Why Warren Buffett now likes gold
Warren Buffett, who has has long ridiculed gold as a non-productive asset, now thinks it is set to shine, after buying shares in miner Barrick Gold.
Warren Buffett has long ridiculed gold as a non-productive asset that is no match for the dynamism of American stocks. Yet now it seems he thinks gold is set to shine. Buffett’s Berkshire Hathaway took a $565m stake in Barrick Gold, the world’s second-biggest gold miner, in the second quarter.
Gold has rallied strongly this year, reaching new all-time dollar highs thanks to fears about inflation, dollar weakness and tumbling bond yields. Yet after peaking at $2,070 an ounce on 6 August the yellow metal tumbled by 9% over the following week. It remains up roughly 30% this year, but the pullback was a reminder that gains can quickly turn into losses in this volatile market. The gold miners are “riding high” this year, but extracting the metal is becoming more challenging, says Alistair MacDonald in The Wall Street Journal. The average cost of finding one ounce of gold has more than doubled since the decade leading up to 2009, according to figures from Minex Consulting. That said, constrained supply won’t necessarily mean higher prices: unlike oil, the metal is not consumed but is “virtually indestructible” once dug out of the ground.
More important for gold is demand, and there are reasons to be bullish, says Tom Stevenson in The Daily Telegraph. Bears point to 2011, when inflation failed to appear and growth exceeded expectations, for what can happen when gold gets carried away. A repeat of that scenario is possible. But 2020 reminds me of 1979, another year marked by turbulent politics and questions about the existing monetary paradigm. Not coincidentally, gold prices more than quadrupled. “Agonising about whether you missed” the rally at $2,000/oz “will seem ludicrous if we get a rerun of 1979’s flight to safety”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
What is the 25x retirement rule and does it work?
The 25x retirement rule has been around for decades but many experts question if it is a suitable strategy
-
When is the self-assessment tax return deadline?
If you are self-employed, rent out a property or earn income from savings or investments, you may need to complete a self-assessment tax return. We run through the deadlines you need to know about
-
Are wealthy whisky enthusiasts leaving Britain?
Collectables Wealthy whisky enthusiasts are heading to tax-friendly countries such as Dubai, where there is more disposable income to spend on collectable luxuries like rare whisky.
-
'The rise and fall of Kodak is a lesson for the tech giants'
Opinion The long decline of Kodak – a once-dominant company – shows why no business is safe from disruption, says Matthew Lynn
-
8 of the best properties for sale with kitchen gardens
The best properties for sale with kitchen gardens – from a 17th-century timber-framed hall house in Norfolk, to an Arts & Crafts house in West Sussex designed by Charles Voysey with a garden by Gertrude Jekyll
-
Why investors can no longer trust traditional statistical indicators
Opinion The statistical indicators and data investors have relied on for decades are no longer fit for purpose. It's time to move on, says Helen Thomas
-
Investors rediscover the virtue of value investing over growth
Growth investing, betting on rapidly expanding companies, has proved successful since 2008. But now the other main investment style seems to be coming back into fashion.
-
8 of the best properties for sale with shooting estates
The best properties for sale with shooting estates – from an estate in a designated Dark Sky area in Ayrshire, Scotland, to a hunting estate in Tuscany with a wild boar, mouflon, deer and hare shoot
-
The most likely outcome of the AI boom is a big fall
Opinion Like the dotcom boom of the late 1990s, AI is not paying off – despite huge investments being made in the hope of creating AI-based wealth
-
What we can learn from Britain’s "Dashing Dozen" stocks
Stocks that consistently outperform the market are clearly doing something right. What can we learn from the UK's top performers and which ones are still buys?