2007: Why did Berkshire sell its silver?

AUDIENCE MEMBER: My name is Nathan Narusis from Vancouver, Canada.

Mr. Buffett, Mr. Munger, my question concerns your previous silver bullion investment. I’m curious to hear more about why you sold when you did.

More specifically, whether you sold your bullion to the organizers of the silver exchange-traded fund in return for cash plus, perhaps, important noncash consideration in order to keep silver markets from either rising or falling sharply.

Thank you very much for anything you would care to share with us.

WARREN BUFFETT: I’m not sure who we sold it to, but whoever we sold it to was a lot smarter than I was. (Laughs)

I bought it too early. I sold it too early. Other than that, it was a perfect trade. (Laughter)

Charlie, do you have anything to add? Charlie had nothing to do with the silver decision, so that one falls entirely on me.

CHARLIE MUNGER: I think we demonstrated how much we know about silver.

WARREN BUFFETT: Yeah. (Laughter)

The very fact you asked us a question on silver flatters us because nobody asks us about silver anymore. (Laughs)

But we’ll come up with something else at some point.

You know, the last part of your question, there was a small implication, I think, of perhaps a silver conspiracy.

We — as soon as we started — it got known that we bought silver, we started getting all these letters in the mail from people who had all these different theories about the fact that hedging was killing things or these kind of traders were doing something.

In the end, silver responds as supply and demand just like oil responds to supply and demand. Oil is — the price of oil at 60 or $65 is not a product of a bunch of oil executives conspiring or anything of the sort. It’s supply and demand on a huge commodity.

Silver is a small commodity, but on any kind of commodity like that, supply and demand is what determines prices over time. Although the Hunt brothers, I must admit, for a short period there, in a few years, managed to change the equation and they forever wished they hadn’t.