QE1, QE2, QE3 and all other garden variety monetizing efforts have certainly left their mark on the U.S. dollar, which has lost 20% of its value since March 2009 lows. But why is gold underperforming equities then? It turns out that Buffett is right again:
My own choice: Investment in productive assets, whether businesses, farms, or real estate. Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment.
Whether the currency a century from now is based on gold, seashells, shark teeth, or a piece of paper (as today), people will be willing to exchange a couple of minutes of their daily labor for a Coca-Cola or some See’s peanut brittle. In the future the U.S. population will move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce.