As gold prices breached $4,300 an ounce in 2025, renowned valuation professor Aswath Damodaran is reinforcing a long-held skepticism championed by Warren Buffett: gold is not a true financial asset.
Damodaran Echoes Buffett’s Core Reason For Avoiding Gold
In a recent video analysis of gold’s “insane rise,” Damodaran agreed with Buffett’s core logic, explaining that because gold generates no cash flows, it “cannot be valued” like a stock or a bond.
Instead, Damodaran classifies gold as a “collectible,” whose price is driven by “mood and momentum” rather than intrinsic worth.
“Warren Buffett has famously said that he would not hold gold because it’s not an investment,” Damodaran said, adding, “it doesn’t have cash flows [and] I can’t value it with my investment portfolio.”
This comes as Buffett, in a Thanksgiving letter, said that he needs to speed up transferring his Berkshire Hathaway Inc. (NYSE:BRK) (NYSE:BRK) stock to his children’s foundations while giving its investors time to gain faith in incoming CEO Greg Abel.
Gold Value Is Determined By Demand And Supply
Damodaran, a professor of finance at NYU’s Stern School of Business, explained that financial assets like stocks or real estate generate cash, allowing investors to calculate their value.
By contrast, he argues, gold functions like a rare painting or a baseball card.
“You can’t value a Picasso,” he stated. “It’s determined by demand and supply… Gold is not an asset.”
See Also: Warren Buffett’s Top Rule Echoed By Analysts: ‘Betting Against America’ Has Never Worked Since 1776
Gold Linked To ‘Mistrust’ In Central Banks?
While acknowledging gold’s 50% surge in 2025, Damodaran attributes the spike to factors like a “mistrust of central banks” and global uncertainty, which expands the “niche” of gold buyers.
He noted that while gold can be used as a commodity for jewelry or as an inefficient currency, its primary role throughout history has been as a store of value based on desire, scarcity, and durability.
This distinction, Damodaran suggests, is critical for investors. Because gold is a collectible, he concludes, you can only price it by guessing market sentiment, not value it based on fundamentals. He noted that while gold is touted as a hedge against catastrophe, its long-term returns have historically lagged far behind stocks, which generate tangible cash flows.
Gold Shines Bright In 2025
While gold was trading 0.66% higher at $4,149.00 per ounce during the publication of this article, its all-time high stood at $4,381.60.
It has risen by 24.31% over the last six months and 57.74% over the last year.
Here are some gold-linked ETFs that investors could consider.
| Gold ETFs | YTD Performance | One Year Performance |
| Franklin Responsibly Sourced Gold ETF (NYSE:FGDL) | 54.35% | 55.89% |
| Goldman Sachs Physical Gold ETF (BATS:AAAU) | 54.39% | 56.54% |
| GraniteShares Gold Trust (NYSE:BAR) | 54.46% | 56.55% |
| VanEck Merk Gold ETF (NYSE:OUNZ) | 54.27% | 56.52% |
| SPDR Gold Trust (NYSE:GLD) | 56.26% | 50.39% |
| iShares Gold Trust (NYSE:IAU) | 54.35% | 56.47% |
| SPDR Gold MiniShares Trust (NYSE:GLDM) | 54.53% | 56.70% |
| abrdn Physical Gold Shares ETF (NYSE:SGOL) | 54.39% | 56.55% |
| iShares Gold Trust Micro (NYSE:IAUM) | 54.56% | 56.75% |
| Invesco DB Precious Metals Fund (NYSE:DBP) | 54.21% | 49.61% |
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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