Advisor Metals Precious Metals Market Update for January 24, 2025

The Warren Buffett Precious Metals Paradox and Why He Bought Silver

The big news this week was the inauguration of President Trump.  Much has been written already.  I will sum it up with four words.  Promises made.  Promises kept.

Warren Buffett is not a fan of precious metals unless they meet his investing criteria.  In the late 1990s he bought silver between $4.50 and $5.00 per ounce.  Several years later he sold his silver position at around $9.00 per ounce.  Why did he purchase silver?  It met his criteria of being undervalued. My guess is at the time silver was trading below its cost of production.  Plus, it has an industrial use and Warren likes to see an asset with a purpose. The cost of production for silver is around $26 an ounce today and it is trading above that not meeting his undervalued criteria.  Not meaning it will not go higher.  Only that it is not meeting this investment criteria currently.

Which brings us to gold.  He has said that you stare at gold and it stares back at you.  Meaning it has no (for the most part) productive use.  The cost of production for an ounce of gold is around $1,200 per ounce with the cost varying depending on the mining company.  Gold is trading way above its cost of production not meeting his undervalued criteria.

HOWEVER, one of his investing criteria is will the investment make as much sense 10 or 20 years from now as it does today.  Which is why he had bought Gillette, See’s Candies, Coca-Cola, etc.  With gold (and silver) the answer is YES!

As of Friday’s close, gold is less than 1% from its all-time high!

Go to our website for a free gold and silver guide, for more information, or to contact me about making a purchase.  www.advisormetals.com ira@advisormetals.com 626 788 5770.