Why don’t Warren Buffett buy gold? — A practical guide

Basics: How gold works as an investment and how to buy gold on stock market

Different ways the market gives exposure to gold

The phrase how to buy gold on stock market fits the practical focus of this section. Most investors gain exposure through publicly traded vehicles rather than by storing metal in a safe. Common stock-market exposures include physical-backed ETFs that track the price of bullion, shares of gold mining companies, royalty and streaming firms, and certain trusts or certificate products that represent claims on metal.

Physical-backed ETFs typically hold bullion in secure vaults and issue shares that trade on exchanges. These ETFs aim to reflect the spot price of gold and usually offer daily liquidity. When you choose a physical-backed ETF, check custody arrangements, the fund’s storage policy, and the expense ratio.

Gold miner equities are different. They are shares in companies that explore for and produce gold. Their returns depend on both the company operations and the metal price, so miner stocks are generally more volatile than owning the metal directly and carry operational and management risks.

Differences between physical gold and stock-market vehicles

Physical gold means holding bars or coins, which removes issuer risk but introduces storage, insurance, and liquidity considerations. Market vehicles convert those operational questions into others, like tracking error, fund fees, and issuer practices. For example, an ETF’s expense ratio reduces long-term returns relative to the metal price, and some digital products add additional counterparty or custody risk.

These distinctions matter because gold itself is a non productive asset. Warren Buffett has repeatedly argued that gold does not produce cash flow or earnings the way a business does, a point he laid out in Berkshire Hathaway shareholder letters; this difference underpins why investors choose one vehicle over another and how they treat gold in a portfolio. Berkshire Hathaway shareholder letter

How liquidity, custody, and fees vary by option

Cash exposure through ETFs typically gives intraday liquidity and avoids personal custody duties, but it moves the responsibility for secure storage to the fund issuer and custodian. That creates operational risk you should evaluate before buying.

Certificate and trust products may offer different tax treatment or settlement rules and can carry issuer credit considerations that do not apply when you hold bullion directly. Market research shows retail access to gold has expanded through ETFs and new digital vehicles, which changes how investors can include gold without changing the metal’s non productive nature. Morningstar research on gold access

Industry analysis shows growing variety in how investors access gold, but the underlying economics remain the same: the metal does not generate earnings, and each market vehicle translates that fact into a different set of operational and fee tradeoffs you must weigh. See our coverage on who holds the most gold and where it is stored for additional context. who holds the most gold

What Warren Buffett actually says about gold and why it matters

Buffett’s core argument in plain language

Buffett’s basic point is simple. Gold does not produce goods or services, and it does not generate earnings or dividends. Because it cannot compound cash flow, he regards it as fundamentally different from owning businesses that reinvest profits to grow over time. This core objection has shaped his public stance and investment decisions. For a closer look at his letters, see an analysis of Buffett’s shareholder letters. A Closer Look at Buffett’s Letter

He expressed this argument directly in Berkshire Hathaway letters and in many public comments, noting that owning productive assets is the preferred path to long-term wealth generation. Readers should see this not as an attack on gold but as an explanation of why his capital allocation favors operating businesses. Berkshire Hathaway shareholder letter

Key quotes from Berkshire Hathaway shareholder letters

Buffett used plain examples in his letters to contrast gold with businesses that earn returns. He emphasized that money invested in a business can compound through retained earnings and reinvestment, while gold relies on future buyers’ willingness to pay more. Quoting his letters helps clarify that his objection is structural, not merely stylistic.

Those letters and later public explanations create a consistent thread in his philosophy. This consistency is visible in Berkshire’s disclosures and in later media commentary that summarized his long-standing preference for equities and operating businesses over bullion or gold-backed instruments. CNBC summary of Buffett’s views, and further coverage on Yahoo Finance provides additional media perspective. Yahoo Finance coverage

How his view fits Berkshire’s capital allocation approach

Berkshire Hathaway’s reported investments and public statements show a pattern: the company channels capital into businesses and securities that produce earnings rather than into commodities that do not. That pattern aligns with the idea of seeking compound returns from productive assets, which Buffett argues is the most reliable path to long-term value creation.

For individual investors, the takeaway is practical: treat gold and gold-like vehicles as tools for specific goals rather than as substitutes for an equity-based growth plan. This interpretation follows directly from Berkshire’s letters and disclosures about their investment choices. Berkshire Hathaway shareholder letter

How gold has performed compared with stocks and why returns differ

Long term total return comparisons

When comparing long-term total returns, broad equity indexes have generally outperformed gold over multi-decade horizons. Historical S&P data show that owning a diversified equity basket has produced compounded returns that, over time, exceed the price appreciation of gold in many long samples. This long-run pattern helps explain Buffett’s preference for businesses. S&P 500 historical performance

That is not the same as saying gold is always inferior. Gold’s return profile is different. It does not produce dividends and often moves independently from equities for stretches, which is why some investors use it tactically.

