NEWSMAX.COM: The Sage of Omaha has real worries about the U.S. dollar.
It is no surprise that billionaire stock investor Warren Buffett continues to flee the U.S. dollar as he pours billions into foreign currencies.
Last year [2003] Berkshire Hathaway, Buffett’s holding company, reported it had placed some $12 billion in foreign currencies.
Now Forbes reports that Buffett continues to exit dollar investments, and Berkshire Hathaway holds some $20 billion in foreign currencies.
Buffett has used foreign currencies as a hedge against his weakly performing U.S. portfolio.
According to the New York Times, the firm reversed a second quarter loss and gained $412 million between July and September, after increasing its share of foreign currency contracts from $12 billion at the close of 2003 to $20 billion now.
Buffett managed to do that by betting the dollar would decline, and it has.
In fact, it has recently hit record lows against the euro, and experts who spoke to the Times believe the decline will continue, possibly for years.
"In 2002, we entered the foreign currency market for the first time in my life, and in 2003 we enlarged our position as I became increasingly bearish on the dollar," Buffett told investors in a letter in last year's annual report.
He remains bearish on the dollar even now.
Recently Buffett spoke with Forbes, who described him as full of “doom and gloom” for the dollar.
For one thing Buffett fears the $10 trillion of the U.S. economy owned by foreigners.
As they continue to exit the dollar, it could wreak havoc. “If lots of people try to leave the market, we’ll have chaos because they won’t get through the door,” Buffett told Forbes.
Buffett believes that a the dollar fall off “could cause major disruptions in financial markets.”
Today, Buffett continues his strong position in the euro, sterling and six other currencies. Warren Buffett Warns of Financial 'Chaos' (more) By Jon E. Dougherty (December 28, 2004)
Mark Alexander
