Nov 21, 2023
Investing legend Warren Buffett has publicly expressed his views on gold on several occasions. He’s generally not a fan of the yellow metal.
In particular, Buffett often emphasized the importance of investing in productive assets. These are assets that generate income, like stocks, bonds, real estate, farms etc. Gold, as he pointed out, does not produce anything.
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Buffett’s take is markedly different from that of Robert Kiyosaki, the bestselling author of “Rich Dad, Poor Dad.”
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A self-proclaimed gold bug, Kiyosaki says he doesn't "touch stocks" and has been known for his positive stance on gold as an investment, often advocating for its use as a hedge against economic uncertainty and inflation.
During an interview earlier this year with Vladislav Lyubovny, commonly known as DJ Vlad, Kiyosaki was asked about Buffett’s views on stocks versus gold.
“This, here, is a 1964 silver dollar,” Kiyosaki responded, holding up a silver coin in his hand.
He noted that the U.S. later removed silver from its circulating coins.
Due to the intrinsic value of the silver content, the old coins that contain the precious metal are often worth more than their face value.
“So this little silver coin today is worth $10. I can go to any coin dealer and change it for $10. So F U Buffett,” Kiyosaki remarked.
‘He’s good at stocks’
To be sure, Kiyosaki recognized Buffett’s achievements, commenting, “He’s good at stocks. He’s a very smart guy. He’s a multi-billionaire.”
Yet, the personal finance expert contended that Buffett didn't use his personal funds for investments.
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“He didn’t invest his money. He invests your money,” he said. “I don’t need to trust Buffett. That’s all I’m saying. I trust me. And if you don’t trust you, give it to Buffett.”
This assertion, however, may not reflect the complete picture.
In Buffett’s 2011 letter to Berkshire Hathaway (BRK.B) shareholders, he wrote, “More than 98% of my net worth is in Berkshire stock, all of which will go to various philanthropies. Being so heavily concentrated in one stock defies conventional wisdom. But I’m fine with this arrangement, knowing both the quality and diversity of the businesses we own and the caliber of the people who manage them.”
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Buffett vs gold
Buffett is widely considered one of the most successful investors of our time.
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From 1964 to 2022, his company Berkshire Hathaway delivered total gains of 3,787,464% — substantially outperforming the S&P 500’s still impressive 24,708% return during the same period.
But for investors aiming to diversify beyond the stock market, it may be prudent not to dismiss the potential of precious metals too quickly.
Gold has historically been considered a "safe haven" asset and reliable store of value by investors who use it to diversify and protect their portfolios. This is because during inflationary and turbulent economic periods, it tends to retain and often gain value.
In fact, even Buffett’s company had once invested in a gold miner. In the second quarter of 2020, Berkshire bought 20.9 million shares of Barrick Gold Corp (GOLD), one of the largest gold mining companies in the world.
However, it was not a long-term investment. Berkshire sold all its stakes in Barrick in the fourth quarter of 2020.
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Jing is an investment reporter for Moneywise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
