Buffet predicts: ONSLAUGHT OF INFLATION-Buy GOLD and SILVER

In his long awaited annual letter to shareholders, Warren Buffet reflected on the economic crisis, the coming inflationary pressures, and his own personal mistakes. “During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt,” he explains.

Speaking of the government response to the nations economic crisis, he writes:

“This debilitating spiral has spurred our government to take massive action. In poker terms, the Treasury and the Fed have gone ‘all in.’ Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel.”


He goes on to explain the foreseeable inflationary threat:

“These once-unthinkable dosages will almost certainly bring on unwelcome
aftereffects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation.”

On the issue of moral hazard, he says that “major industries have become dependent on Federal assistance, and they will be followed by cities and states bearing mind-boggling requests. Weaning these entities from the public teat will be a political
challenge. They won’t leave willingly.”

In 2008, Mr. Buffet’s Berkshire Hathaway suffered a decrease in book value per share of 9.6%, only the second such decline in Berkshire’s 44 year history. The price of his company’s stock has dropped over 50% since the 2007 peak of $151,600 per share.