Warren Buffett does not invest in gold. He has invested almost $1 billion in silver, so the reason for his aversion is not simply a dislike for precious metals. The explanation for Buffett's dislike of gold and for his enthusiasm about silver stems from his basic value investing principles.
Key Takeaways
- Warren Buffett has been vocal that he feels gold lacks value because it lacks usefulness.
- A key principle of value investing, as Buffett practices it, says you should only invest in things that serve some practical purpose.
- Silver has myriad uses, and Buffett has invested nearly $1 billion in it.
Warren Buffett has been very vocal about his disdain for gold as an investment. He sees little to no value in it. What Buffett refers to as a lack of value results from a lack of usefulness. He once stated about gold, "It doesn't do anything but sit there and look at you."
One of Buffett's basic principles of investing is that one should only invest in things that are useful and that serve some purpose and that supply some practical need that people have. Silver has a myriad of industrial and medical uses. In medicine, silver is used in bandages, catheters, and as a healing agent for burns and other health conditions. It's also used for water purification. In electronics, silver is the best metal conductor of electricity and doesn't corrode, so it's used extensively in wiring and connective parts, computers, cellphones, and cameras. It is even used to coat DVDs because it is scratch-resistant.
Therefore, silver meets Buffett's requirement of having a real and identifiable value. Even better, from the point of view of an investor, silver is almost uniquely suited to a number of the uses it serves as an industrial metal and would be difficult to replace with any substitute material.
Gold does not meet Buffett's usefulness requirement. Although it has some industrial applications, it is not virtually irreplaceable as silver so often is. Gold makes pretty jewelry, but it is by and large without practical uses. In Buffett's opinion, since it has virtually no inherent value, it is not a good financial asset. The metal commodity that glitters for Buffett is silver, not gold.
FAQs
As Buffett told his shareholders at a Berkshire Hathaway annual meeting, “If you take all the gold in the world…and put it into a cube, it will be a cube that's about 67 feet on a side…but it's not going to do anything for you.” Buffett therefore doesn't see any utility in owning gold because it can't produce things.
Does Warren Buffett invest in gold? ›
The answer to whether Warren Buffett invests in gold is a simple “no.” This probably doesn't surprise the “Oracle of Omaha” followers, as he's been very outspoken and open regarding his investment style, strategies and ownership. He's even spoken directly about whether he would invest in gold numerous times.
Is gold a good investment and why? ›
Gold has historically been an excellent hedge against inflation because its price tends to rise when the cost of living increases. Over the past 50 years, investors have seen gold prices soar and the stock market plunge during high-inflation years.
Is it logical to invest in gold? ›
This is very subjective and depends on your investing goals, risk tolerance, time horizon and which other assets you own. While it has proven less volatile than shares during times of economic distress, for example, it has made lower gains during stock market rallies.
What Warren Buffett said about gold? ›
The same year, in a CNBC "Squawk Box" interview, Buffett described investing in gold as “a way of going long on fear,” suggesting that people often buy gold out of fear, hoping that its price will rise with increased market uncertainty.
What does Warren Buffett say about owning gold? ›
“Gold is a way of going long on fear” Buffett has also spoken fairly extensively about his belief that people who buy gold are essentially betting on fear. The quote above is from a 2011 episode of CNBC's Squawk Box, but he also brings this idea up in his 2011 letter to shareholders.
Should I buy gold or silver in 2024? ›
Global silver demand is forecast to reach 1.2 billion ounces in 2024, which would mark the second-highest level on record, the Silver Institute said in a recent report.
What will gold be worth in 5 years? ›
Two Jakarta-based commodity analysts forecast that the price of gold could reach as high as $3,000 per ounce in the next five years. While they remain bullish, they cautioned that many factors could affect the price of gold within this timeframe.
Is it better to keep cash or gold? ›
Gold offers a hedge against inflation
Gold is a unique safe haven asset because it acts as an inflation hedge. This is due to gold's historical tendency to climb in value when the dollar falls. So, the precious metal may help you maintain the value in your portfolio during periods of high inflation.
Who is the biggest investor in gold? ›
The biggest gold investor in the world
The largest single owner of gold on the planet is the U.S. government. At last count, Uncle Sam had 8,133.5 tons of gold (260 million ounces) stashed in vaults around the country like Fort Knox, which holds 147.3 million ounces.
The Pueblo Viejo gold mine in the Dominican Republic. Source: Barrick Gold Corp.
Do rich people invest in gold? ›
Gold in Rich Investors' Portfolios
It turns out the average ultra-high net worth individual (UHNWI) with a net worth over $30 million does own a little gold. They just don't own giant vaults and swim in gold like Scrooge McDuck. The average UHNWI holds about 2% of their net worth in gold.
Can you become a millionaire by investing in gold? ›
It depends on what you mean by “rich.” There are ways to get rich investing in any asset, including gold. However, multiplying your money in the short term requires a high degree of risk, perfect market timing, and complex trade strategies that are often impractical for individual investors.
