Is it time to buy Gold?

Gold has beat the SP500 this year. It's up 50% while the SP500 is up ~14% YTD.

So... should we buy gold?

It's been around for a loooong time, it's a great hedge against inflation/faltering currencies, and has been performing great!

While I'll never tell you what to do with your money, I'll give you my (and Buffett's) thoughts.

## The problem with gold

In 2011, Buffett told CNBC, "gold is a way of going along on fear". What he meant was that the price of gold relies on market sentiment and demand. When people grow more fearful of the economy, demand for gold rises and its price increases. But if people become less fearful, demand falls, and its price decreases.

The main problem with gold, is that it is an unproductive asset (meaning it just sits there).

That makes it incredibly hard to value (other than historic price).

Ray Dalio has said that he uses it in his profiles as "fire insurance", which is a use case that makes sense to me, but it's not what I do in my own investing. I prefer to invest in things that I can value.

I'd rather focus on productive assets that are trading below their intrinsic value... I am almost certain this will outperform Gold in the long run.

## But Buffett has been involved in gold before

Yes! That's true!

In the second quarter of 2020, Buffett’s Berkshire Hathaway disclosed that it held a $565 million stake in one of the largest gold mining companies in the world, Barrick Gold Corp ($B)

This decision may have been surprising given Buffett’s point of view about gold as an investment... but if you understand Buffett, it makes sense.

Gold mining BUSINESSES are productive assets and thus easier to value.