By Minh Hieu  May 2, 2024 | 05:30 pm PT
Warren Buffett at a Berkshire Hathaway's shareholder meeting in May, 2018. Photo by Reuters
While finance billionaire Warren Buffett have recommended against investing in gold, other billionaire investors, such as Ray Dalio and David Einhorn, have been fond of the precious metal.
Although gold prices soar to record levels, Buffett, one of the most successful investors of all time and the chairman of holding company Berkshire Hathaway, remains unenthusiastic about investing in the yellow metal, stock market news website Investing News Network reported, citing multiple instances where the billionaire voiced his disinterest in gold.
Most notably, in a 2011 letter to Berkshire Hathaway’s shareholders, Buffett highlighted gold as an asset with limited utility and productivity.
He noted that buyers of gold do so with the expectation that someone else will pay more for it in the future.
Buffett emphasized that investing in stocks or cropland would yield a plentiful harvest of crops and substantial dividends over the years, whereas an ounce of gold would still be an ounce of gold.
Finance experts also echo Buffett's sentiment, cautioning against making gold a significant component of any investment portfolio, as reported by CNBC.
"Gold has not always been the store of value people hoped it would be," said Doug Boneparth, a certified financial planner and the founder and president of U.S. financial adviser firm Bone Fide Wealth.
In the long term, assets that can grow and provide compounding returns are superior to the precious metal, experts said.
Over the past 15 years, an exchange-traded fund tracking the spot price of gold has returned an annualized 5.5% compared with a 15.3% return in the S&P 500.
While Buffett maintains his skepticism towards gold, other billionaire investors like Ray Dalio, David Einhorn, John Paulson, and Jacob Rothschild are avid supporters of the precious metal, according to financial news company Benzinga.
Einhorn's hedge fund Greenlight Capital is particularly bullish on gold, viewing it as a hedge against inflation.
"We own a lot more gold than just the GLD [exchange-traded fund]. We own physical bars as well. So gold is a very large position for us," he said in an April conference.
Billionaire investor Dalio, the founder of American investment management firm Bridgewater Associates, is also holding onto gold as as a safeguard against potential risks from rising inflation and a looming debt crisis in the U.S. economy, Business Insider quoted him as saying last month.
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FAQs
He noted that buyers of gold do so with the expectation that someone else will pay more for it in the future. Buffett emphasized that investing in stocks or cropland would yield a plentiful harvest of crops and substantial dividends over the years, whereas an ounce of gold would still be an ounce of gold.
Why does Warren Buffet not invest in gold? ›
Buffett therefore doesn't see any utility in owning gold because it can't produce things. Stocks can grow earnings and profits and pay dividends, and farmland produces fruits and vegetables that can be used and sold, but gold just sits there, waiting for someone to come along and decide to pay more for it.
What are the arguments against investing in gold? ›
Price volatility: The price of gold can be volatile, and it may fluctuate significantly over short periods. This can make it difficult to predict its value and can make it a risky investment.
What are the golden rules of investing Warren Buffett? ›
“Be fearful when others are greedy and greedy when others are fearful.” This highlights Buffett's contrarian approach to investing. He often takes advantage of market panics and crashes to buy companies at a discount, knowing that their value will eventually recover.
Do billionaires invest in gold? ›
Physical assets fit the bill in providing status and something that's in their possession and control. Gold isn't the only tangible investment that's popular with the ultra-wealthy. They often choose property, art, and land alongside precious metals.
Is owning gold a good investment? ›
Gold can be a good investment option in specific situations, such as when inflation is high. During these scenarios, gold can outperform the stock market. However, gold is typically a poor investment option when the economy is strong.
Does Warren Buffett still own Barrick Gold? ›
Warren Buffett bought an approximate stake of US$565 million in Barrick Gold (TSX:ABX)(NYSE:ABX) in Q2 2020. As the Berkshire Hathaway's 13F filing revealed this Tuesday, he had exited the gold position altogether by the end of 2020. US$565 million is a lot of money to most people.
What is the weakness of gold investment? ›
Investing in gold comes with several disadvantages. Physical gold does not generate passive income or dividends, leading investors to rely solely on price appreciation. Additionally, owning gold incurs storage and insurance costs.
What investments are better than gold? ›
Silver is more affordable than gold, making it an accessible way to diversify your investments. It's also widely used in industries, which means its value has the potential to grow based on market demand. Platinum's value comes from its rarity and industrial use, particularly in automotive manufacturing.
Can the US government confiscate your gold? ›
Of course it is possible; it has been done before and governments in times of stress simply change the laws. As you can see above, gold bullion was forced to be sold to the government in 1933.
The golden rules of investing
- If you can't afford to invest yet, don't. It's true that starting to invest early can give your investments more time to grow over the long term. ...
- Set your investment expectations. ...
- Understand your investment. ...
- Diversify. ...
- Take a long-term view. ...
- Keep on top of your investments.
What are the 4 golden rules investing? ›
They are: (1) Use specialist products; (2) Diversify manager research risk; (3) Diversify investment styles; and, (4) Rebalance to asset mix policy. All boringly straightforward and logical.
What is the Buffett's two-list rule? ›
Buffett's Two Lists is a productivity, prioritisation and focusing approach where you write down your top 25 goals; circle your 5 highest priorities; then focus on those 5 while 'avoiding at all costs' doing anything on the remaining 20.
Where do rich people buy gold? ›
Some of the most trustworthy and well-known gold dealers include JM Bullion, American Precious Metals Exchange (APMEX) and American Hartford Gold.
Are 1 oz gold bars a good investment? ›
And like all gold investments, 1-ounce bars can serve as a hedge against inflation. That means buying in now, while inflation remains high, could deliver big benefits.
Do people buy gold during a recession? ›
Put very simply, investors gravitate to gold during recessions because it is a safe harbor. If investors are worried about currencies being devalued via loose monetary policy, gold provides an alternative option.
Why is Michael Burry buying gold? ›
The substantial Sprott investment is believed to highlight Mr Burry's confidence in the commodity as a hedge against economic uncertainty. The maverick investor is well-known for his ability to accurately predict the economic cycle.
Why doesn't Warren Buffett invest in real estate? ›
Buying and managing real estate is more of a business than it is an investment, and Buffett knows that his time is better spent choosing companies to invest in than it is running a real estate business.
Did Warren Buffet invest in McDonald's? ›
Buffett — who proudly eats like a six-year-old — has even bought McDonald's stock: Berkshire held a 4.3% stake in the company worth $1.4 billion at the end of 1996.
Why does Warren Buffet not pay dividends? ›
But the main reason Berkshire doesn't pay dividends is that Buffett is confident in his ability to allocate capital in a more profitable way. Even if Buffett thinks he can't make effective use of his cash reserves, he will choose a buyback plan to return capital to shareholders rather than dividends.