Open Letter to Charlie Munger

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Recently by Lawrence Lepard: Had Enough?

Recently, you rather arrogantly claimed that civilized people don't buy gold. I am not sure how you define civilized, but the comment struck me as odd since I thought you were a profit maximizing capitalist. You further said that gold does not compare in investment quality to operating businesses. Is this statement just an example of you talking your own book? Or, are you intentionally trying to mislead people? The reason I ask is that I bought gold in 2003 at $320 per ounce. Today it trades at $1,640 per ounce, or 5.1 times my cost basis. This investment has given me a compound annual return of 19.91% over a 9 year time frame. Frankly, I think you would be hard pressed to find another investment which has done so well in this timeframe. Of course, I could have done what you suggested and bought operating businesses. Let's look at how I would have done if I had purchased the DOW, the S&P500 or your stock, Berkshire Hathaway.

Wait a minute. You mean to tell me that over the last nine years the performance of those investors who invested in gold absolutely crushed the returns of stock investors? Yet gold investors are uncivilized? What is up with that? Are you crying foul because you are losing? Sounds like sour grapes to me.

When I saw your comment, two home-spun phrases, that I picked up as a youth in the Midwest, popped into my mind:

  1. There is no fool like an old fool.
  2. Better to remain silent and be thought stupid, than to open your mouth and remove all doubt.

As a wealthy member of our society you can do as you please. But as a Director of a large public company it strikes me that you have an obligation to speak the truth. I have followed you and your partner, Warren, over the years and I know of your antagonism toward sound money and the gold standard. Such a position is not a surprise since your considerable fortunes have been amassed by gaming the fiat money system. Without bailouts of some of your largest portfolio companies Berkshire Hathaway's stock would be worth much less. Or, perhaps, even worthless. Frankly, those of us who have labored honestly in this capitalist system are fed up and disgusted with "crony capitalists" like you and your partner. Sure the system works for you. Let's see how you do in a sound money system. Perhaps that is why you are so hostile to the concept?

Sincerely, Lawrence W. Lepard

Lawrence Lepard [send him mail] is a venture capitalist and investment manager and lives and works in the Boston, Massachusetts area.

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