Over the past few years, investors have poured into low-yielding Treasury bonds, perceiving them as the safest place to be during the global economic tumult. But, according to Warren Buffett, bonds are one of the most dangerous places for investors to put their money over the long term — and that’s not going to change.

“The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in measuring risk) but rather by the probability — the reasoned probability — of that investment causing its owner a loss of purchasing power over his contemplated holding period,” Buffett writes for Fortune magazine in a piece billed as an adaptation of his upcoming annual letter to shareholders. “Assets can fluctuate greatly in price and not be risky as long as they are reasonably certain to deliver increased purchasing power over their holding period. And … a nonfluctuating asset can be laden with risk.”

The risk for bondholders — and investors in other currency-denominated assets like  money market funds or bank deposits — comes in the form of inflation. Buffett says that throughout history, inflation and income taxes have eaten away at bond returns. And, today, with bond yields so low, “Right now bonds should come with a warning label,” Buffett says.

Since he took over Berkshire Hathaway in 1965, the purchasing power of the dollar has fallen 86%, Buffett says. Continuous rolling of Treasury bills over that period would have produced a 5.7% average annual return, he notes — but 4.3 points of that would have been eaten away by inflation. The other 1.4 points would have been lost to income taxes, he adds.

Buffett says he doesn’t like currency-based investments like bonds right now, though for liquidity reasons Berkshire owns substantial amounts of them.

Buffett also is lukewarm on another class of assets — those “that will never produce anything, but that are purchased in the buyer’s hope that someone else — who also knows that the assets will be forever unproductive — will pay more for them in the future.” Gold is the biggest example, and, while he doesn’t explicitly say it, Buffett hints at the idea that gold may be in a bubble right now, driven higher by fear and crowd-following. In general, he is skeptical of gold because it doesn’t produce anything or grow in size the way that a company might.

The third main category of investments — his preference — is “productive assets”, Buffett says, citing businesses, farms, and real estate. “Ideally, these assets should have the ability in inflationary times to deliver output that will retain its purchasing-power value while requiring a minimum of new capital investment,” he says.

Over the long term, the ability to keep pace with — and, in fact, grow faster than — inflation makes productive assets the place to be, Buffett says. “I believe that over any extended period of time this category of investing will prove to be the runaway winner among the three we’ve examined,” he says. “More important, it will be by far the safest.”