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.
### Warren Buffett’s Stance on Gold
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.” Warren Buffett’s perspective on gold highlights his belief in focusing on productive assets rather than non-procreative ones like gold.
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 money into gold, which he said is a way of “going long on fear.”
### Current Trends in Gold Investing
Despite Warren Buffett’s skepticism, many investors have been turning to gold as a safe-haven asset. 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. However, doubts over the sustainability of monetary and fiscal policies have driven investors towards gold as a hedge against uncertainty.
### Global Factors Impacting Gold Prices
Business Insider reported 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. Chinese consumers and the People’s Bank of China have been buying gold as a safe haven and a way to diversify holdings, highlighting the global demand for gold as a store of value.
Meanwhile, many U.S. analysts remain cautiously optimistic about gold, with Citi analysts assigning a 25% probability that the yellow metal will average a record $2,300 an ounce in the second half of 2024. This indicates that despite Warren Buffett’s reservations, gold continues to be a popular investment choice for many in uncertain times.
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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
