Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, remains skeptical about investing in gold despite its recent 60% surge in value. Buffett argues that gold has no utility and does not produce anything or generate income, making it a less attractive investment compared to productive assets, such as farmland or real estate. Gold would be way down on my list as a store of value,” Buffett remarked at the Berkshire Hathaway annual shareholder meeting in 2005.
He emphasized that productive assets not only maintain but can grow in value over time through income generation, unlike gold, which is mainly static and unproductive. Buffett’s long-time vice chairman, Charlie Munger, has been even more blunt, calling gold a “dumb investment.” Both Buffett and Munger favor investments in assets that have practical use and generate returns. To illustrate his point, Buffett often compares gold’s performance to that of Berkshire Hathaway.
When Buffett took over the company in 1965, gold was priced at about $35 per ounce.
Buffett dismisses gold’s surge
Today, gold has increased nearly 100-fold, whereas Berkshire Hathaway has grown by approximately 58,664-fold over the same period, underscoring Buffett’s belief in the value of investing in productive assets.
For the average investor, Buffett recommends investing in index funds such as the Vanguard S&P 500 ETF. While owning farmland or real estate can be lucrative, these investments require significant management and oversight to be truly productive and profitable. Individual stocks can also yield high returns but necessitate diligent research and active management.
Buffett posits that for long-term investors who can endure market volatility, there is little need to diversify with other asset classes. Government bonds might be a better option than gold for those seeking stability. Buffett’s overarching advice is clear: focus on productive assets that can grow in value and contribute to wealth accumulation over time, rather than static assets like gold.
While gold’s recent surge may make it appear attractive, long-term investors should heed Warren Buffett’s advice and opt for productive investments such as index funds, which can offer more reliable and substantial returns.
