AngloGold CEO says Warren Buffett just doesn’t understand gold and gold investors – by Alec Hogg ( – February 16, 2012)

Mineweb’s Editor-in-chief, Alec Hogg, interviews AngloGold Ashanti’s Mark Cutifani and hears some forthright views on Warren Buffet’s most recent attack on gold.

JOHANNESBURG –  Anglogold Ashanti’s CEO Mark Cutifani is to local South African gold mining what top South AFfrican asset manager, John Biccard is to the local asset management sector, the man other money managers would most trust to handle their savings. In mining, Cutifani’s astute management has raised the bar for an industry where performance was once measured by volume of rock through the mill rather than gold delivered.

The Australian-born head of Africa’s biggest gold producer has been walking on water lately. He took history’s biggest ever bet on the gold price by closing out the industry’s largest hedge book – at a cost of billions. As the gold price kept steaming ahead, that decision continues to reward Anglogold Ashanti. In the three months to end December it added another $200m to the bottom line.

Cutifani was clearly on a high during our chat this week after the release of his group’s December quarter results. Who could blame him? Apart from that $200m, costs were reasonably controlled, the company got more South African Rands for its gold and the result was a fresh record for profit in any three months. Shareholders joined in the applause when hearing that the yearend dividend was being doubled.

Then I pressed a big fat button called Warren Buffett.

The lionised chairman of Berkshire Hathaway, known universally as The Oracle of Omaha, is public enemy number one right now among gold diggers. A man whose mere mention sends share prices rocketing has become the most irritating of matadors for the gold bulls. He keeps warning about a bubble in bullion. And did it again this week arguing that gold is worthless because it produces nothing – and that anyone investing from a base of fear is doomed.

The latest edition of US business magazine Fortune carries a preview of Buffett’s annual letter to Berkshire shareholders. Much of it is devoted to his arguing that the gold price is substantially overvalued. Buffett explains that all the gold ever mined would make a cube with 68-foot sides. At the current market price around $1 750 an ounce, that pile is worth $9.6 trillion. Says Buffett: “For that, we could buy all US cropland (400 million acres with output of about $200 billion annually) plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money.”

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