Gold is hot — but a classic Warren Buffett rule suggests caution, advisor says

cnbc.com:

Gold prices are popping. But investors should avoid the temptation to chase a shiny object, investment experts said.

The SPDR Gold Shares fund (GLD), which tracks the price of gold bullion, is up about 11% in 2025 as of 2 p.m. ET Tuesday. Returns are up about 42% over the past year. (Prices were down more than 1% on Tuesday.)

Gold futures prices are also up about 10% year-to-date and currently 36% higher compared to the price a year ago. 

By comparison, the S&P 500 U.S. stock index is up about 1.5% in 2025 and 17% in the past year.

Lee Baker, a certified financial planner, said he wasn't getting client calls about gold a year ago. Now, he fields them regularly.

He thinks investors would be wise to remember the classic rule from Warren Buffett, «Be fearful when others are greedy, and be greedy when others are fearful.»

«It feels to me everyone is starting to get greedy as it pertains to gold,» said Baker, owner and president of Claris Financial Advisors, based in Atlanta, and a member of CNBC's Advisor Council.

The typical investor shouldn't have an allocation to gold that exceeds 3% of a diversified portfolio, Baker said.

Investors enticed by lofty returns may make a knee-jerk reaction and buy a big chunk of gold (literally or figuratively) — and, in the process, make the common investment mistake of buying high and selling low, he said.

«If you're going to make money with gold you need to buy and sell it — and hopefully sell it at right time,» Baker said. «And if you're getting in now, are you buying at a peak? I don't know.»

Investors often perceive gold as a safe haven in times of turmoil and buy the asset when there are high levels of uncertainty, explained Sameer Samana, senior global market strategist and head of