Steve Hanke, an economist and professor of applied economics at Johns Hopkins University, has pushed back against Warren Buffett’s long-standing criticism of gold, arguing that the metal plays a far more important role in wealth protection than the billionaire investor acknowledges.

Hanke’s comments come in response to Buffett’s well-known view of gold as a non-productive asset. Over the years, the Berkshire Hathaway (NYSE: BRK.B) founder has repeatedly dismissed gold for its lack of income generation, contrasting it with businesses and other productive assets that produce cash flow.

He has also characterized the yellow metal as a trade driven by fear, noting that its value tends to rise when investors are anxious about economic instability.

These perspectives anchor his philosophy that long-term wealth is best built through assets that compound and generate earnings, not through commodities whose value depends primarily on market sentiment.

Gold’s primary purpose 

However, in an X post on November 21, Hanke challenged this stance by emphasizing that gold’s primary purpose is not to behave like a productive asset but to act as insurance.

He noted that owning gold offers protection against extreme economic and financial risks, functioning as a safeguard rather than an investment expected to generate returns through production.

The scholar further pointed to Buffett’s own success in the insurance business through GEICO, suggesting that the investor should appreciate the value of hedging against uncertainty.

Hanke concluded his critique with a message encouraging resilience in wealth preservation, reinforcing his view that gold remains an essential part of a robust financial strategy.

Interestingly, in 2025, amid growing economic uncertainty, investors have increasingly fled to gold for its hedge against volatility. 

As a result, the precious metal has been among the best-performing assets, gaining almost 55% year to date and valued at 4,065 at the last market close.

Featured image via Shutterstock