Is Gold a Good Investment? Kiyosaki and Buffett Face Off

Gold Investment's Changing Script: 2024 Trends Defy Old Market Paradigms
Published on: Jun 20, 2024

When it comes to the investment of gold, the financial world is rife with opposing viewpoints. Some believe that gold is true wealth, offering advantages like hedging against inflation and acting as a safe haven, making it a reliable store of value. Others, including Warren Buffett, see no investment value in this precious metal, especially in the long term. For instance, gold does not generate cash flow and long-term returns lag behind those of assets like stocks.

Among the gold bulls, American entrepreneur and bestselling author of “Rich Dad Poor Dad,” Robert Kiyosaki, is quite prominent. At the beginning of the year, he stated that commodities and resources would be the best investments for 2024, predicting that gold, silver, and Bitcoin would outshine technology and real estate. In his view, fiat currencies, particularly the US dollar, have no inherent value.

Kiyosaki has been buying gold continuously since 1972 when it was priced at $50 per ounce. He still recommends gold, citing his distrust of the Federal Reserve and emphasizing that historically, gold has often been a store of value during crises.

In contrast, Buffett’s attitude towards gold investment is far less enthusiastic. In his 2011 letter to shareholders, Buffett wrote, “Gold has two significant shortcomings: it is 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.” By contrast, productive assets like real estate, stocks, and bonds generate income.

Kiyosaki vehemently disagreed with Buffett’s view, even resorting to profanity. In an interview, he held up a silver coin, saying this 1964 silver coin is now worth $10, and he can exchange it for $10 anytime at a dealer. He capped it with, ” So F U Buffett.”

Back in 2010, Buffett noted that if you gathered all the gold ever mined, it would fill a cube with 67-foot sides. At current prices, this gold could buy all the farmland in the United States. Yet, if given the choice, he would opt for the farmland. To him, it was nonsensical that people dig gold out of the ground in places like South Africa, and then store it in vaults like those at the New York Fed.

Kiyosaki acknowledges Buffett as an extraordinarily successful investor, skilled in the stock market, very smart, and a billionaire. However, he refuses to take investment advice from Buffett. The reason is straightforward—Kiyosaki does not trust Buffett, alleging that Buffett invests other people’s money rather than his own. This claim may not hold water, though, as Buffett’s 2011 shareholder letter disclosed that over 98% of his net worth was invested in Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) stock.

Historically, gold has been considered a safe investment, a point even Buffett concedes. Former U.S. National Security Advisor James Rickards predicted that gold prices would soar by 1400% to $15,000 per pound between 2015 and 2025. As gold prices continue to rise and reserves dwindle, Rickards urges people to buy gold before 2025 to benefit from its price appreciation.

Gold Precious Metals Silver Warren Buffett