Aswath Damodaran’s latest analysis into gold’s 2025 surge walks through gold’s contradictory nature as a collectible rather than an asset with cash flows, showing why it’s impossible to “value” gold in the traditional sense, yet entirely possible to understand what drives its pricing.
Even though gold is outperforming almost all other assets in my portfolio this year I fundamentally don’t like holding it. I’m a Buffett disciple: gold is an unproductive asset that generates no earnings, pays no dividends.
But Damodaran’s framework helps to understand why tolerating it anyway might be worth it. It’s less an investment than insurance against the tail risks of hyperinflation and catastrophic market dislocations, scenarios where correlations go to one and traditional diversification fails. The dissonance between what I believe intellectually (productive assets compound wealth) and what I’m actually doing (holding some gold anyway) probably says more about 2025’s macro uncertainty than any principled investment thesis.
Damodaran’s blog linked in this post’s title.