Today one of the top money managers in the world spoke with King World News about Russia, Berkshire Hathaway and how Warren Buffet just shocked the world. He also discussed how the power structure across the globe is being dramatically altered as well as how investors should be positioning themselves.
Stephen Leeb: “It’s important to read between the lines when it comes to what Warren Buffett is saying and doing at this time of year. When I read between the lines in his latest report, I see a man who has become increasingly aware of a world that is quickly shifting to the East. I have been arguing this is the case for some time now and the implications of this global shift in power are stunning….
“A large Eastern bloc, controlled by China, is a major political threat to the United States. It clearly undermines the case for petro-dollars. It also exposes the fact that a new world reserve currency is inevitable and that new currency will be backed by gold.
How Buffett Shocked The World
Why do I say this? What did Warren Buffett do that indicated this to me? What Buffett did was he took a huge position last year in Exxon. Exxon is the least leveraged and the most protected when it comes to downward swings in the price of oil. Well, last quarter he sold every share he owned of Exxon.
Buffett Quickly Dumps Exxon Shares
Now as far as I know, this is probably the only time he has bought a major position in a stock and turned around and sold it in a short period of time. The reason he gave for selling it was that oil prices dropped. Really? For a man who likes to hold things for long periods of time and who believes energy is going to be absolutely crucial to our future, why did he really sell Exxon?
It’s totally disingenuous for him to say he sold Exxon because oil prices went down. Oil prices go up and down all the time — what does that have to do with anything? And if he really believed the drop in oil was that significant, then he should have sold Berkshire Energy as well. But he didn’t.
Exxon Partnering With Russia
He sold Exxon because Exxon has 5-times more acreage in Russia than they do in the United States. This is why it is totally disingenuous of him to say he sold his stake because oil prices went down. The bottom line is Buffett sold his stake because Exxon is moving aggressively to the East, particularly into Russia, and Buffett wants no part of it. Regardless, this is just more evidence that if you want more hydrocarbons and you want to follow the power, you have to go East.
Gold To Regain Its Prominence
I want to shift gears for a moment and just say that based on all my studies of history, the world will not stand for having a reserve currency that is not backed by gold. So gold is about to regain its role once again in the world monetary system. There is no doubt about it and it may happen sooner rather than later.
So my advice is to KWN readers around the world is that if you want to preserve the purchasing power of your wealth, you must own physical gold and its correlates. The world is shifting East and that means gold is going to have a much more important role in monetary affairs throughout the entire world.”
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