Investing

What has Warren Buffett said about gold?

1. “Gold … has two significant shortcomings”

“Gold … has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end”
— Warren Buffett, letter to shareholders, 2011

Warren Buffett’s 2011 letter to shareholders includes a fairly lengthy discussion on gold, which hit what was then an all-time high of around US$1,920 per ounce in September of that year.

In the letter, Buffett lays out three types of investments, placing gold squarely in the second category, which involves “assets that will never produce anything.” Buyers purchase these assets, according to Buffett, with the hope that someone else will pay more for them in the future. “Owners are not inspired by what the asset itself can produce — it will remain lifeless forever — but rather by the belief that others will desire it even more avidly in the future,” he states in the letter.

Gold advocates reacted strongly to those comments, arguing that the point of gold isn’t what it can produce; instead, its value comes from the fact that it’s a source of protection in times of crisis.

Others have pointed out that gold does in fact have a good track record of producing returns. Responding specifically to Buffett’s comment that an ounce of gold will always only be an ounce of gold, Frank Holmes, chief investment officer at U.S. Global Investors (NASDAQ:GROW), said that the Oracle of Omaha is simply wrong about the yellow metal.

“Buffett’s always been negative on gold; his own company doesn’t pay a dividend, and his argument before was (that) gold doesn’t pay income,” Holmes said. “He’s totally wrong. Since 2000, bullion has far outperformed the S&P 500 (INDEXSP:.INX) by two to one, and it’s outperformed Berkshire Hathaway.”

2. “It won’t do anything … except look at you”

“I have no views as to where (gold) will be (in the next five years), but the one thing I can tell you is it won’t do anything between now and then except look at you” — Buffett, CNBC’s Squawk Box, 2009

Most of the other things Buffett has said about gold relate to the two failings he mentions in his 2011 letter to shareholders: the metal’s lack of utility and the fact that it’s not procreative.

During a 2009 episode of CNBC’s Squawk Box, Buffett aired his thoughts on those issues in a slightly different way. Speaking about gold in the next five years and if it should be part of a value investing strategy, Buffett said he had no opinion on where it might go — “The one thing I can tell you is it won’t do anything between now and then except look at you,” he said.

That’s in contrast to stocks like Coca-Cola (NYSE:KO) and Wells Fargo & Company (NYSE:WFC), which Buffett said would be generating money, and lots of it. He explained, “It’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.”

The comment ends with another of Buffett’s well-known lines on gold, which he’s repeated in various ways over the years: “The idea of digging something up out of the ground, you know, in South Africa or someplace and then transporting it to the United States and putting into the ground, you know, in the Federal Reserve of New York, does not strike me as a terrific asset.”

For Buffett, value relates back to usefulness, and without a specific use gold has neither. Interestingly, the same thought process does not apply to silver — Buffett has put money into silver before, and believes its dual nature as both a precious and an industrial metal make it useful and therefore valuable.

3. “Gold is a way of going long on fear”

“With an asset like gold, for example, you know, basically gold is a way of going long on fear, and it’s been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in the year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money. But the gold itself doesn’t produce anything” — Buffett, CNBC’s Squawk Box, 2011

Warren Buffett has also spoken fairly extensively about his belief that people who buy gold are essentially betting on fear. The quote above is from a 2011 episode of CNBC’s Squawk Box, but he also brings this idea up in his 2011 letter to shareholders.

“What motivates most gold purchasers is their belief that the ranks of the fearful will grow,” he says in the letter. And indeed, gold is often described as a safe-haven investment, meaning that people flock to it in times of turmoil in order to feel more secure and to balance out other areas of their portfolios.

While Buffett admits that “during the past decade this belief has proved correct” — in other words, fear did spur gold demand — overall he sees going long on fear as a problem. Again he goes back to the idea that gold lacks utility and is not procreative.

As he explains, all the gold in the world at the time would be worth US$7 trillion. By his calculations, that’s equivalent to roughly a billion acres of farmland in the US plus seven ExxonMobils (NYSE:XOM) and with an additional US$1 trillion to spare.

“And if you offered me the choice of looking at some 67-foot cube of gold … and the alternative to that was to have all the farmland of the country, everything, cotton, corn, soybeans, seven ExxonMobils. Just think of that. Add $1 trillion of walking around money. I, you know, maybe call me crazy but I’ll take the farmland and the ExxonMobils,” he said.

Will Warren Buffett change his mind about gold?

Berkshire’s Barrick investment was certainly a surprise for many, but it doesn’t necessarily mean that Buffett has changed his mind about gold. He’s been consistent in his approach to the precious metal for years, and it seems unlikely that he’ll do an about-face any time soon.

What are the types of rare earth minerals?

There are a number of ways to categorize and better understand rare earths, which will help you know which companies to invest in based on what they’re targeting.

For example, they are often divided into “heavy” and “light” categories based on atomic weight. Heavy rare earths are generally more sought after, but light REEs are important too.

