[logfromblammo]

You can read about it here: https://en.wikipedia.org/wiki/Labor_theory_of_value

I don't believe it is applicable to most of the economies on this planet.

If I may analogize, Buffett is saying that a trophy spouse that does nothing but look good and impress your friends (gold) is a less worthwhile investment than one that goes away all day to bring home $80 and a distinct grease-trap odor (stocks). A Van Gogh painting that hangs on your wall, slowly oxidizing its pigments (gold) is a less worthy investment than a plastic fish on a wood-veneer plaque that can sing four different songs whenever you walk past it (stocks). A square mile out in the desert with awesome sunsets and no light pollution at night (gold) is better than a square mile that grows corn, wheat, alfalfa, and soy when dosed with sufficient amounts of chemicals (stocks).

People value things other than money and rate of return, and other purely rational criteria. Sometimes people buy things to enjoy them as they are, rather than anticipate what they could be. The lump of gold will never be anything greater or lesser than what it was when you bought it, and some people like that quality. The 1 troy ounce .9167 gold coin will always be worth at least 1 troy ounce of .9167 gold, no matter what anyone else in the world does. If you bury 10 kg of .9999 gold and dig it up 100 years later, it will still be worth 10 kg of .9999 gold. You might be able to trade your gold for differently sized baskets of goods and services in different years, and the size of future baskets will always be smaller than what you could have obtained if you had wisely invested in companies, but you will always be able to get something, even if the world has effectively ended.