Legendary Warren Buffett warns of the fatal weakness of gold investment

(Dan Tri) - Despite the strong fluctuations in gold prices, investment legend Warren Buffett still says no to this precious metal because he believes it is an asset that does not create value.

Lie still in the safe

Investors cite various reasons for owning gold. In some ways, the precious metal has served as a form of currency for centuries. However, many people believe that gold is just an asset that “sits in a safe,” not creating any real added value or profit.

That's why the world's most famous investor Warren Buffett never invests in gold.

In his 2011 letter to shareholders, he pointed out that with the money to buy all the gold in the world, an investor could buy all the farmland in the US and still have enough money left over to own 16 more ExxonMobil corporations - the oil and gas "tycoon" with the largest revenue in the world.

"Over time, these things will yield rich harvests and dividends. Meanwhile, those who buy gold will only end up with a warehouse full of shiny metal bars," billionaire Warren Buffett said.

He also said that gold has some industrial and decorative uses, but demand for these purposes is limited, not creating new products. "If you own an ounce of gold, you still only have an ounce," billionaire Warren Buffett once wrote.

The 90-year-old billionaire divides investments in the market into three categories. First, cash investments include savings accounts, bonds and other similar types of investments with low risk.

The second is productive assets, those that can appreciate in value over time and can create valuable assets, such as stocks or rental properties.

Finally, there are assets that do not produce value and gold falls into this group.

Billionaire Warren Buffett at the 2019 Berkshire Hathaway Shareholders Meeting (Photo: AFP).

“A big block of gold can do nothing”

Billionaire Buffett once said that if you collected all the gold in the world, you would only have a cube. "You can climb it, look at it, polish it - but it will not produce any corn, any fiber, or any profit," the billionaire said.

“You just hope someone will buy it back at a higher price. But that's not investing, that's fear speculation,” he stressed.

In contrast, he classifies productive assets such as farms, factories or new businesses as the foundation of long-term investment.

“When you buy a farm, you can calculate the tons of corn, soybeans per year, the cost of labor and taxes. You know it creates real value,” the legendary investor shared.

For Mr. Buffett, investing in stocks or companies is the same: "We don't care about the stock price going up and down every week. What's important is the real productivity of the business."

According to Buffett, the appeal of gold lies in emotion. “When prices go up, people get excited and want to rush in. But in the long run, it is not the path to wealth."

Sharing the same view, Mr. William Bernstein - author of the book "4 pillars of investment", said that when all investment channels go down, gold is the one that can perform well. But in the long run, investors will benefit more with assets that grow and bring profits with compound interest. Therefore, he likes the view of not investing in gold like Warren Buffett.

Tim Hayes, global investment strategist at Ned Davis Research, said it should be viewed as a portfolio diversifier. "Don't make gold the backbone of your portfolio," he said.

Source: https://dantri.com.vn/kinh-doanh/huyen-thoai-warren-buffett-canh-bao-diem-yeu-cot-tu-cua-dau-tu-vang-20251022121505721.htm