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Is gold an unproductive asset?
Mon, 22 Sep Pre-Open

"Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head".

The above lines are part of Warren Buffett's speech at Harvard in 1998, while talking about Gold.

As per Mr Buffet, Gold is just worthless.

Gold bullion, gold miners and gold ETFs simply have no place in Warren Buffett's portfolio. Not only that, Mr Buffet has also told investors at various public speeches that gold should have no place in their portfolio either.

And Mr. Buffet has stuck to his view over the years on yellow metal. He believes that gold is expensive to store and is practically of no use. Over and above, Mr Buffet believes gold has no intrinsic value. And thus if one invests in value stocks one could fetch much better returns.

It is indeed a rare occurrence that we disagree with Mr Buffett. But we believe he may be wrong here. Everyone knows that gold has limited supply. Gold acts as insurance, especially at the time of crisis. Gold will be the one tangible asset that will act as a hedge as against paper currencies that can lose value due to poor monetary policies.

That is why we stick to our view that gold is an asset class that one should not ignore. Gold can be the only asset class to be considered as a store of value. It is traditionally the most favoured anti-inflation play. The only asset class that would be capable of preserving purchasing power for many years to come. And therefore has a real intrinsic value we believe. Investors therefore must consider having some gold in their investment portfolio.

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