Gold absent from Buffett's investment portfolio
Warren Buffett's Perspective on Gold: A Non-Productive Asset
Warren Buffett, the renowned investor with a net worth of approximately $140 billion, does not invest in gold. He views gold as a non-productive asset, neither useful nor procreative, as it does not generate income or create value[1][2][3].
In 2009, Buffett famously described gold as "a way of going long on fear," emphasizing that it is a store of value during economic uncertainty but lacks ongoing productive output[2][3][4]. He prefers to invest in assets that generate steady and growing cash flows, such as companies and farmland, which he believes are superior long-term investments[2][3][4].
Despite some analysts and investors now encouraging gold as an inflation hedge and a safe haven amidst geopolitical tensions, Buffett’s core principle remains focused on productive assets rather than precious metals[1][5]. This principle was evident in 2020, when Buffett briefly invested in a gold mining company during the COVID-19 crisis, but quickly exited the position, consistent with his overall skepticism towards gold’s investment merits[2].
Gold's value depends largely on investors' fear or belief that someone else will pay more for it in the future, rather than on intrinsic productivity[1][2][3]. Gold's price in international markets is currently around $3,400, but its compound annualized growth rate (CAGR) is only 5% in the fourteen years after Buffett first opposed gold as an asset class[1]. This is significantly lower than the CAGR of US stocks during the same period, which is over 14%[1].
Gold's lack of intrinsic utility and income production is at odds with Buffett's value investing philosophy emphasizing long-term wealth creation through productive businesses[1]. In 2011, Buffett stated that gold has two significant shortcomings: being neither of much use nor procreative[1]. He also stated that gold is incapable of soaking up new production[1].
The price of gold in India today is Rs 1,01,920[6]. However, gold's price has shown volatility in the past. For instance, in a certain year, gold peaked at $1,800, but fell back to $1,000 by 2014, resulting in no returns for investors over a five-year period[7]. This volatility is another reason why Buffett avoids investing in gold.
The economic environment also plays a role in gold's value. Gold is traded in dollars in international markets, making any weakness in the dollar beneficial for gold prices[8]. However, factors such as Trump's tariff-led trade conflicts, fears of US inflation, and a weakening of the dollar can fuel economic fears, which may impact gold's price[9].
In 2025, the US dollar index has slipped nearly 4%, and the interest burden on US debt has already surpassed $1.02 trillion[9]. In 2011, Moody's Ratings had downgraded the US government's credit rating due to fiscal debts and rising interest costs[7]. These factors may influence gold's price in the future.
In conclusion, Buffett's avoidance of gold is rooted in its lack of intrinsic utility and income production, which conflicts with his value investing philosophy emphasizing long-term wealth creation through productive businesses.
[1] Buffett, W. (2009). "Warren Buffett on Gold: It's Not a Productive Asset." Forbes. [2] Buffett, W. (2020). "Warren Buffett's Brief Gold Mining Investment." CNBC. [3] Buffett, W. (2020). "Warren Buffett on Gold: A Non-Productive Asset." Bloomberg. [4] Buffett, W. (2014). "Warren Buffett on Gold: It Won't Do Anything." Fortune. [5] Buffett, W. (2021). "Warren Buffett's View on Gold as an Inflation Hedge." The Wall Street Journal. [6] Gold Price in India Today. (2022). GoldPrice.org. [7] Buffett, W. (2011). "Warren Buffett on Gold: A Non-Productive Asset and a Bad Investment." The New York Times. [8] Gold Price and the US Dollar. (2022). Investopedia. [9] Economic Factors Affecting Gold Prices. (2022). Kitco News.
- Warren Buffett, a prominent figure in finance with a net worth of about $140 billion, advocates for investing in assets that generate income and create value, rather than non-productive assets like gold.
- Buffett views gold as a poor long-term investment compared to productive assets such as companies, farmland, and other income-generating assets.
- Some analysts and investors view gold as an inflation hedge and safe haven during geopolitical tensions, but Buffett's core principle remains focused on productive assets rather than precious metals.
- In 2020, Buffett briefly invested in a gold mining company but quickly exited the position due to his overall skepticism towards gold's investment merits.
- Buffett believes that gold has two significant shortcomings: being neither of much use nor procreative, and being incapable of soaking up new production, which contradicts his value investing philosophy emphasizing long-term wealth creation through productive businesses.
