Warren Buffett is one of the wealthiest men on the planet, and his name is synonymous with successful investing. I certainly admire him. However, that doesn’t necessarily make him right about everything.
Dr. Mark Skousen interviewed Buffett in June, and asked him whether he believed in gold as a good long-term investment. Buffett replied:
“No, I’ve never invested in gold.” Buffett’s father, Howard, a conservative Republican congressman from Nebraska, believed in the gold standard and gave Buffett some gold coins. He told me he still has them, but “only as a keepsake, not as an investment.” He told me he’s no gold bug and, instead, prefers to invest in well-run businesses on the belief that investing in free enterprise does more social good than investing in gold. He’s not interested in gold even as a speculation, although he did take a position in silver several years ago (not as a monetary metal, but as an industrial metal).
Perhaps Buffett’s most famous quote about gold is:
“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
So why do I think he’s wrong about gold?
First, the most obvious: gold is scarce. There is only so much of it. (I have written an issue of my Mini-Course on why gold is such a special metal — you can subscribe to the Gold Minute free here and read this fascinating story.)
It also does have practical uses, such as conducting electricity, not tarnishing, etc.
Perhaps most important though, is that as the value of paper money drops and people become scared of inflation, the desire for (and consequently the price of) gold increases.
So, do you agree with Warren Buffett or me? Let me know by commenting below.