Top Seven Warren Buffett Quotes on Gold Investing

Warren Buffett, the Oracle of Omaha is one of the most famous investors of all time. This billionaire has made so much money that he hardly knows what to do with it, although he has decided that after his passing he would like a sizable portion of his earnings to be dedicated to charity. Still, for all of the successes and endeavors that Buffett has taken on in his lifetime, there is one asset that he never quite warmed up to; gold [see also Three Reasons Why Gold Is Overvalued].

Buffett is well-known for not only his strengths as a businessman, but also for his rather outspoken hatred of gold. The stance is somewhat controversial given the massive popularity of the precious metal that has made millions for investors all around. Also, we have seen other billionaire investors betting big on gold in recent weeks. Nevertheless, Buffett is not the least bit timid about his opposition towards the commodity. We scoured the internet to bring you the seven best Warren Buffett quotes regarding gold and why he hates it so much.

  1. “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head” [for more gold news and analysis subscribe to our free newsletter]
  2. “The problem with commodities is that you are betting on what someone else would pay for them in six months. The commodity itself isn’t going to do anything for you….it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something that you expect to produce income for you over time”.
  3. “Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything.”
  4. “I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion dollars – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion dollars…you could have all the farmland in the United States, you could have about seven Exxon Mobils, and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils”.
  5. “The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, 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 an eternity, you will still own one ounce at its end” [see also How to Play Schiff’s $5,000 Gold Prediction].
  6. “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“.
  7. “I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you.  Whereas, you know, Coca-Cola will be making money, and I think Wells Fargo will be making a lot of money and there will be a lot — and it’s a lot — it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that”.

While Buffett certainly makes a lot of good points about gold, it is very difficult to argue with its historical performance in recent years. What do you all think? Is Buffett simply stuck in his ways, or is he right about gold?

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Disclosure: No positions at time of writing.

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    Chains of habit are too light to be felt until they are too heavy to be broken.– Warren Buffett. Read more http://thequotes.net/quote/?aut=108

  • Warren Bolton

    I think Warren Buffett dislike of gold as a medium for investment must come entirely from his psychological. I think perhaps he may have been bitten by a gold bar when he was a child.

    I have seen his quotes used so extensively, generally by entities that are marketing alternative investment mediums as a way of eliminating at least some of the opposition.

    But I have never seen Warren Buffett put forward a scientific analysis to support
    his belief about gold.

    So how does some of his attributed glib quotes stand up to analysis

    1. Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig
    another hole, bury it again and pay people to stand around guarding it. It has
    no utility. Anyone watching from Mars would be scratching their head”

    Response-Recycling.com-Of all the minerals mined from the earth, there is none with more practical uses than gold. Its usefulness is derived from a combination of truly unique properties. One such example of its exceptional flexibility comes from the fact that it is the most malleable and ductile of all metals. Imagine, a single ounce can be mechanically stretched into a sheet 300 square feet!

    It’s really only in the last two or three decades that modern science techniques have discovered how truly important this precious ‘substrate’ is in helping solve age-old and future challenges.

    Gold is used in Information technology;
    Gold is central to safe space travel;·
    Gold plays a vital role in future water purification, reducing pollution, energy consumption, and diesel emission control;·
    Gold is used with platinum by Japanese manufacturer Hitachi Maxell for it hydrogen fuel cell catalyst;·
    Gold is used in medicine to treat rheumatoid arthritis, liver, eye and ear diseases, as well as depression;

    2. The problem with commodities is that you are betting on what someone else would pay
    for them in six months. The commodity itself isn’t going to do anything for you….it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something that you expect to produce income for you over time”.

    794 commodity companies listed on the ASX have built business solely on the bases of …’ betting on what someone else would pay for them (commodities) in six months.

    Returns from investing in art outpace NSX S&P 500 in 2011 by about 9%;·
    Shares are paper giving you title to ‘ a lump of something’ you hope someone will ‘ pays you more for that lump two years from now’ and maybe produce an annual income – but many do
    not.

    3. Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything.”
    ·
    U.S. debt set to increase by approximately $1.5 trillion per year to be $25 trillion by 2020.
    World debt set to increase by approximately $10.72 trillion per year to be $180 trillion by 2020.
    U.S. Household debt grew at its fastest pace since early2008 – Reuter March 2013
    Water scarcity’s effect on world food production means radical steps needed to
    feed growing population·
    Carbon dioxide levels jumped by 2.67 parts per million (ppm) in 2012 to 395ppm,·
    Government review looming global shortages of resources of fish, timber, water and precious
    metals, amid mounting concern the problem could hit every sector of the economy.
    and finally those people in Cyprus holding gold assets have blocked the government from access to steal 40% of thier wealth.

  • Cassandra

    Buy now CY around ~ $ 11.00 .

    CY had negative inciome as they bought 3 companies.

    CY has the best divident ($ 0.44 at present) and it is tax free as the ” Return on Investment”. As agreed with IRS divident is Return on Investment.

    Risk down 9.00 dollars. by Cecember 2014 my target ius at least $ 15.00

    The long term 3 x bagger!

    Should Turman Roger (one of the best CEO) retire, CY could be solds 3.2 times their todays stock value.

    I am long and still buying!

    My goal is to hold at least 100,000 shares!

    That gives me tax free income of $ 44,000 a year!

  • Rob

    Warren’s a greedy old man he only thinks of gaining more of more, more, more & more wealth.
    Although he did give 50 Billion to charity. but he won’t give his grand kids much at all.

    When all you have is wealth you do not need to insure it’s purchasing power with gold.
    I cannot risk my wealth in a stock like he does. I may not make money off of gold but I will not lose any either.