Why Warren Buffett avoid investing in gold while other billionaires do

By Minh Hieu   May 2, 2024 | 05:30 pm PT
Why Warren Buffett avoid investing in gold while other billionaires do
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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