Rare earths can also be grouped together according to how they are used. Rare earth magnets include praseodymium, neodymium, samarium and dysprosium, while phosphor rare earths — those used in lighting — include europium, terbium and yttrium. Cerium, lanthanum and gadolinium are sometimes included in the phosphor category as well. For a detailed breakdown of rare earth uses, check out our guide.

One aspect that is common to all the rare earths is that price information is not readily available — like other critical metals, rare earth materials are not traded on a public exchange. That said, some research firms do make pricing details available, usually for a fee, including Strategic Metals Invest, Fastmarkets and SMM.

What factors affect supply and demand for rare earths?

As mentioned, each REE has different pricing and supply and demand dynamics.

However, there are definitely overarching supply and demand trends in the sector. Most notably, China accounts for the vast majority of the world’s supply of rare earth metals. As the world’s leading producer, the Asian nation accounted for roughly 70 percent of rare earths production in 2024, or 270,000 metric tons (MT), with the US coming in a very distant second at 45,000 MT. After the US, Myanmar is the third largest rare earths producer with total output of 31,000 MT last year. On top of that, China is also responsible for 90 percent of refined rare earths output.

The strong Chinese monopoly on rare earths production has created problems in the sector in the past. For instance, prices in the global market spiked in 2010 and 2011 when the country imposed export quotas.

The move sparked a boom in global rare earth metals exploration outside of China, but many companies that entered the space at that time fell off the radar when rare earths prices eventually sank again. Molycorp, once North America’s only producer of rare earths, is a notable example of how hard it is for companies to set up shop outside China. It filed for bankruptcy in 2015. But the story didn’t end there — MP Materials (NYSE:MP), the company that now owns Molycorp’s assets, went public in mid-2020 in a US$1.47 billion deal, and a year later was a US$6 billion company.

MP Materials is now the western hemisphere’s largest rare earths miner, putting out high-purity separated neodymium and praseodymium oxide; a heavy rare earths concentrate; and lanthanum and cerium oxides and carbonates.

Concerns about China’s dominance are ongoing as the US/China trade war continues and as supply chain stability grows in importance. The Asian nation has tightly controlled how much of its rare earths products make it into global markets through a quota system initiated in 2006.

US President Donald Trump’s high tariffs targeting Chinese goods has resulted in China enacting further rare earth export restrictions. In April 2025, the Government of China placed strict export controls on samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium — all crucial for the production of electric vehicles, smartphones, fighter jets, missiles and satellites.

Sharing a border with China, Myanmar is the source of at least 70 percent of its neighbor’s medium to heavy rare earths feedstock. With that in mind, it’s not surprising that a temporary halt in Myanmar’s production in late summer of 2023 sent rare earths prices to their highest level in 20 months, as per OilPrice.com.

Myanmar’s rare earths production experienced further disruptions in late 2024 as the Kachin Independence Army seized two towns in Kachin state, near China’s Yunnan province, that are critical suppliers of rare earth oxides to China.

Outside of China, one of the world’s leading rare earths producers is Australian company Lynas (ASX:LYC,OTC Pink:LYSCF), which sends mined material for refining and processing at its plant in Malaysia. In 2023, Japan Australia Rare Earths, a joint venture between the Japan Organization for Metals and Energy Security and Sojitz (TSE:2768), inked an agreement to invest AU$200 million in the production and supply of heavy rare earths from Lynas.

This has allowed the mining company to expand its light rare earths production and begin production of heavy rare earths. Lynas brought its large-scale downstream Kalgoorlie rare earths processing facility online in November 2024. According to its H1 2025 fiscal year results, the company’s neodymium and praseodymium (NdPr) production volume increased by 22 percent.

In the US, MP Materials is making good use of US$58.5 million awarded in April to support construction of the first fully integrated rare earth magnet manufacturing facility in the US. The funding is part of the Section 48C Advanced Energy Project tax credit granted by the Internal Revenue Service, Department of Treasury and Department of Energy.

The Fort Worth, Texas, magnet facility began producing the NdFeB magnets crucial for EVs, wind turbines and defense systems at the start of 2025. First commercial deliveries are expected by the end of the year.

Looking at demand, many analysts believe the need for rare earths is set to boom on accelerating growth from top end-use categories, including the electric vehicle market and other high-tech applications.

As an example, demand for dysprosium, a key material in steel manufacturing and the production of lasers, has grown as countries increase their steel standards. Aside from that, rare earths have long been used in televisions and rechargeable batteries, two industries that accounted for much demand before the proliferation of new technologies. Other rare earth metals can be found in wind turbines, aluminum production, catalytic converters and many high-tech products.

As can be seen, securing rare earths supply is an increasingly important issue. In addition to traditional rare earths mining, there has been growth in the rare earths recycling industry, which aims to recover REE raw materials from electronics and high-tech products in order to reuse them in new ways.

Exploring and extracting rare earth materials from deep-sea mud is one of the newest recovery methods, although deep sea mining of mud and nodules comes with significant environmental concerns. However, it is gaining traction as more mining companies look offshore for resources and US President Trump pushes for fast tracking of deep-sea mining permits.