and logically be drawn to invest in precious metals, particularly gold. But in contrast to Ice-T's famous quip, Munger says that when it comes to gold you should hate both the game and the playa.

Perhaps Munger's gold comment is not intended so much for the proverbial man in the street (although that's a bit hard to believe given his audience at the time he made the comment) but more for hedge fund titans and fellow billionaires such as George Soros and John Paulson, both of which hold huge gold positions. Maybe Munger feels his cohort should instead focus on trying to fix the financial system rather than taking advantage of its current weakness by investing in gold to make yet another buck?

A final historical oddity about Munger's comment has to do with a speech given in 1948 by Howard Buffett, a former U.S. Congressman and Warren Buffett's father. Perhaps times have changed, but back then Howard hardly found gold ownership a good reason to be dubbed a jerk. Quite the contrary in fact. An excerpt:

"But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold, you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty."