Warren Buffett, the legendary chairman and CEO of Berkshire Hathaway (BRK.B) (BRK.A), has long been recognized for his disciplined approach to investing. The Oracle of Omaha is lauded for his ability to find value and not chase speculative trends. Rather than chasing the latest trend, he finds good businesses at the right price and goes all-in on a small handful of companies he believes in. Among these investing ideologies is investing solely in revenue and profit-producing businesses. This means he steers clear of gold (GLD) and Bitcoin (BTCUSD), even when they’re rallying to historic highs. 

Among Buffett’s most pointed observations is his critique of gold as an investment vehicle:

“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.”

This quote, drawn from Buffett’s 2011 letter to Berkshire Hathaway shareholders, encapsulates his skepticism toward gold and the psychology that often drives its price.

Buffett’s statement further analyzed the motivations behind gold buying. He argued that gold’s appeal is largely psychological, rooted in fear and the expectation that more investors will seek safety in turbulent times. This “bandwagon” effect, he warned, can create self-fulfilling price surges, but these are often unsustainable when not backed by underlying utility or productivity.

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Gold’s Recent Rally and Investor Sentiment

Fast forward to 2025, and gold has once again captured headlines, recently breaking above $3,423 per ounce — a historic high. This surge has been fueled by persistent inflation, geopolitical instability, the Trump administration’s tariff policy, and concerns about central bank policies. As Buffett predicted, the “ranks of the fearful” have indeed grown, driving demand for gold as a perceived safe haven.

However, Buffett’s underlying caution remains relevant. While gold has performed well during recent bouts of uncertainty, its effectiveness as a long-term hedge against inflation and volatility remains debated. The precious metal does not generate income, dividends, or productive value — key criteria in Buffett’s investment philosophy.

Buffett’s Investment Philosophy: Productive Assets Over Speculation

Buffett’s aversion to gold is not rooted in a blanket dismissal of all commodities. He has, for example, invested in silver, which he views as having practical industrial and medical uses. His core principle is to invest in assets that are inherently productive — businesses that generate cash flow, dividends, and long-term growth.

Berkshire Hathaway’s portfolio reflects this philosophy, with major holdings in companies like Apple (AAPL), Coca-Cola (KO), and American Express (AXP) — firms with durable competitive advantages, or “economic moats,” that can thrive even in challenging environments. Buffett’s approach emphasizes patience, rational analysis, and a long-term perspective, avoiding the emotional swings that often drive speculative investments like gold.

A Notable Exception: Berkshire’s Brief Foray into Gold Mining

In 2020, Berkshire Hathaway made headlines by purchasing shares in Barrick Gold (B), one of the world’s largest gold miners. The move was seen by some as a shift in Buffett’s stance, but Berkshire quickly exited the position. Analysts interpreted the trade as a tactical bet on a productive company rather than an endorsement of gold itself. The episode reinforced Buffett’s preference for businesses that create value, rather than assets that rely on the psychology of fear.

Buffett’s warning about “bandwagon” investing is especially timely in today’s volatile markets. As economic uncertainty persists, many are tempted to chase rising assets like gold. But as Buffett’s track record shows, sustainable wealth is built by owning productive enterprises, not by speculating on the next wave of fear.

For investors, the takeaway is clear: focus on assets that generate real value, maintain discipline amid market noise, and beware of the seductive but fleeting truths created by herd mentality. As Buffett’s own example demonstrates, patience and rationality remain the most reliable guides in uncertain times.