Forget gold. I’m following Warren Buffett’s advice in 2025
Billionaire investor Warren Buffett has long stated he has little interest in gold. As a value investor, he’s often highlighted that despite its popularity, gold’s an unproductive asset that doesn’t generate any cash flows.
Yet since the start of 2025, prices have surged 56.4%, from $2,601 per ounce all the way to a record $4,069. And that’s after the shiny yellow metal suffered a sudden drop in recent weeks.
So is Buffett wrong? I don’t think so. Demand for gold’s driven by fear, not fundamentals. And while it’s performing well as a short-term hedge against inflation, history demonstrates that stocks, over the long run, continue to be vastly superior.
To highlight, the price of gold has increased by 200% over the last 15 years. By comparison, the S&P 500 has generated a total return of 660% over the same period. And even the slow-growing FTSE 100 has outperformed with a 280% return.
‘Be fearful when others are greedy’
Regardless of whether an investor disagrees with Buffett’s stance on gold, there are still early warning signs of peak sentiment. The metal recently suffered a sharp pullback. And with a rising number of analysts suggesting gold should have a permanent place in a portfolio, complacency could be creeping in. Even more so, given that the latest US inflation figures came in cooler than expected.
Buying gold or stocks near a peak can backfire spectacularly. And there’s no denying that even stock market valuations are looking quite frothy right now. Yet, unlike gold, there continues to be numerous pockets and industries where top-notch shares are trading at a discount.
A FTSE stock to buy now?
LondonMetric Property (LSE:LMP) has lagged its parent index as higher interest rates continue to dampen sentiment within the real estate sector.
However, with impressive recurring cash flows from its vast rental portfolio of commercial properties, this business has had little trouble covering the cost of both interest and dividend payments.
In fact, even with an elevated 6.2% yield, payouts keep flowing to shareholders. And at the same time, management’s leveraging its strong balance sheet and size to acquire smaller competitors struggling in the current economic environment.
The company’s now projecting a 14% increase in net rental income. And combining this with its expanding moat of competitive advantages alongside a still-discounted share price certainly makes LondonMetric Property look like the kind of business Buffett likes to invest in.
Of course, no stock’s ever without risk. Sixty percent of the group’s tenants operate in the retail sector. As such, any sudden slowdown in footfall due to lower consumer spending could put pressure on upcoming lease renewals. This is particularly important for Tesco, B&M and The Range, which are some of the group’s biggest tenants.
Historically, these businesses are strong operators. But B&M’s faced margin pressure throughout 2025 that may have some knock-on effects for LondonMetric.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
The bottom line
Gold can be a sensible investment under the right conditions. But with concerns that we might be at the top of a gold rush cycle, investing in this metal doesn’t feel prudent right now. Instead, discounted shares like LondonMetric seem like a much wiser investment. That’s why I’ve already added this business to my income portfolio.
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Zaven Boyrazian has positions in LondonMetric Property Plc. The Motley Fool UK has recommended B&M European Value, LondonMetric Property Plc, and Tesco Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
