 Good day, fellow investors. I continue reading for fun Buffett's letters to investors. Those are really eternal investing knowledge. And I'm now reading from 1978 to 1981. And the topics are inflation, gold, bonds, free topics that might be very, very interesting for us investors over the next decade. If we see inflation, if we see higher or different interest rates, and therefore let's dig into what Buffett in his eternal wisdom shared through his letters has to tell about and what is his advice on what should we do with bonds, inflation and even gold. Let's start. So Buffett owns bonds. So he says that the original 3% savings bond, a 5% passbook savings account or an 8% US Treasury note have, in turn, being transformed by inflation into financial instruments that chew up rather than enhance purchasing power over their investment lives. So the key with long-term bonds is very simple. Let me just tell you short-term bonds, everything that Buffett has in cash, more than 100 billion is in short-term US Treasuries with a four months maturity. So high liquidity for Buffett, it's like cash and he gets a yield on that. He doesn't invest in long-term bonds. He did that in the 1970s. He later explains how that was a mistake, but why he doesn't invest in bonds. Well, it's very simple. Now, if we look at this chart, the 40 year Treasury yield in red and inflation rate, we can see that those that invested in 1982 in the 40 year Treasury did extremely well as they locked in a 15% yearly yield from the US government that just declined. So if you invested back then in 1982, you would have locked a great yield and made a really killing investment. However, if you would have invested in the years before that from 1974-1975 at 7% or at 10%, you wouldn't have been that happy for the long-term. And this is what Buffett really warns us. We don't know what will be the rate of inflation. We don't know where will the yields go, especially of long-term bonds. And therefore Buffett says that's more betting than real investing. And it's better to have a business than to invest in bonds. And especially now, and my point is, and even Buffett's is that especially now with the 30 year bond of the US government at 3%, bonds offer a very low yield 3% and very big risks. If there is inflation of 5% on average over the next 10 years, and remember inflation is man-made. So the government can say, okay, let's push inflation to 5%, it will make much easier to pay our debt. And you have locked in 3% for the very long-term, while inflation might be 5%, 7%, or even higher, which means it will chew up your investment, your money. So therefore, long-term bonds extremely risky, especially now, we are not at 15%. At 15%, I might take that gamble to invest in long-term bonds at 3%, definitely not. But short-term investors might bet on those changes if interest rates go up and down, but nobody can ever know what will happen to interest rates. As Buffett has severe doubts as to whether a very long-term fixed interest bonds denominated in dollars remains an appropriate business contract in a world where the value of dollars seems to almost certain to shrink by the day. The dollars as well as paper creations of other governments simply may have too many structural weaknesses to appropriately serve as a unit of long-term commercial reference. So, same as now, the dollar all currencies have always been weak, structurally, so they will lose money, lose value over the long-term. And therefore, Buffett invested only in convertible bonds, which is a different game. Staying with the weakness of the dollar, inflation, what is inflation? Buffett understands that low inflation is possible as it is man-made, but that's betting, non-investing. Nobody could have known for certainty that high interest rates wouldn't persist in 1982 and that low interest rate rates would be going on for such a long time since then. How did Buffett protect himself from inflation? He bought food stocks, which is exactly the sector I'm also researching now, so you have a few videos on YouTube if you want to dig deeper or articles on my website. His position in 1981, General Foods, the company was later acquired by Philip Morris and consequently spun off into craft. So, those pandas that are saying that Buffett lost money or made a mistake with craft, we'll have to watch our next videos when we see how much money did Buffett make with the acquisition of General Foods. Just to finish Buffett on gold, he discusses how one friendly but sharp-eyed commentator on Berkshire has pointed out that our book value at the end of 1964 would have bought about one half an ounce of gold and 15 years later, after we have plowed back all earnings along with much blood, sweat and tears, the book value produced will buy about the same half an ounce. However, that was just that period from 1964 to 1980. Since then, Berkshire's stock exploded and gold only exploded again from 2000 to 2011, but now at 1200-1300, it's just double since then. Berkshire had the way since the 1980s. Berkshire's stock since the 1980s is up much, much more. And this is also the message Buffett always had with gold. Gold is not really an investment that constantly delivers. In the last 50-60 years, it delivered twice from 1970-something till 1982 and then you had to have the courage to sell because then from 1982 till 2002 nothing, 20 years of zero negative terrible returns, then a boom from 2002 to 2012 and then again since 2012 very bad returns and we are still lingering 30-40% below the peaks. So gold doesn't produce anything in the meantime Buffett delivered continued to do on the businesses that delivered in that period equally to gold and in the future also much more than gold. So dividends, earnings growth, business growth and the more I look, those businesses, general foods later for Buffett offer even better protection than gold and this is where we and I and Buffett agreed. I have a miner, I have just sold one if you haven't seen the video, check it out, but I'm investing in businesses, mining businesses, value and margin of safety, not as just betting on gold. So the conclusion, don't invest in long-term bonds, better invest in businesses, don't invest in anything with long-term fixed rates. If you are a lender, borrow long term, nobody knows what will happen to inflation as it is man-made, good businesses and assets offer both protection and give a yield, gold is a speculation, see how that fits your portfolio. Please subscribe if you haven't, check my website for more resources, books, newsletters, articles, whatever that might add value to your portfolio. Thank you and I'll see you in the next video.