International
Gates and Buffett bet against the dollar
By Finfacts Team
Jan 31, 2005, 07:07

Bill Gates and Warren Buffett, two of the world's richest men, are betting that

Bill Gates, Microsoft Chairman and Chief Software Architect

Microsoft chairman Gates said that he expects the dollar to extend its three-year drop because of widening U.S. trade and budget deficits.

``I'm short the dollar,'' Gates told US television interviewer Charlie Rose this weekend at the World Economic Forum in Davos, Switzerland. ``The ol' dollar, it's gonna go down.''

Warren Buffett, Chairman of Berkshire Hathaway: image of 'The Warren Buffett Way: Investment Strategies of the World's Greatest Investor'

Buffett, whose personal fortune of more than $42.9 billion is exceeded only by Gates's $46.6 billion among corporate titans, has been buying foreign currencies since 2002, because of the impact of the US deficits. 

The US dollar has fallen 26 percent against a basket of six major currencies since the start of 2002 and last year, the trade deficit ballooned to a record $609 billion. On the budget side, the Bush Administration has said that the budget shortfall will reach an all-time high of $427 billion in the year ending in September.

``It is a bit scary,'' Bill Gates said of the U.S.'s $7.62 trillion in debt. ``We're in uncharted territory when the world's reserve currency has so much outstanding debt.''

According to Bloomberg News, Warren Buffett, chairman of the investment company Berkshire Hathaway, purchased $1 billion in foreign- currency contracts in the third quarter, bringing his total to $20 billion of forward contracts in eight currencies on Sept. 30, 2004. 

The currency position gave Berkshire a $412 million pretax gain in the quarter as the value of the dollar fell.