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See Warren Buffett's Criticism of Gold as an Investment as the Precious Metal Hits All-Time Highs

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  Published in Stocks and Investing on Tuesday, September 30th 2025 at 15:32 GMT by Investopedia
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Warren Buffett’s Classic Skepticism of Gold Amid Record‑High Prices

When gold last hit all‑time highs—peaking above $2,400 an ounce in late‑2023—many investors cheered a “safe‑haven” rally. Yet the long‑time value‑investor, Warren Buffett, remains firmly skeptical. In a series of interviews, letters to shareholders, and public statements, Buffett has repeatedly reminded the market that “gold is a store of value, not an investment.” The Investopedia article “See Warren Buffett’s Criticism of Gold as an Investment as the Precious Metal Hits All‑Time Highs” distills this viewpoint and places it in the context of the current commodity market.

1. The Context: Gold’s Record‑High Run

Gold’s meteoric rise is a product of several interlocking forces:

• Inflation and currency uncertainty – The pandemic, massive fiscal stimulus, and rapid quantitative easing have worried investors that paper money will lose value. Gold, a physical asset, is perceived as a hedge against that erosion.
• Central‑bank policy – The U.S. Federal Reserve’s dovish stance in 2022 and early 2023 kept interest rates low, which reduces the opportunity cost of holding a non‑yielding asset.
• Geopolitical risk – Tensions in Eastern Europe and trade disputes have again pushed risk‑off flows into gold.

Because gold is priced in U.S. dollars, its price moves inversely to the currency. When the dollar weakens, gold tends to rally, a dynamic that has driven recent all‑time highs.

2. Buffett’s Core Argument: No Income, No Growth

Buffett’s criticism stems from a foundational principle of value investing: cash flow matters. In a 2018 interview with Bloomberg, he explained that gold “has no productive use” – it does not generate income, dividends, or even a profit‑and‑loss statement. A gold bar is simply an asset that appreciates only in response to supply‑demand dynamics, not due to inherent value creation.

“Gold is a very expensive store of value. It does not create cash.”
— Warren Buffett, Letter to Berkshire Hathaway shareholders (2016)

Buffett also points to the “expense ratio” of gold‑trading vehicles. Exchange‑traded funds (ETFs) that hold physical gold or futures incur annual costs, eroding returns over time. If an investor is looking for a long‑term, yield‑generating position, Buffett favors assets that pay dividends or generate operational cash flow.

3. Gold Mining Companies: A Buffett‑Friendly Alternative

While Buffett eschews holding bullion, he has long invested in gold‑mining companies. In the past, Berkshire Hathaway owned stakes in Barrick Gold, Newmont Mining, and AngloGold Ashanti. Buffett’s rationale? Gold‑mining stocks combine exposure to the metal’s price with the benefits of a business model that can grow, generate cash, and pay dividends.

Investopedia’s companion article on Gold vs. Gold Mining Stocks elaborates on the differences:

Buffett’s historical bets on mining companies reflect a pragmatic approach: he wants the upside of gold prices while retaining the income and growth potential of a business.

4. The Practical Take‑away for Investors

1. Define “investment” – If you’re in it for yield, dividends, or cash flow, a physical gold bar or ETF is unlikely to satisfy that need. If you’re after a hedge against fiat currency collapse, gold can play a role, but you’ll still be paying a premium and the cost of storage.

2. Consider the expense ratio – Gold‑ETFs (GLD, IAU) charge between 0.15% and 0.25% annually. Over a decade, that can eat up a significant portion of any appreciation.

3. Look at mining stocks – Companies like Barrick and Newmont offer exposure to gold’s price while also providing dividends, share buybacks, and management expertise. Buffett’s own portfolio shows that a small allocation to mining can diversify a portfolio beyond pure commodity exposure.

4. Keep the dollar in mind – Because gold is denominated in U.S. dollars, a weaker dollar can inflate gold’s price. For U.S. investors, this adds a layer of currency risk that pure gold holdings already carry.

5. Treat gold as an insurance policy – Buffett likens it to a small “insurance” line on a portfolio rather than a core asset. If you can tolerate the lack of yield, you might hold a modest amount (1–2% of total assets) to hedge against extreme macro‑economic shocks.

5. Buffett’s Final Words

In a 2022 interview on Bloomberg’s “Morningside”, Buffett reiterated that while he respects gold’s historical role as a store of value, he remains unconvinced it qualifies as a productive investment:

“Gold does not produce anything. It doesn’t pay dividends, it doesn’t grow, and it doesn’t create wealth. For that reason I’m not a big fan of buying gold.”

His sentiment has not wavered even as gold has climbed past all‑time highs. Instead, Buffett continues to champion the virtues of businesses that generate cash, pay dividends, and demonstrate a sustainable competitive advantage. In this context, gold’s allure lies largely in its psychological comfort as a “last‑resort” asset, not in any financial efficiency.

Bottom Line

Warren Buffett’s criticism of gold is less about the metal itself and more about the type of asset it is. Gold’s current price surge underscores its role as a hedge against inflation and currency risk, but it remains a commodity that offers no income or growth. For investors looking for yield, diversification, and long‑term returns, Buffett’s advice is clear: treat gold as a small, defensive portion of your portfolio, and consider gold‑mining stocks if you want a blend of commodity exposure and business fundamentals. The gold market may continue to rally, but Buffett’s prudent stance reminds us that not all price appreciation translates into sound investing.