Why Billionaire Warren Buffett Does Not Like The Glitter of Gold
Warren Buffett is a name that needs no introduction in the world of investing. At the age of just 11, he had started investing in stocks. And fast-forward to today, eight decades later, the billionaire still remains an inspiration to many across the globe.
And quite naturally, everyone wants to know his ‘secret’ to amassing such huge wealth, and the investment ideology behind all of it.
But one thing that the 95-year-old billionaire (who is about to retire this year) has repeated time and again is his dislike towards one particular asset class that the world otherwise loves: Gold. Despite gold’s global appeal as a ‘safe haven’ and its mounting prices this year as well, Warren Buffett has consistently stayed away from the precious yellow metal.
But why? Let’s unfold what the Oracle of Omaha, who sits on a massive net worth of nearly $150 billion, thinks about gold, and why he prefers to stay away from its glitter.
Why gold does not fit into Warren Buffett’s playbook
Warren Buffett is known as a value investor, i.e., an investor who hunts for assets priced lower than their true worth, and thus expects the market to catch up and price them right eventually, which earns him that profit later on.
But for him, gold is an unproductive asset. Unlike stocks, which generate dividends and profits for the investor and have a company behind them that creates some value through the sale of goods and services, Buffett feels that gold just sits idle. The glittery yellow metal doesn’t grow, innovate or even pay the investor back in any way.
And these are not our words.
Warren Buffett had explained it all in his 2011 letter to Berkshire Hathaway’s shareholders.
While talking about a “major category of assets that will never produce anything, but the buyer will still pay more for them in the future”, Buffett pointed towards gold:
“Gold has two significant shortcomings: being neither of much use nor procreative*. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production.*
Meanwhile, if you own one ounce of gold for eternity, you will still own one ounce at its end. What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade, that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while.”
Buffett then went on to ask investors to imagine a scenario.
“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge).
Can you imagine an investor with $9.6 trillion selecting pile A over pile B? Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.
A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A (gold) will compound over the century at a rate far inferior to that achieved by pile B.”
Buffett answers why gold’s price keeps on rising
Reading this detailed explanation by Warren Buffett makes us think – If gold doesn’t generate income and might not be an undervalued asset, why does its price keep rising?
Well, the answer too lies in Warren Buffett’s letter – it’s fear.
People tend to invest in gold because they are concerned about inflation, wars, recessions, and any form of financial meltdown. They actually don’t keep buying gold for what it does as an asset class; they keep buying it in the hope that someone else in the world will be willing to pay more for that gold later on.
Remember, Warren Buffett had mentioned this in his letter?
Through this, he had pointed out that people buy gold because they’re worried or fearful about future factors, such as inflation, market crashes, or crises. Such people also believe that more and more people will keep becoming fearful and hence rush to buy gold, thus pushing up its price.
How has Gold performed vs the stock market?
We compared gold’s 10, 20, and 30-year returns (prices as per 10 grams of 24K gold) with those of India’s Sensex and the US’ NASDAQ Composite.
And the results are contrasting for India and the USA, with gold showing impressive and better returns than the stock market in India over most of the long term, but failing to outperform the US stock market index of the NASDAQ composite in any of the past three decades.
Gold (India)
(Source for gold prices: https://www.goldpriceindia.com/ , https://groww.in/blog/historical-gold-rates-trend-in-india )
Sensex
*Sensex levels for the month of November for every time period
(Historical data: https://www.bseindia.com/indices/IndexArchiveData.html)
Gold (USA)
Source: https://www.usagold.com/daily-gold-price-history/
NASDAQ
*NASDAQ levels for the month of November for every time period
Source: https://in.investing.com/indices/nasdaq-composite-historical-data
So, comparing Sensex’s returns with India’s gold prices and NASDAQ’s returns with US’ gold prices shows that while the returns from gold have largely outperformed the Sensex over 10 and 20 year periods, India’s stock market index has edged past the glittery gold over the 30 years.
As far as the USA is concerned, the story is totally different. The US’ stock market index, the NASDAQ Composite, has managed to outperform the country’s gold in all three periods: 10, 20, and 30 years.
Why is there a disparity between the India and US markets vs Gold?
The above figures clearly show the disparity between the India and US markets vs gold. But why is it so? Here are the key reasons behind the disparity:
- Explosive tech-driven growth of the US stock market: The last three decades saw the US equity market indices like NASDAQ growing explosively due to huge tech-driven innovation by giants such as Apple, Microsoft, Amazon, NVIDIA, etc. India’s stock market, on the other hand, did not witness such big tech-driven shifts in that period.
Also, although the Indian stock market too has grown significantly in this period, its growth was steadier but across multiple time periods, whereas NASDAQ compounded faster across multiple time periods, as visible from these two charts.
Rupee depreciation vs the US Dollar: The last three decades have seen the Indian currency of Rupee steadily weaken against the USD-from around ₹31 per USD in 1995 to ₹84-88 in 2025, i.e., a depreciation of as high as 183%. Since gold is globally priced in USD, Indian gold prices rise not just with gold’s global price but also because of the rupee’s depreciation.
Access to global assets: For the majority of the last 30 years, Indian investors had limited access to global equities or dollar-denominated assets, which is why gold had become the default global asset to hedge against inflation, diversify, and indirectly hold USD value.
In the last three decades, SEBI allowed mutual funds to invest overseas from as recently as 2021, and although the Liberalised Remittance Scheme (LRS) was introduced in 2004, its limit was increased much later during 2015-2021 period, from $25,000 to $2,50,000 per individual per year.
On the other hand, US investors could easily diversify across global stocks, thus reducing their need to depend on gold.
What does Warren Buffett’s portfolio look like?
If Warren Buffett does not invest in gold as an asset class, then where does the world’s 10th richest person actually invest?
Well, as per the publicly available data of his shareholdings through his company Berkshire Hathaway, Buffett has invested in stocks of around 40 companies, with his biggest investments and their valuations being (as of October 2025):
Apple: $75.2 billion
American Express: $55.9 billion
Bank of America: $32.2 billion
Coca-Cola Co.: $28.2 billion
Chevron Corp: $18.9 billion
Conclusion
Warren Buffett’s logic against gold stems from its lack of productivity. However, the historical performance of gold reveals a different story in various countries.
In the USA, gold’s underperformance against the US stock market index NASDAQ signals why the American billionaire Warren Buffett is not a fan of the glittery metal. Whereas in India, the picture is quite opposite, as gold has proven to give better returns than Sensex in the 10 and 20-year periods, and just marginally missed in outperforming it in the 30 years.
Moreover, we also explained the key reasons behind the disparity between the India and US markets vs gold, right?
So, if you follow Buffett’s strategy, you would end up avoiding gold altogether. But should you do that? Well, not really. Since gold indeed can be a useful hedge against inflation, and its long-term returns, as we showed above, have been mostly in double digits in the USA and even beaten the stock market in countries like India.
Summing it up, even though Warren Buffett is not a fan of gold, you, as an investor, can add some of it to your portfolio and view it as a diversifier beyond the usual stocks.
Please note that this is an opinion blog and not an official research advice. This blog aims to promote informed decision-making and neither encourages nor discourages you from investing in any asset class, deal or platform.
