As investment advisors, one of the most common questions we receive—especially during times of uncertainty—is whether investors should buy gold.  It’s totally understandable. Gold has a certain mystique.  It’s been coveted for centuries, worn as jewelry, used in rituals, and stockpiled in vaults.  It’s tangible, shiny, and has a legacy of being a “safe haven.”

But despite all of that, we typically don’t recommend gold as an investment for our clients. And it’s not because we don’t appreciate its historical significance or its emotional appeal. It’s because, as Warren Buffett once famously wrote, gold is not a productive asset—and in our opinion, productive assets are the only kind worth owning for the long haul.

Let me explain.

Investing Is About Growth—Not Just Preservation

At Mercer Partners, we define investing as the act of forgoing consumption today with the expectation of receiving more purchasing power in the future.  That’s the key phrase: more purchasing power.  Not just wealth that holds its value.  Not just something that doesn’t rust or disappear.  But something that grows, compounds, and becomes more useful to you over time.

Publicly traded businesses — equities — do exactly that.  When you own a portfolio of stocks, you are essentially a part-owner in hundreds (or even thousands) of real companies that produce goods and services people need.  These companies employ people, build things, innovate, solve problems, and—most especially—earn profits.  Over time, those profits are returned to you through dividends and price appreciation.

Gold, by contrast, just sits there.  It doesn’t produce income.  It doesn’t grow crops.  It doesn’t invent new technology.  It doesn’t generate cash flows.  It’s not a business—it’s a shiny rock.

The Gold Cube vs. Productive Assets

In a 2012 essay for Fortune Magazine, Warren Buffett offered a powerful illustration.  At the time, the entire world’s gold stock—roughly 170,000 metric tons—was worth about $9.6 trillion.  For that same amount of money, you could buy:

  • All the farmland in the United States (400 million acres),
  • Sixteen Exxon Mobil’s, each generating billions in annual profits, and
  • Still have about a trillion dollars left over in cash.

Which would you rather own?

One pile—a giant cube of inert metal, 68 feet on each side, that you could admire and touch, but which would never change, never grow, never pay you a dime.

Or the other pile—millions of acres producing crops, oil giants spinning off dividends, and a mountain of cash for good measure.

It’s not even close, right?

Gold’s Popularity Is Fueled by Fear—Not Fundamentals

Gold tends to attract attention during periods of fear.  When investors worry about inflation, currency devaluation, or geopolitical instability, gold becomes a symbolic refuge.  In times of panic, it’s natural to crave something that feels stable and timeless.

But that emotion can lead to poor decisions.  Gold’s rise is often fueled not by its value, but by the hope that someone else will come along and pay more for it tomorrow.  That’s speculation—not investing.  Buffett called it “the greater fool theory”: buying something not because it’s inherently valuable, but because you hope a greater fool will buy it from you later.

And while gold prices have soared during certain historical windows, those gains often pale in comparison to the long-term compounding power of equities.  Over the last century, a diversified stock portfolio has outperformed gold many times over—not only in returns, but in usefulness to the investor.

What About Inflation?

One of the most common arguments for gold is its use as a hedge against inflation.  And yes, over very long periods, gold has roughly kept pace with inflation.

But so have other assets—particularly stocks. In fact, businesses are often better positioned to respond to inflation.  They can raise prices, adapt their business models, and continue to grow earnings in real terms.  Gold doesn’t adapt—it just exists.

If you’re looking to preserve purchasing power over decades (which is the very essence of retirement planning), stocks have been a far more effective solution historically.

Liquidity, Transparency, and Simplicity Matter

Public equities offer investors advantages that gold cannot match.  They are:

  • Liquid – You can buy and sell shares in seconds.
  • Transparent – Public companies report earnings, pay dividends, and are closely scrutinized.
  • Tax-efficient – With smart planning, you can manage gains, harvest losses, and minimize taxes.
  • Scalable – Whether you’re investing $1,000 or $10 million, you can allocate to public equities efficiently.

Gold, by contrast, may require secure storage, comes with markup and transaction costs, and doesn’t offer the same flexibility when managing a financial plan.

We Prefer Owning Productive Assets

At Mercer Partners, we believe in investing in the real economy.  That means owning great businesses—whether directly or through diversified funds—that generate cash flow, pay dividends, and have the potential to grow.

When clients ask us about gold, we understand the impulse.  The world is complex, and sometimes unsettling.  But the answer isn’t to retreat into unproductive assets.  It’s to own a well-crafted portfolio of productive ones, stay disciplined, and align your investments with your long-term goals.

Gold may glimmer in uncertain times, but it does not produce anything.  It does not create jobs, solve problems, or reward patient capital.  For that, you need companies, innovation, and the compounding force of enterprise.

Final Thoughts

There will always be a place for gold in the global conversation—perhaps as a store of historical value or a hedge of last resort.  But as a core investment?   As a pillar of a retirement plan?  We believe there are better choices.

If you’re ever tempted by headlines about gold or anxious about where markets are headed, let’s talk.  Our role as Investment Advisors isn’t just to manage portfolios—it’s to provide perspective.  And our perspective is clear: when it comes to building lasting wealth, gold may sparkle, but stocks deliver.

Best,

Nick

These views are those of the author, not of the broker-dealer or its affiliates. This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. All investments involve risk, including loss of principal. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors

Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.​

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.