What is the investment strategy that Buffett uses during market downturns?
Although gold has industrial uses, such as electronics manufacturing due to its conductivity, and is widely used in jewelry making, these uses are limited and do not absorb new quantities of it on a large scale. Buffett compares this situation to productive assets like agricultural land, factories, and companies that continuously produce goods and services.
Unlike shares of companies that generate profits, pay dividends, reinvest capital, or buy back their shares, gold remains idle; it does not generate any income and does not grow on its own. Warren Buffett famously stated: "You can hold an ounce of gold for a full century, and you will only have one ounce left – no growth, no return."
He reinforced this opinion in interviews, describing gold as essentially "a way to invest in fear." When fear rises during crises, gold prices tend to increase as investors seek safety; and when fear fades, prices drop – because the metal itself does not produce anything of value.
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