Volatility, drawdowns, and crisis behavior

Gold can show strong relative performance during periods of high inflation, currency stress, or geopolitical shocks. Academic work and industry studies find evidence that gold sometimes behaves as a partial hedge or safe haven in stressed markets, although findings vary by timeframe and market conditions.

Because results are not uniform, gold’s protective qualities should be seen as conditional. The academic literature underlines that gold’s hedge behavior depends on the type of shock and the timeframe examined rather than acting as a guaranteed defense. Academic study on gold as a hedge

When gold can outperform stocks

Gold tends to outperform in episodic stretches, particularly when inflation expectations rise sharply or when financial assets face acute stress. That episodic behavior makes gold potentially useful as a tactical allocation for specific scenarios rather than a core, long-term growth holding.

Industry research also notes that retail access through ETFs and digital vehicles can influence flows and short term outcomes, even though those access changes do not alter the metal’s fundamental economics. World Gold Council research and for a local perspective see our piece on why Germany’s youth are betting on gold. Germany’s youth and gold

Practical ways to buy gold on the stock market: ETFs, miners, and funds

How gold ETFs work and what to watch for

Physical-backed gold ETFs hold bullion and issue shares that trade like stocks. Expense ratios, storage locations, and sponsor reputations are central decision factors. Typical investor concerns include how closely the fund tracks spot gold, the fund’s expense ratio, and any known tracking error over time.

When you compare ETF options, pay attention to the trustee and custodian structure, and whether the fund discloses vault audits regularly. These operational details matter because the ETF stands in for physical ownership and you depend on the fund’s processes for secure storage.

Buying gold miner stocks and how they differ

Miner stocks are operating companies. Their value depends on management, production costs, reserves, and the gold price. This makes them more leveraged to changes in the metal price, but also introduces company-specific risks such as mine disruptions or cost overruns.

Because miners can pay dividends or reinvest in growth, they are technically productive businesses, but their returns are shaped by operational execution far more than ETFs that simply track the commodity’s price. That distinction is essential when you choose between owning miners and owning metal.

Other market vehicles: funds, trusts, and certificates

Trusts and certificate products can offer different tax profiles or settlement mechanisms. Some newer digital gold offerings provide fractional exposure to allocated metal but can add counterparty layers that require due diligence on custody arrangements.

Industry analysis shows growing variety in how investors access gold, but the underlying economics remain the same: the metal does not generate earnings, and each market vehicle translates that fact into a different set of operational and fee tradeoffs you must weigh. World Gold Council research

A simple framework to decide if and how much gold to hold

Match allocation to your goals and time horizon

Start with a clear goal. Are you seeking long-term compound growth, short-term crisis protection, or inflation hedging? Your intended role for gold should determine whether a small tactical allocation makes sense or whether gold should play no meaningful role in your growth portfolio. See related posts in our investing section. investing category

Remember Buffett’s point that gold is non productive. If your primary objective is compound growth over decades, equities and productive businesses tend to be better suited to that goal. Treat gold as a potential complement for specific risks rather than the core engine of long-term growth. Berkshire Hathaway shareholder letter

Consider risk tolerance and expected role for gold

If you prefer lower volatility in portfolios, a modest allocation to gold can sometimes reduce portfolio drawdowns during particular shocks. If you are comfortable with equity volatility, you might prefer to keep gold exposure minimal and rely on diversification within stocks and bonds instead.

Calibration depends on your time horizon. Shorter horizons increase the chance that a static gold allocation will underperform growth assets, while long horizons generally favor productive investments for wealth accumulation.

Checklist to choose a vehicle and allocation size

Use a short checklist before you buy: define the goal, set a target allocation, pick the vehicle that matches custody and tax needs, confirm fees and tracking performance, and decide rebalancing triggers. This structured approach reduces emotional decisions during market swings.

Industry research supports treating gold as a tactical allocation for diversification or inflation concerns rather than a substitute for equity-driven compound returns. World Gold Council research

Decision criteria and typical allocation ranges for different investor goals

How allocation shifts by goal: growth, preservation, or diversification

For long-term growth-focused investors, small allocations or no allocation to gold often align with the objective because equities historically outperformed gold. For preservation or diversification goals, a larger tactical allocation may be justified if you expect inflation or short-term market stress.

Allocation ranges are not one-size-fits-all. They depend on income needs, other assets, and how much of your portfolio you want to shield from specific risks. Historical performance is a guide but not a determinative rule. S&P 500 historical performance

Tax, fees, and liquidity as part of allocation choice

Tax treatment varies by vehicle and jurisdiction. ETFs are often tax-efficient relative to some trust structures, but certain certificate products or physical holdings can have different capital gains or collectibles rules. Factor in expense ratios, spreads, and potential transaction costs when sizing your position.

