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
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.
Does Warren Buffett invest in gold? ›
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.
What does Warren Buffett not invest in? ›
Warren stays away from technology companies because he likes investments in which he can predict winners a decade in advance—an almost impossible feat when it comes to technology. Unfortunately for Warren, the world of technology knows no boundaries.
Why is everyone buying up gold? ›
Central banks see gold as a long-term store of value and a safe haven during times of economic and international turmoil. Gold is considered a resilient investment.
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.
Do the rich invest in gold? ›
The average UHNWI holds about 2% of their net worth in gold. While that's more than they keep in cryptocurrencies (1%), it's less than they keep in any other asset classes. In fact, wealthy investors even put more money into “investments of passion” such as fine art, wine, and cars than they do in gold.
What does Warren Buffett invest in? ›
Berkshire Hathaway is Buffett's investment company. It's the full owner of many recognizable companies, including GEICO and Fruit of the Loom. Berkshire is also a major shareholder in many other publicly-traded companies, such as Apple (AAPL).
Why is Warren Buffett buying silver? ›
It also generated a pre-tax return of more than $97 million for their Berkshire Hathaway conglomerate, Buffett said in his 1997 letter to shareholders. The Berkshire CEO described the wager as a "return to the past" as he bought silver in the 1960s in anticipation of its demonetization by the US government.
What is Warren Buffett's golden rule? ›
"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1."- Warren Buffet.
What did Warren Buffett tell his wife to invest in? ›
Buffett said he revises his will every three years, and he still advises his wife to allocate 10% of her inheritance to short-term government bonds and 90% to a low-cost S&P 500 index fund.
Con: Gold won't produce income as rapidly as other assets
While stocks and bonds may offer dividends (a share of corporate profits paid to stockholders) and coupon rates (interest paid on bonds), the only way to earn an income by investing in gold is to take advantage of growth in the price of the commodity.
Are gold bars at Costco worth it? ›
Costco is a reputable place to buy gold
The gold bars sell out fast, because the prices are hard to beat. You also get the peace of mind that you're buying from a reputable vendor. Many vendors charge a hefty gold premium. That's the markup between the price of a gold product and the current spot price of gold.
Are 1 oz gold bars a good investment? ›
The bottom line
Investing in 1-ounce gold bars can be a prudent move for those who are looking to diversify their portfolios and safeguard against economic uncertainties. However, it's crucial to approach this investment with a clear understanding of the market, associated costs and the long-term commitment required.
Is it better to keep cash or gold? ›
Is it better to hold gold or cash? For short-term needs, cash is better due to its unmatched liquidity. For long-term buy-and-hold investments, gold is preferable to protect against inflation and provide portfolio diversification.
What will gold be worth in 5 years? ›
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.
Should I buy gold now or wait 2024? ›
Buy gold before prices rise
While the indicators above are mixed, the bottom line may be that now—April 2024—is the time to buy gold. Multiple industry experts say gold could have a record year, so you'll want to purchase your precious metals before prices soar.
Does Goldman Sachs invest in gold? ›
Goldman Sachs Physical Gold ETF is among the most competitively priced commodity ETFs on the market.
Which stock is tied to gold? ›
7 best gold stocks by one-year performance
| Ticker | Company | Performance (Year) |
|---|
| FSM | Fortuna Silver Mines Inc. | 88.82% |
| NGD | New Gold Inc | 79.10% |
| KGC | Kinross Gold Corp. | 72.51% |
| EGO | Eldorado Gold Corp. | 71.47% |
3 more rows6 days ago
The Best Gold Stocks of June 2024
| Company (Ticker) | Market Cap |
|---|
| Harmony Gold Mining Limited (HMY) | $5.7 billion |
| Eldorado Gold Corporation (EGO) | $3.3 billion |
| Dundee Precious Metals Inc (DPM.TO) | $1.5 billion |
| DRDGold Limited (DRD) | $762 million |
3 more rowsAccording to the Gold ETF Impact Study 2023, Millennials on average hold 70 per cent more gold than the two previous generations, with 17 per cent of their portfolios invested in gold.
