America’s investing sweetheart Warren Buffett loves investing in everything from ketchup to cola to insurance companies. But one area of investing that Buffett refuses to touch is the precious metals market, specifically gold. Here are three reasons Buffett argues against gold as an investment:
- “It doesn’t DO anything.” Warren Buffett likes investments in companies that have the opportunity to grow and prosper. He thinks investing in gold is pointless because it can’t create yearly dividends for investors.
- “Its value lies in people thinking it’s valuable.” Buffett argues that gold doesn’t have an intrinsic value for human kind in the same way that some items, like agricultural products, do. He argues that because gold relies on people thinking its valuable to be valuable, it’s not a sound investment noting that in the 1600s.
- “It’s a risky investment.” Buffett argues that the rapid inflation of currency outstrips the strides gold makes in market value, making it a risky long-term investment.
Of course, nobody can be right all the time, and while Buffett has some interesting points to consider when it comes to investing in gold bullion, there are some strong counter arguments for gold investment.