Warren Buffett, widely revered as the "Oracle of Omaha", has become one of the greatest investors of our time over six decades of investing with Berkshire Hathaway (his holding company). Precious metals - considered an asset class that provides protection from inflation and economic uncertainty - have often been included as part of investors' portfolios; does Warren Buffett own any precious metals himself?
Warren Buffett's Investment Philosophy
Before diving deeper into Warren Buffett's take on precious metals, it's essential to grasp his investment philosophy. Buffett is known for being an avid value investor - preferring stocks which undervalued when measured against their intrinsic worth, looking out for businesses with competitive edges, strong management practices and long-term potential growth potential as potential buys.
Warren Buffett's Past View on Gold
Warren Buffett has historically taken an unfavorable view of gold investments. In 2011, in a letter addressed to Berkshire Hathaway shareholders, he famously contrasted productive assets like land and stocks to gold as non-productive investments that do not yield income or dividends over time.
However, it should also be remembered that precious metal prices tend to appreciate over time and many investors purchase gold as a store of value during economic downturns when these precious metals can provide shelter against economic uncertainties.
Berkshire Hathaway Ventures into Precious Metals
Berkshire Hathaway made headlines again during the second quarter of 2020 as they ventured into precious metals by buying shares in one of the biggest gold mining companies, Barrick Gold. Although many were surprised at this move, as it seems at odds with Buffett's past comments regarding gold. But it should be remembered that Berkshire invested in Barrick Gold itself rather than gold directly, which makes sense considering his history with delegating investment decisions to his lieutenants rather than directly himself making such moves themselves in recent years.
Diversification and Portfolio Considerations
One thing to keep in mind when investing is that Warren Buffett's strategies might not suit every investor. Individual investors would do well to diversify their assets across stocks, bonds, and potentially precious metals for best risk management results; precious metals' low correlation to other asset classes serves as a hedge against economic uncertainties.
Conclusion
While Warren Buffett is notoriously wary of investing in precious metals such as gold, Berkshire Hathaway's investment in Barrick Gold in 2020 shows that even his Berkshire Hathaway portfolio can include some exposure to this sector. Individual investors may still consider including precious metals as part of a balanced portfolio even if such investments don't form part of Warren's playbook - as always investment decisions must consider individual financial goals, risk tolerance levels, and investment horizon.