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Money Metals News Alert
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May 27th, 2025
– Gold and silver prices surged higher last week on renewed interest in safe
havens. The renewed threat of tariffs on imports from Europe and spiking bond
yields made investors nervous.
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The S&P 500 lost roughly
2% for the week but is showing strength today.
The 10-year Treasury ended
back above 4.5% yield for the first time since February.
Meanwhile, the U.S. dollar
as measured on the DXY index was clobbered from just over 101 to just under 99 by
Friday???s close.
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It was quiet in the bullion markets
however. Higher prices did little to stimulate interest from speculators. There
was a little profit-taking from long-time holders inclined to sell.
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Gold : Silver Ratio (as of
Friday's closing prices) – 100 to
1
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Warren Buffett???s Gold Blind Spot
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The Oracle of Omaha, Warren Buffett,
recently announced he will be stepping down as CEO of Berkshire Hathaway. He built
a reputation as one of the sharpest minds in investing.
Buffett???s folksy wisdom and knack for
picking winners made him a household name. But when it comes to gold, Buffett
maintains a stubborn bias against investing, and he's missed an absolutely huge
move over the past 25 years.
Just before a generational bull market
began in 2000, Buffet delivered a famous quip during a 1998 speech at Harvard
summing up his disdain:
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"[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."
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At the time, it was a reasonable
perspective. Gold had been floundering for nearly 20 years since the last bull
market ended in 1980.
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It looks silly today.
Buffett has turned more
bearish on stocks given the sky high valuations and a mixed economic outlook. He
has also shared strong concerns about the U.S. dollar.
Buffett has even been
vocal about dumping dollars in favor of other fiat currencies such as the Japanese
yen. Yet he has shown no interest in gold.
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That???s odd. Gold has already enjoyed
an extraordinary run over the past 25 years, driven by many of the same concerns
Buffett has now.
The Fed went berserk with bailouts,
zero interest rates, and massive money creation. Federal debt has literally gone
parabolic, and Congress still shows no inclination to rein that in. Japan and
other developed nations appear just as irresponsible. Gold has performed even
better relative to the yen.
The whole world is mired in an
inflationary spiral. Despite that, Buffett has yet to acknowledge the utility of
gold.
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Gold???s Quiet Triumph Over the
S&P 500
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Gold???s results ought to be hard to
miss or ignore.
Since 2000, gold has delivered a
compounded annual growth rate (CAGR) of roughly 8.7%, climbing from around $280
per ounce to over $2,600 by May 2025.
Compare that to the S&P 500, which,
including dividends, has posted a CAGR of about 6.5% over the same period. In raw
terms, gold has surged over 800%, while the S&P 500, even with reinvested
dividends, has gained around 400%.
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Think about that. The
???useless??? metal has more than doubled the returns of U.S. stocks. Importantly, the
metal did better during turbulent times -- the dot-com bust, the 2008 financial
crisis, and the COVID market panic.
The stimulus-addicted
equity markets look like a bubble, with record PE valuations. Gold, on the other
hand, has proven its mettle as a safe haven. In 2008 alone, while the S&P 500
cratered 38%, gold gained over 4%.
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It???s not just about price
appreciation. Gold???s low correlation with stocks – recently at its lowest in
decade – makes it a powerful diversifier. When markets tank, gold often
holds or climbs, cushioning portfolios.
Gold has worked great as an
investment, an inflation hedge, and as a safe haven for 25 years. That is a ton of
utility.
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Gold vs. Berkshire
Hathaway
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Gold hasn???t just fared well versus the
broad S&P 500 index. It also stacks up against Buffett's own Berkshire
Hathaway…
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This week's Market Update was
authored by Money Metals Director Clint Siegner.
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