State Street Global Advisors, manager of the world’s largest gold exchange traded fund, is taking exception to Warren Buffett saying investors should avoid the precious metal.
“Buffett, the greatest investor of our time, is, therefore, the most famous critic of gold. He points out that it has no earnings, yield or way to return cash to the investor. We agree. However, that doesn’t mean one can’t make money in gold,” writes Chris Goolgasian, senior portfolio manager at State Street, in a filing for SPDR Gold Shares (NYSEArca: GLD).
“So while Berkshire Hathaway has gone up a very respectable 105% since January of 2000, gold has increased nearly five-fold during the same period. It strikes us that Buffett believes that only asset classes and investments that fit his specific investment beliefs can be sensible investments. We, however, are agnostic about how to beat the market. We just want to do it,” he added in the filing.
In the recently released Berkshire Hathaway annual shareholder letter, Buffett argued gold has no intrinsic value. [Gold ETFs Pause on Bernanke, QE3 Talk]
The $71 billion gold ETF has a five-year annualized return of about 21%, according to investment researcher Morningstar. Gold prices are currently trading around $1,700 an ounce. The gold fund holds nearly 1,300 metric tons of bullion. [Gold ETFs Hold More Bullion Than Most Central Banks]