Warren Buffett’s warning on gold: Indians may not like this
It’s no secret we Indians love gold. For most of us, financial reasons probably come second — the primary attachment to the metal stems from deep-rooted cultural traditions. Gold finds a place in every Indian household in some form — a bracelet or mangal sutra adorning a mother’s wrist and neck, a grandmother’s heirloom bangles, or a small coin purchased on Diwali or other festive occasions. Over the years, owning gold has become a significant status symbol.
But in the eyes of Warren Buffett, the world’s most successful investor, gold is nothing special. He once said, “Gold just sits there and does nothing.” In other words, according to him, gold is non-productive as an asset class.
Interestingly, gold has proved to be a good investment over the years. It usually performs well when the economy is not doing that well or when there is global tension. This has been seen again in the last two years, as gold prices have almost doubled amid economic and geopolitical uncertainties.
Even though gold has proved its value to investors around the world, Buffett still believes it is not a great long-term investment because it does not generate any income.
Buffett’s warning: ‘Gold has no utility’
Buffett once said, “Gold gets dug out of the ground in Africa or somewhere. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility.”
He sees gold as a “non-productive asset” that doesn’t create anything new, generate income or grow a business. The legendary investors always preferred to invest in businesses, creating real value. For him, investing in companies like Coca-Cola or Apple was more appealing as he could see them growing year after year.
His investment philosophy is simple — the magic of compounding works only when your money is put to work.
Buffett’s point is valid, but gold’s recent performance tells a different story. In fact, in the past few years, gold has challenged his idea of it being an “unproductive” asset.
Gold’s journey over the last 15 years
Gold’s performance over the past few years has surprised many investors. While the stock market has fluctuated, gold has consistently maintained its brilliance.
Gold vs S&P 500: The 15-year global showdown
| Time Period | Gold Returns (USD) | S&P 500 Returns (USD) |
| 1 Year | 44% | 18.20% |
| 5 Years | 103.50% | 101% |
| 10 Years | 259% | 220% |
| 15 Years | 187% | 465% |
(Source: Yahoo Finance)
In US dollar terms, gold has comfortably beaten the S&P 500 over shorter horizons — delivering higher returns in the 1-year, 5-year, and even 10-year periods. However, when the time frame extends to 15 years, equities take the lead. The S&P 500 clearly outpaces gold.
Gold vs Nifty 50: The 15-year showdown
| Time Period | Gold Returns (Absolute) | Nifty 50 Returns (Absolute) |
| 1 Year | 50% | 6% |
| 5 Years | 143% | 109% |
| 10 Years | 355% | 222% |
| 15 Years | 550% | 313% |
(Source: Yahoo Finance)
Across all time frames — short, medium, and long — gold has comfortably outperformed equities (represented by the Nifty 50 index). The yellow metal has not only acted as a safe haven but also turned into a high-performing asset over the long term, surprising even those who’ve always viewed gold as a passive investment.
A rethink on Buffett’s gold view
Buffett has never been in favour of putting money in gold, saying such an investment doesn’t generate any cash flow like stocks or businesses do.
But if we look at the above data (gold vs equities), the story flips. Over the last 10 years, gold has quietly but steadily raced ahead of equities, rewarding patient investors with over 259% returns in USD terms. In rupee terms, gold has outperformed equities even on a 15-year time frame.
Buffett once said: The stock market is designed to transfer money from the active to the patient. But this logic fits perfectly here, too, in the case of gold investment. In gold’s case, those who stayed patient and held their investments for the long haul have clearly been the biggest gainers. It’s a reminder that even so-called “idle” assets can perform well when given time.
Gold emerged as saviour for investors
Every time the world has faced major political or economic uncertainty, gold has emerged as a saviour for investors. In recent times too, the Russia-Ukraine war, tensions in the Middle East, and global economic slowdown have once again turned gold into a “safe haven”. Whenever market fears rise, investors rush to gold for safety.
Gold is known to preserve its value during times of inflation. A weak rupee, continued gold purchases by central banks, and investor confidence have all supported its price.
Now the question arises, when gold is performing so well, why doesn’t Warren Buffett like it?
Buffett’s thinking has been simple. Gold doesn’t generate any income — neither dividends nor interest. Its price depends on how valuable people perceive it to be, meaning it is sentiment-driven, not productivity-driven.
Buffett always invests in assets that “do something” — such as companies that produce products, generate profits, and grow over time. He believes that true wealth, in the long run, is built from “ownership of businesses,” not from metals that simply sit in a vault.
So, even though gold has outperformed stocks in recent years, Buffett’s warning isn’t entirely misplaced. His message can be interpreted in the present context like this: don’t avoid gold, but definitely avoid dependence on it.
Gold today: A time beyond Buffett’s thinking
Buffett’s view of gold was probably formed at a time when investing in gold meant only its physical purchase — jewellery, coins or biscuits. Such gold neither generated income nor contributed to any economic activity. Buffett’s argument for a “non-productive asset” was directed at this form of gold.
But today, the whole dynamics around gold investment has changed. Investing in gold is no longer limited to just jewellery stored in a wardrobe. Modern options like Gold ETFs, Sovereign Gold Bonds (SGBs), and digital gold have made it a modern investment avenue, even in a country like India.
Some of these options (like SGBs) also pay interest, meaning investing in gold is no longer completely “idle.” Today’s investor gains not only security but also diversification by adding gold to their portfolio.
That is, if Buffett looks at this understanding of Indian investors today, then he might have to admit that investing in gold is no longer just a burden on the treasury, but has become a strategic financial decision.
The Indian context: Gold still close to the heart
In India, gold isn’t just an investment, it’s an emotion. Here, it symbolises both security and prestige. India is among the top two gold-consuming countries in the world. For Indian households, gold isn’t speculation, but a safety net — a shield that supports the family through difficult times and becomes a legacy for the next generation.
Over the years, investment methods have now also changed. Gold ETFs, Sovereign Gold Bonds (SGBs), and digital gold have made it easier and more transparent.
For most Indians, gold isn’t a race for returns, but a story of security and stability. But Buffett’s warning reminds us that investing wisely requires a balance of emotion and logic.
Conclusion: A balanced strategy is true wisdom
Over the years, gold has proven itself to be a reliable investment in uncertain times. But Buffett’s philosophy teaches us that long-term wealth is created only by investments that are productive, like businesses, equities or assets that perform.
That said, Buffett’s views on gold must be seen in the context of the time when he expressed them. In the present context, his approach can be reinterpreted as a call for flexibility — to identify what creates the maximum value in a changing investment landscape. Buffett has always advocated building a concentrated portfolio and having a deep understanding of one’s investments to minimise the risk of permanent capital loss. And that, perhaps, is the real “golden takeaway” for Indian investors, as gold has time and again proved to be successful in protecting capital by working as a safe-haven asset.
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