Buffett Buys Gold

by JDH on August 15, 2020

Well, that was an interesting article yesterday: Did Buffett Just Bet Against The US? Berkshire Buys Barrick Gold, Dumps Goldman

It appears, according to Berkshire Hathaway’s 13F filing, (and use this link, not the one from the article), bout 20,918,701 shares of ABX.TO – Barrick Gold Corp in the quarter ended June 30, 2020.  On Friday Barrick closed at $35.79, so that’s an investment now worth three quarters of a billion Canadian dollars.  Not bad.

Buffett does not appear to be trying to take control of Barrick.  He “only” bought 1% of their outstanding shares.  This appears to be a simple investment, a bet on the price of gold.

This is interesting because I have not mentioned Barrick on this site since 2012, so nice to see it back in the news.

It is more interesting because Buffett is “anti-gold”, describing it at something you dig out of the ground to put back into the ground.  He prefers to invest in companies that make stuff.

Fair enough.

Interestingly his father, Howard Buffett, U.S. Congressman from Nebraska, was a strong believer in gold, as stated in his paper in 1948: Human Freedom Rests on Gold Redeemable Money.

Perhaps, after 72 years, Buffett the Younger, at the age of 90, is coming around to his father’s way of thinking.

I interpret this as proof that we are now in a gold bull market.  If Buffett is buying, every other institutional investor is soon to follow.

We’ve had a correction in gold, and as the six month chart shows, gold has now corrected close to it’s trend line, so we likely won’t get a better buying opportunity than now.

It’s August, the summer, the “Dog Days of Summer”, so no-one is laser-focused on the markets in general, or gold in particular, but the word is now out: gold is the thing, and now is the opportunity to add to positions.

I don’t follow Barrick, I don’t own it, and I have no plans to buy it, but there are lots of other gold stocks out there that are suitable investment candidates.

My personal favorite is EQX.TO – Equinox Gold Corp; I have a significant position, accumulated over the last three years (I started buying pre-merger), and I’m happy to ride it a while longer.

Enjoy the ride.  Fun times ahead.

See you next week.