Liquidity needs should shape whether you pick an ETF for quick entry and exit or a trust that may trade less frequently. Include rebalancing rules so your gold exposure does not drift far from the intended role in your portfolio. World Gold Council research

Rebalancing rules and monitoring

Simple rebalancing rules work well. For example, set a target allocation and rebalance when the gold allocation drifts by a fixed percentage of portfolio value. That helps capture gains and avoid emotional top-ups after price moves.

Common mistakes and pitfalls when buying gold through market instruments

Mistaking miners for the metal

A frequent error is assuming a gold miner stock behaves the same as owning bullion. Miner performance depends on corporate execution and capital structure, which can diverge sharply from metal spot prices over long stretches.

Misunderstanding that distinction can lead to unexpected volatility and losses when investors expect miner equities to mimic bullion. Before buying, review a miner’s production profile and balance sheet.

Ignoring fees, tracking error, and issuer risk

Fees and tracking error can quietly erode investor returns over time. An ETF with a higher expense ratio or persistent tracking differences can underdeliver relative to spot gold, and some digital or certificate offerings introduce issuer credit considerations that need careful examination.

Check the fund’s long-term tracking record and read prospectuses to understand how the product stores metal and what protections exist for investors. Morningstar research on product structures

Overallocating based on short term fear

Another common issue is adding too much gold after a market scare. Because gold’s long-term return pattern differs from equities, overallocating based on fear can undermine long-term growth goals. A disciplined framework and allocation checklist helps avoid emotionally driven decisions.

Buffett’s logic encourages investors to focus on assets that produce cash flow for long-term growth while reserving gold for tactical diversification when appropriate. Berkshire Hathaway shareholder letter

Practical examples and step by step scenarios to buy gold on the stock market

Example 1: small tactical ETF allocation for diversification

Scenario: An investor with a diversified stock and bond portfolio wants a modest hedge against inflation and geopolitical risk. They decide a small tactical allocation makes sense. Step 1, define the target allocation. Step 2, pick a physical-backed ETF with transparent custody and a low expense ratio. Step 3, buy shares in an employer or retail brokerage account and set a rebalancing rule to restore the target allocation if it drifts.

Monitor the ETF’s tracking performance and expense ratio annually and review whether the position still fits the goal. This approach treats gold as a tool for diversification rather than a growth driver. World Gold Council research

Example 2: buying a gold miner as a speculative position

Scenario: A risk-tolerant investor wants leverage to potential gold price gains. They buy a small position in a gold mining stock after evaluating the company’s reserves, production costs, and management record. This is effectively a leveraged bet on the metal plus company execution, and it requires closer monitoring than a passive ETF position.

Because miners are corporate entities, the investor should conduct additional due diligence on balance sheets and operational plans and be prepared for higher volatility and company-specific events that affect share price but not the underlying metal market. Morningstar on miner and product differences

Checklist before you buy and quick next steps

Pre-purchase checklist: clarify your goal and horizon, choose the vehicle that matches custody and tax needs, confirm expense ratios and tracking history, set rebalancing rules, and limit position size relative to your portfolio. This checklist helps translate Buffett’s logic into a clear, personal decision process.

After purchase, review the holding at fixed intervals, avoid emotional increases after short-term moves, and keep the allocation consistent with your stated objective. Industry data continues to show that broad equities have generally outperformed gold for long-term growth, so align your allocation with that context. S&P 500 data

Decision criteria and typical allocation ranges for different investor goals

How allocation shifts by goal: growth, preservation, or diversification

For long-term growth-focused investors, small allocations or no allocation to gold often align with the objective because equities historically outperformed gold. For preservation or diversification goals, a larger tactical allocation may be justified if you expect inflation or short-term market stress.

Allocation ranges are not one-size-fits-all. They depend on income needs, other assets, and how much of your portfolio you want to shield from specific risks. Historical performance is a guide but not a determinative rule. S&P 500 historical performance

Tax, fees, and liquidity as part of allocation choice

Tax treatment varies by vehicle and jurisdiction. ETFs are often tax-efficient relative to some trust structures, but certain certificate products or physical holdings can have different capital gains or collectibles rules. Factor in expense ratios, spreads, and potential transaction costs when sizing your position.

Liquidity needs should shape whether you pick an ETF for quick entry and exit or a trust that may trade less frequently. Include rebalancing rules so your gold exposure does not drift far from the intended role in your portfolio. World Gold Council research

Rebalancing rules and monitoring

Simple rebalancing rules work well. For example, set a target allocation and rebalance when the gold allocation drifts by a fixed percentage of portfolio value. That helps capture gains and avoid emotional top-ups after price moves.

