It’s no secret that Warren Buffett is not a fan of cryptocurrency like bitcoin, which he calls “probably rat poison squared.” But the real reason? He just doesn’t like gold.
A long-time value investor, Buffett compares cryptocurrency to gold, which he sees as a nonproductive asset. “It’s essentially not going to deliver anything other than supposed scarcity because you can only mine so many,” Buffett said at the Berkshire Hathaway annual shareholder meeting on Saturday. “So what? What does it produce itself?”
The price of bitcoin (BTC) has been on a roller coaster ride. At $9,500 on Saturday it is 50% down from its all-time highs reached in December, but has bounced back by 40% since April. Some people see it as digital gold with storage value. Even Goldman Sachs (GS), which Berkshire Hathaway (BRK-A, BRK-B) invested in, has decided to start a cryptocurrency trading desk after more clients expressed interest.
Buffett isn’t one of them. In an earlier interview with Yahoo Finance, Buffett called investing in bitcoin a gamble based on speculation, not an investment.
“I think every time you buy a nonproductive asset, you’re counting on somebody else, later on, to buy a nonproductive asset, because they think they can sell to somebody for more money,” Buffett said. “It does come to a bad ending.”
No gold and bitcoin
Buffett and his right-hand man Charlie Munger have been long known for their limited investment interest in gold. Buffett kicked off this year’s shareholder meeting with an anecdote about why people should invest in American businesses. According to his calculations, investing $10,000 in the S&P back in 1942 would have yielded $51 million. But if he put the money in gold, he would have only yielded $400,000.
Munger dislikes cryptocurrency more than Buffett. “I think people who are professional traders that are going to trade cryptocurrencies, it’s just disgusting,” Buffett’s longtime business partner of said. “It’s like someone else is trading turds and you decide I can’t be left out.”
Munger’s thoughts on gold aren’t any softer. “I don’t have the slightest interest in gold,” he said back in 2010, “I don’t see how you become rational hoarding gold. Even if it works you’re a jerk.”
Correction: The price of bitcoin on Saturday is 50% down from its all-time highs, not 100%.
Krystal Hu is a technology and economy reporter at Yahoo Finance. Follow her on Twitter