Warren Buffett Shuns Gold as an Investment
Source: Telegraph, Richard Blackden (5/2/11)
"Gold really doesn't have utility."
The billionaire investor Warren Buffett has said he'd always bet on a good business to deliver better returns than gold over time, even as the precious metal sets fresh records.
"Gold really doesn't have utility," the 80-year old told shareholders at Berkshire Hathaway's annual general meeting. "I'd bet on a good producing business to outperform something that doesn't do anything."
Gold prices reached new highs 15 times in April as a weaker dollar and fears of inflation encouraged some investors to seek the metal as a store of value.
The financial crisis has helped propel gold higher as initial worries of deflation gave way to current concerns that very low interest rates in much of the developed world is helping to stoke inflation. Gold is already up 10pc this year after climbing for each of the last ten.
It isn't a rally that Buffett, whose investment skill has turned him into the world's third-richest man, will be joining in. Asked about gold at the annual meeting in Omaha, Nebraska, Buffett said, "If you take all of the gold in the world and put it into a cube, it would be about 67 feet on a side and you could get a ladder and get up on top of it. You can fondle it, you can polish it, you can stare at it. But it isn't going to do anything."
Gold's current rally has also found new momentum, as the world's central bankers become net buyers for the first time in two decades last year. According to the World Gold Council, central banks bought 87 metric tons of gold last year as many developing countries sought some diversification away from the dollar.