Lessons From Warren Buffett Warren Buffett

Lessons From Warren Buffett: Why Buffett Prefers Stocks to Gold

Gold is pitched endlessly to investors as an inflation hedge and a great investment, so should gold, or any precious metal, be a major part of your portfolio? As an asset class, Warren Buffett is less than impressed. “When we took over Berkshire, gold was at twenty dollars and Berkshire was at fifteen. Gold is now at $1,600 and Berkshire is at $120,000,” Buffett noted in 2012.

Almost a decade later, gold stood at $1,798 and Berkshire Hathaway’s A shares were over $443,000.

For Buffett, it all comes down to the advantage of the earning power that companies have over commodities, such as gold.

“It’s very hard for an unproductive investment to beat productive investments over any period of time,” Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting. “The one thing I would bet my life on is over a 50-year period not only will Berkshire do considerable better than gold, but common stocks as a group will do better than gold, and probably farmland will do better than gold.”

Buffett’s full explanation on why productive assets ultimately outperform unproductive assets over time

See the complete Lessons From Warren Buffett series

© 2021 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.