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.
As an investment enthusiast with a deep understanding of Warren Buffett's investment principles, it's evident that his approach is rooted in the fundamentals of value investing. Buffett's aversion to gold and preference for silver is not arbitrary; it reflects a deliberate application of his core investment philosophy.
Buffett's perspective on gold is centered on its perceived lack of value due to its limited usefulness. He asserts that investments should be made in assets that serve practical purposes and have intrinsic value. Gold, according to Buffett, falls short in this regard as it essentially "doesn't do anything but sit there and look at you."
The key takeaway from Buffett's stance is his emphasis on utility and tangible value. This principle aligns with his belief that investments should contribute to society or fulfill some genuine need. In contrast to gold, silver is highlighted as an attractive investment because of its diverse applications and practical uses.
Silver, in Buffett's eyes, stands out due to its extensive industrial and medical uses. It is employed in various medical applications, such as bandages, catheters, and as a healing agent for burns. Furthermore, silver plays a crucial role in water purification. Its significance extends to the electronics industry, where it serves as an excellent conductor of electricity without corroding. This makes silver indispensable in wiring, connective parts, and electronic devices like computers, cellphones, and cameras. Even in the realm of entertainment, silver's scratch-resistant properties make it an ideal coating for DVDs.
In essence, silver aligns with Buffett's criteria for a valuable investment by virtue of its real-world applications and irreplaceable nature in certain industries. Unlike gold, which may be limited to aesthetic and some industrial uses, silver's versatility and practical indispensability make it a more attractive prospect for the seasoned investor.
Buffett's disdain for gold stems not from a generalized aversion to precious metals but from his specific investment philosophy that prioritizes utility and tangible value. His strategic deployment of funds, nearly $1 billion, into silver underscores his conviction in the metal's practical and enduring significance within various sectors of the economy.
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 Buffet 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.
Is gold a good investment Why or why not? ›
Investing in gold can often be a prudent choice for those seeking to diversify their portfolios, hedge against inflation, and protect their assets during economic uncertainty. Gold's enduring value and its role as a safe haven asset make it a compelling investment, particularly in volatile or unpredictable markets.
What is Warren Buffett most invested in? ›
Top 10 holdings in the Warren Buffett portfolio
- Apple Inc. (AAPL).
- Bank of America Corp. (BAC).
- American Express Co. (AXP).
- Coca-Cola Co. (KO).
- Chevron Corp. (CVX).
- Occidental Petroleum Corp. (OXY).
- Moody's Corp. (MCO).
- Kraft Heinz Co. (KHC).
Gold does not have earnings and, in fact, if you want to hold physical gold there is potentially a cost to hold and insure it. Gold is worth what people are willing to pay for it on that day," he says. "The value of gold is determined by supply and demand, which is very hard to predict.
What is Warren Buffet investing in right now? ›
Buffett Watch
| Symbol | Holdings |
|---|
| Chubb Ltd | CB | 25,923,840 |
| Citigroup Inc | C | 55,244,797 |
| Coca-Cola Co | KO | 400,000,000 |
| Davita Inc | DVA | 36,095,570 |
46 more rowsWhile 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.
Has gold ever been a bad investment? ›
As a result, gold also can be considered a risky investment, as history has shown that the price of gold does not always go up, particularly when markets are soaring.
Is gold better than cash? ›
Why is gold a better long-term investment than cash? Gold acts as a stable store of value by maintaining its purchasing power over long periods. It has limited supply growth, making it a rare tangible asset. During times of economic turmoil, when cash is devalued, gold prices often rise, thereby preserving wealth.
What are the pros and cons of buying gold? ›
3 pros and cons of investing in gold this May
- Pro: Inflation continues.
- Con: Gold's price.
- Pro: Gold's price growth.
- Con: You'll need to store your gold.
- Pro: Gold is highly accessible.
- Con: Gold won't produce income as rapidly as other assets.
Apple Inc.
Not only is Apple Berkshire's largest public stock holding, it's not even close. Apple represents about 44.3% of Buffett's total portfolio, and his $185 billion Apple stake is more than four times larger than his second-largest investment.
Does Warren Buffett still own silver? ›
Over 30 years ago, Warren Buffett, CEO of Berkshire Hathaway, made his first purchase of silver in anticipation of the metal's demonetization by the U.S. Government. Since that time he has followed silver's fundamentals but no entity he manages has owned it.
What 1 stock does Warren Buffett own? ›
The Berkshire Hathaway portfolio
| Company | Shares held | Holding value |
|---|
| Apple (AAPL) | 789,368,450 | $135,360,901,805 |
| Bank of America (BAC) | 1,032,852,006 | $39,165,748,068 |
| American Express (AXP) | 151,610,700 | $34,520,240,283 |
| Coca-Cola (KO) | 400,000,000 | $24,472,000,000 |
37 more rowsThroughout history, gold has been seen as a special and valuable commodity. Today, owning gold can act as a hedge against inflation and deflation alike, as well as a good portfolio diversifier. As a global store of value, gold can also provide financial cover during geopolitical and macroeconomic uncertainty.
Is it better to own gold or gold stocks? ›
Whether to hold physical gold or invest in gold exchange-traded funds requires examining the trade-offs with each, including their liquidity, costs, returns, risks, and the practicalities involved. In general, gold ETFs offer some tax advantages and lower costs over time than trading physical gold.
How much gold should you own? ›
You should aim to own around 5-20% of gold in your overall portfolio, with the exact percentage varying based on your age and investor profile. Most experts recommend keeping your gold investment within the range of 5% to 20% to diversify your portfolio and hedge against inflation.
Does Dave Ramsey recommend investing in gold? ›
I'd stop investing in gold and silver completely. I don't put money in precious metals at all, because they have a lousy long-term track record. — Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover.
Does Warren Buffet own a Rolex? ›
18238. Warren Buffett's Rolex definitely has a sapphire crystal on it immediately ruling out all of the older 4-digit reference models, as the ref. 1803 and all Day-Date watches before it featured acrylic crystal.
Why doesn't Warren Buffett invest in real estate? ›
Buffett avoids real estate investments due to precise pricing, lack of competitive edge, complex management and corporation tax disadvantages. However, he considers investing in real estate during crises or via REITs, offering diversification, liquidity and expert management.
Is Warren Buffet actually a good investor? ›
Despite common media portrayals, Buffett's success isn't rooted in economics but rather in his age and commitment to long-term investments. Many still adhere to Buffett's value investing approach, it's worth noting that he himself has diversified into growth companies and moved away from these principles.
