Gold Has Hit a Record High, But Warren Buffett Still Says Don’t Invest In It
Despite a recent dip since peaking in mid-April, gold prices continue to trade near record highs amid a prolonged rally that has seen prices rise by nearly one-third since last fall. The surge has attracted investors from all over the world to the yellow metal. However, the world’s most famous investor, Warren Buffett, remains on the sidelines.
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The CEO of Berkshire Hathaway has a famously negative opinion of gold investing, having once written in a letter to shareholders that the metal has “two significant shortcomings, being neither of much use nor procreative…If you own one ounce of gold for an eternity, you will still own one ounce at its end.”
Buffett knows a thing or two about amassing wealth, having built a net worth of more than $100 billion over the decades. The “Oracle of Omaha” follows a value investing strategy focusing on underpriced companies with strong fundamentals and growth potential. He never has been a fan of pouring your money into gold, which he said is a way of “going long on fear.”
As Investing News Network recently reported, Buffett also once said that gold won’t do anything “except look at you,” meaning that it holds no value beyond the fact that it exists and people seem to like it.
Even so, plenty of investors have been looking into gold lately. Gold prices hit a record high of nearly $2,412 an ounce on April 19, 2024, according to APMEX. Although current prices have eased back to around $2,325 an ounce, they are still up more than 30% since touching a 52-week low of $1,833 on Oct. 4, 2023.
In some ways, the recent gold rush is contrary to what usually happens. In the current economic environment, with interest rates still well above the Federal Reserve’s target rate, investors would normally favor bonds and savings accounts over gold, Business Insider reported.
According to billionaire investor David Einhorn, the rise in gold could be related to doubts over the “sustainability and wisdom of both monetary and fiscal policies.” However, other forces could be at work as well.
“Perhaps the West is running out of gold it is willing to sell, while Eastern demand has remained strong enough to force the price higher,” Einhorn wrote in a recent letter to investors at Greenlight Capital, which he founded and currently serves as CEO.
Business Insider noted that central banks in other countries have been “racing to buy gold.” One of the biggest buyers is China, which has been dealing with an extended period of economic sluggishness, falling stock prices and high unemployment. In response, Chinese consumers and the People’s Bank of China have been buying gold as a safe haven and a way to diversify holdings.
Meanwhile, many U.S. analysts remain cautiously optimistic about gold, Investing.com reported. It cited Citi analysts, who are “medium-term bullion bulls,” and assigned a 25% probability that the yellow metal will average a record $2,300 an ounce in the second half of 2024.
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This article originally appeared on GOBankingRates.com: Gold Has Hit a Record High, But Warren Buffett Still Says Don’t Invest In It
