Rhodium on my Corn Flakes

One of the people on the investment committee for a foundation in which I am involved told me of some other foundations who are looking into buying platinum and rhodium for their portfolios.

I work with several investment committees of foundations.  A board member of one particular foundation told me about a conversation he had with a few of his director counterparts at other foundations.  These other foundations either are or are looking into buying rhodium and platinum for their endowment portfolios.  He asked me what I thought.   

Here was my response:
"Feels like they are chasing performance - almost always a sucker’s game.  We could set up a plan for making commodity investing part of a long term plan for the endowment but remember; commodities don't pay dividends.  So it's just plain speculation and inflation hedging - not investing. "  Additionally, I do not feel that endowments should be speculating like this, investment committees, even when filled with experts, do not meet often enough to be effective market timers.

I'm not saying these might not go up and go to the moon, but it is speculation not investing.  I'd rather just buy shares of Berkshire Hathaway and let Warren Buffet make those kinds of decisions for me.  He bought silver a few years ago and everyone thought he was insane and had lost his edge – after all the tech boom was still going.  (Silver has doubled since then).  But I, like Buffet, believe in buying things at a good value and when everyone else is selling.  I also believe that for investment purposes (meaning you are not trading every day) having a very long term time horizon will yield the best results and let you buy when the speculators are selling in a panic.

My opinion on commodities: (not meant for an endowment committee): Because I hate paper money (the stuff that governments around the world in a frenzy) I like commodities (commodities are not made of paper, issued by central banks or national treasury departments) right now.  I think physical commodities, metals, oil, gas, wood pulp, potash, gold, sand, bricks, tar and nickel (to name a few) will go higher as a symptom of inflation and then an investment mania creating a bubble.  But at some point, it will all crash just as everyone is taking out second mortgages against their houses to buy gold coins.  I am not getting out now (maybe by next year or in three years) but I would rather get out before I feel I am a fool selling to a greater fool.  I'm happy to miss the last part of a bubble when it starts.

Disclosure:  I own Berkshire Hathaway (BRK.A).  I also own Gold and Silver Coins purchased between (1996 and 2004) minted by various governments. (Mainly South Africa).  I own some cufflinks with platinum in them and the catalytic converter in my car has some platinum in it.  I own no rhodium*, I don't even know what it is used for and wouldn't know I was eating it if you put it on my Corn Flakes.

*I looked up Rhodium in Wikipedia - found out there is some rhodium in my catalytic converter too - thus I modify my disclosure but won't change it because I like the Corn Flakes reference.