Why Warren Buffett Shunned Gold but Bet Big on Silver — Twice

Key Takeaways

• Warren Buffett has long criticized gold as a “non-productive asset.”

• He bought silver on two separate occasions — once in the 1960s and again in the late 1990s — earning more than $97 million from the latter trade.

• Silver’s industrial versatility and tight supply dynamics make it fundamentally different from gold.

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Buffett’s Golden Rule — and Why It Doesn’t Apply to Silver

For decades, Warren Buffett has been famously dismissive of gold.
He’s called it an asset that “does nothing but look at you,” lacking the ability to produce income, dividends, or yield.

Yet the same investor who mocked gold’s stagnation once purchased over 100 million ounces of silver — twice in his career. The difference? In Buffett’s view, silver isn’t just a shiny store of value. It’s a working metal that drives real-world productivity.

In Berkshire Hathaway’s 2006 shareholder meeting, Buffett explained his 1997 decision to acquire 111 million ounces of silver: “Silver was out of balance.” Global demand had been exceeding annual supply by roughly 100 million ounces, and that structural gap created a rare opportunity. When he sold in 2006, Buffett pocketed roughly $97 million in profit.

His first foray into silver came decades earlier, in the 1960s, when the U.S. government began to phase silver out of its currency system. Both bets shared one thing in common — they were based on supply and demand, not speculation.

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Silver: The Most Useful Precious Metal on Earth

Silver isn’t just for coins or jewelry. It’s the most electrically and thermally conductive metal known, which makes it indispensable across dozens of industries.

It’s used in:

• Semiconductors and AI hardware

• Solar panels and renewable-energy systems

• Electric vehicles and batteries

• Medical devices, water purification, and touch screens

These applications now account for more than 50% of total silver demand, a stark contrast to gold, where only ~11% is used industrially.

Global industrial demand for silver climbed to 680.5 million ounces in 2024, driven by the AI boom, renewable-energy buildouts, and electrification of transport. Every new data center or solar farm quietly pushes silver consumption higher.

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Why Supply Can’t Keep Up

Gold mining is responsive to price — when prices rise, miners dig faster. Silver doesn’t work that way.
Because most silver comes as a by-product of mining copper, zinc, gold, or lead, production can’t be ramped up easily.

At a 2023 investor event, Buffett highlighted this unique dynamic:

“There’s been a gap of perhaps 150 million ounces between what’s mined and what’s consumed each year. Above-ground inventories are filling that gap, but those reserves are being depleted.”

That prediction proved accurate.
In 2024, global mines produced 819.7 million ounces of silver — nearly flat from 2023 — even as demand surged.
The world consumed 149 million ounces more than it produced, marking the fourth straight year of deficit.

The London Bullion Market Association now reports “critically low” stockpiles, and COMEX inventories have fallen 70% since 2020.
In India, the country’s largest precious-metals distributor recently ran out of silver entirely — a historic first.

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The Perfect Storm for Silver Prices

When demand relentlessly rises but supply can’t respond, the market only has one release valve: price.
That’s why silver has rallied to a 12-year high, with the iShares Silver Trust (SLV) up more than 75% year-to-date.

The convergence of several powerful trends — AI infrastructure, green energy, lower interest rates, and persistent inflation — is giving silver both an industrial foundation and a monetary appeal.

For Buffett, that combination checks every box of his investment philosophy:

• Real-world utility (it “produces” value through industry).

• Supply scarcity (not easily increased).

• Predictable long-term demand (energy and technology growth).

Gold may glitter, but silver works — and that, in Buffett’s view, makes all the difference.

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Bottom Line

Buffett’s long-standing disdain for gold boils down to one thing: productivity. Gold just sits there.
Silver, on the other hand, is powering the technologies of the future — from semiconductors to solar energy — while facing a looming supply crunch.

As industrial consumption accelerates and global inventories tighten, silver may continue to shine brighter than gold in the years ahead.

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Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Investors should perform independent research before making investment decisions.