Why Investors Like Warren Buffett Don’t Like Investing In Gold

Published:

25 sep 2021 14:15 GMT

In 1998 the American magnate described this metal as an asset that “has no use”.

Despite the fact that gold is considered a tool to protect against market volatility and that its value has experienced significant growth in recent years, several investors, such as Warren Buffett, question the argument of investing in this precious metal, reported this Friday CNBC, which consulted several experts on the matter.

Buffett, who has been in investing since the 2000s, has spoken out numerous times about his doubts about future demand for gold, calling it as early as 1998 an asset that is “useless”. On opinion Buffett’s gold, like all unproductive goods, it is not “procreative”. This means that gold will never produce more gold or anything else of value. In this way, it considers that it is more reasonable, for example, to invest in oil. In addition, the American investor mentioned that this metal does not have a great practical use, since it can be applied mainly only to produce jewelry, and consequently the demand for the good will not increase.

Buffett agrees with Jason Snipe, chief investment officer at Odyssey Capital Advisors. “[El oro] does not produce anything and therefore, from a long-term perspective, it is a difficult asset to invest in“The expert told CNBC.” It is prudent portfolio management to have maybe a small allocation there, but this is not an asset you want to be deeply rooted in if you are looking for a long-term return, “he added.

For her part, Suki Cooper, executive director of precious metals research at Standard Chartered Bank, stated that gold “is not necessarily a perfect hedge against inflation, but it can be a strategic hedge against inflation.” The expert said that gold is “a good inflation hedge” if stored for 12 to 18 months before inflation reaches a higher level; however, “if it is only purchased for a short period, say a month, it may not be an effective inflation hedge.”

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