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Feb. 20, 2025-
Warren Buffett, who is considered the best investor of all time, once raised some eyebrows.
Mr. Buffett has always stressed faith in American enterprise and to pick the right investments and to stay with them long-term. He’s always condemned gold as an investment.
For obvious reasons at this writing, he has a net worth of $150.8 billion.
But his firm Berkshire Hathaway put money into Barrick Gold, which pays a dividend.
Meantime, published reports indicated hedge funds have been warning investors about gold and a so-called consolidation phase.
This, as the gold market continues to expand.
Bank of America
Contrasting Mr. Buffett’s turnabout on gold, the Bank of America asserted gold is too crowded in the financial markets in its Fund Manager Survey. Gold is second just behind tech-sector stocks.
UK fund manager Mark Mobius of Mobius Capital Partners said investors should wait for a correction in gold.
“The safest investments are equities and precious metals such as gold. However, I would not advise buying gold or precious metals at this time until a price correction has taken place,” he was quoted in Kitco News.
Investing Principles for New Investors to Minimize Risk
Instead, he recommended buying companies “with strong balance sheets and growing earnings.”
Fear-based investment
Gold is a fear-based investment. People buy it for the wrong reasons.
They fear the dollar or other currencies are shaky. They have little too-little faith in the U.S. economy.
It’s worth noting the speculation President Trump will bring back the Gold Standard.
Until the pandemic, President Trump had created the best economy in the history of the U.S. For years, we had been in a low-inflation situation. I think he’ll do it again. He and Elon Musk are determined to succeed in their quest to slash waste and fraud from the federal budget.
Federal Reserve
Gold prices are propped up by demand from investors. In essence, the investment in gold now is really the recycled supply for the future.
That can change in 24 hours because many gold investors are fickle and switch from gold to other investments.
The reality is that gold doesn’t have any earnings, which also means it doesn’t pay dividends like good stocks.
The Federal Reserve has been trying to lower interest rates for liquidity reasons. And it’s worth noting gold hates higher interest rates. But the Fed is pausing rate cuts over the fear of higher inflation.
You might note gold is priced in U.S. dollars and it has benefited from the weak dollar. A lot of people have been getting into gold, which means it’s a crowded investment sector and is oversold.
It also means the dollar will get its strength back, forcing the price of gold to decrease.
With the federal government borrowing so much and printing money, gold is relatively high and might explain Mr. Buffett’s decision. Meantime, let’s pray for President Trump and Mr. Musk success in slashing the federal budget. The current massive borrowing and printing money is unhealthy for America and is not sustainable.
From the Coach’s Corner, for late-breaking analysis and events on Wall Street, see the Business video page in The Biz Coach Newsroom.
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“Price is what you pay. Value is what you get.”
-Warren Buffett
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