Monitor changes in fund expense ratios, custody disclosures, and regulatory updates to digital products. The market structure around gold can evolve, and those operational changes affect the costs and risks of maintaining exposure. Morningstar on gold access

Common mistakes and pitfalls when buying gold through market instruments

Mistaking miners for the metal

A frequent error is assuming a gold miner stock behaves the same as owning bullion. Miner performance depends on corporate execution and capital structure, which can diverge sharply from metal spot prices over long stretches.

Misunderstanding that distinction can lead to unexpected volatility and losses when investors expect miner equities to mimic bullion. Before buying, review a miner’s production profile and balance sheet.

Ignoring fees, tracking error, and issuer risk

Fees and tracking error can quietly erode investor returns over time. An ETF with a higher expense ratio or persistent tracking differences can underdeliver relative to spot gold, and some digital or certificate offerings introduce issuer credit considerations that need careful examination.

Check the fund’s long-term tracking record and read prospectuses to understand how the product stores metal and what protections exist for investors. Morningstar research on product structures

Overallocating based on short term fear

Another common issue is adding too much gold after a market scare. Because gold’s long-term return pattern differs from equities, overallocating based on fear can undermine long-term growth goals. A disciplined framework and allocation checklist helps avoid emotionally driven decisions.

Buffett’s logic encourages investors to focus on assets that produce cash flow for long-term growth while reserving gold for tactical diversification when appropriate. Berkshire Hathaway shareholder letter

Practical examples and step by step scenarios to buy gold on the stock market

Example 1: small tactical ETF allocation for diversification

Scenario: An investor with a diversified stock and bond portfolio wants a modest hedge against inflation and geopolitical risk. They decide a small tactical allocation makes sense. Step 1, define the target allocation. Step 2, pick a physical-backed ETF with transparent custody and a low expense ratio. Step 3, buy shares in an employer or retail brokerage account and set a rebalancing rule to restore the target allocation if it drifts.

Monitor the ETF’s tracking performance and expense ratio annually and review whether the position still fits the goal. This approach treats gold as a tool for diversification rather than a growth driver. World Gold Council research

Example 2: buying a gold miner as a speculative position

Scenario: A risk-tolerant investor wants leverage to potential gold price gains. They buy a small position in a gold mining stock after evaluating the company’s reserves, production costs, and management record. This is effectively a leveraged bet on the metal plus company execution, and it requires closer monitoring than a passive ETF position.

Because miners are corporate entities, the investor should conduct additional due diligence on balance sheets and operational plans and be prepared for higher volatility and company-specific events that affect share price but not the underlying metal market. Morningstar on miner and product differences

Checklist before you buy and quick next steps

Pre-purchase checklist: clarify your goal and horizon, choose the vehicle that matches custody and tax needs, confirm expense ratios and tracking history, set rebalancing rules, and limit position size relative to your portfolio. This checklist helps translate Buffett’s logic into a clear, personal decision process.

After purchase, review the holding at fixed intervals, avoid emotional increases after short-term moves, and keep the allocation consistent with your stated objective. Industry data continues to show that broad equities have generally outperformed gold for long-term growth, so align your allocation with that context. S&P 500 data

Decision criteria and typical allocation ranges for different investor goals

How allocation shifts by goal: growth, preservation, or diversification

For long-term growth-focused investors, small allocations or no allocation to gold often align with the objective because equities historically outperformed gold. For preservation or diversification goals, a larger tactical allocation may be justified if you expect inflation or short-term market stress.

Allocation ranges are not one-size-fits-all. They depend on income needs, other assets, and how much of your portfolio you want to shield from specific risks. Historical performance is a guide but not a determinative rule. S&P 500 historical performance

Tax, fees, and liquidity as part of allocation choice

Tax treatment varies by vehicle and jurisdiction. ETFs are often tax-efficient relative to some trust structures, but certain certificate products or physical holdings can have different capital gains or collectibles rules. Factor in expense ratios, spreads, and potential transaction costs when sizing your position.

Liquidity needs should shape whether you pick an ETF for quick entry and exit or a trust that may trade less frequently. Include rebalancing rules so your gold exposure does not drift far from the intended role in your portfolio. World Gold Council research

Rebalancing rules and monitoring

Simple rebalancing rules work well. For example, set a target allocation and rebalance when the gold allocation drifts by a fixed percentage of portfolio value. That helps capture gains and avoid emotional top-ups after price moves.

Monitor changes in fund expense ratios, custody disclosures, and regulatory updates to digital products. The market structure around gold can evolve, and those operational changes affect the costs and risks of maintaining exposure. Morningstar on gold access

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.