It’s not often that you can go to a mainstream financial website and see gold mining stocks dominating the headlines. But when a legendary billionaire investor who used to trash-talk gold is now loading up on mining shares, it’s a news story that the press just can’t resist.
Back in 2011, Berkshire Hathaway CEO Warren Buffett likened gold to a giant, shiny cube that in his opinion was “incapable of producing anything.” A few years later, in 2018, Buffett sarcastically called gold “the magical metal.” So obviously, the Oracle of Omaha didn’t see a gold-sector investment in his future.
Buffett might have scoffed at gold, but the gold price is substantially higher today than it was in 2018 and recently surpassed its peak from in 2011, when he was making his anti-gold comments. This isn’t to disrespect Warren Buffett as he is a highly successful investor, but his track record certainly isn’t perfect.
After all, Buffett has admitted that he doesn’t understand technology and that’s why he didn’t take an early position in tech stocks like Google and Microsoft. That was a mistake on his part, as he could have allowed other, more tech-savvy financial experts to invest in tech stocks on his behalf.
Yet he didn’t do that, and so he missed the boat on the tech renaissance of the 2000’s and 2010’s. Buffett also screwed up with airline stocks this year. He sold off all of Berkshire’s airline-company shares (United, Delta, American, and Southwest) at the bottom during the onset of the coronavirus crisis. Very soon after he did that, those stocks all went up in value.
Looking over Berkshire’s holdings over the past couple of decades, we can discern that Buffett has favored big-bank stocks and avoided precious metals and miners completely. That strategy hasn’t worked out too well for Buffett:
Compared to the significant move in gold, financial-sector stocks have been dead money. So, Buffett’s not in a strong position to continue trash-talking precious metals. I don’t expect him to admit his error like he did with airlines and tech stocks, but Warren Buffett can’t disparage hard assets when they keep proving him wrong.
If he won’t admit his mistake with gold, could Buffett at least switch up his investing strategy now that the gold price is clearly moving north? With the U.S. government cranking up the money-printing machine to pay for massive coronavirus relief funds, there’s no doubt that the dollar will lose value and gold will continue its bull run.
And could Buffett, again without admitting it verbally, finally start to unload some of Berkshire’s underperforming big-bank stocks? As it turns out, an SEC 13-F filing revealed that Berkshire reduced its position in JPMorgan, Wells Fargo, PNC Financial, M&T Bank, Bank of New York Mellon Corp., Mastercard, and Visa, and sold all of its Goldman Sachs stock.
93% Of Investors Generate Annual Returns, Which Barely Beat Inflation.
Wealth Education and Investment Principles Are Hidden From Public Database On Purpose!
Build The Knowledge Base To Set Yourself Up For A Wealthy Retirement and Leverage The Relationships We Are Forming With Proven Small-Cap Management Teams To Hit Grand-Slams!
But here’s the real kicker: the same man who, back in 1998, declared that gold “has no utility” now owns nearly 21 million shares of Barrick Gold, a position worth $563.5 million at the time of purchase. Talk about an abrupt U-turn – the financial media was stunned to see Berkshire Hathaway taking a big stake in a gold miner.
In fact, while Buffett did add to some other positions (Kroger, Store Cap, and Suncor Energy), Barrick Gold was Berkshire’s only new position in Q2. As you would expect, this news item immediately trended on social media. Rich Dad, Poor Dad author Robert Kiyosaki pulled no punches in his assessment of Buffett’s about-face:
Courtesy: Robert Kiyosaki
As usual, Kiyosaki sees what many others unfortunately don’t. Warren Buffett’s purchase of gold-mining and his dumping of financial stocks are emblematic of a negative outlook on the U.S. dollar and on the state of the economy.
Every purchase and sale that Warren Buffett makes is, in effect, a statement of where he thinks the economy is headed. Clearly, he doesn’t believe that mega-banks can earn strong returns on their loans in an ultra-low interest-rate environment.
Buffett is also, through his actions rather than his words, expressing an opinion on high-flying stocks versus underpriced commodities. He didn’t add any tech stocks, and that’s a loud and clear statement that Warren Buffett, value investor extraordinaire, doesn’t see them as a strong value now.
He does see Barrick Gold’s value, though, and that’s encouraging for mining-share investors everywhere. We didn’t need the Oracle’s stamp of approval, but the Buffett boost is a welcome event nonetheless.
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
Protect Yourself Now, By Building A Fully-Hedged Financial Fortress!
Legal Notice: No matter how good an investment sounds, and no mater who is selling it, make sure you’re dealing with a registered investment professional. Use the free, simple search at investor.gov
We are not brokers, investment or financial advisers, and you should not rely on the information herein as investment advice. We are a marketing company. If you are seeking personal investment advice, please contact a qualified and registered broker, investment adviser or financial adviser. You should not make any investment decisions based on our communications. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT recommendations. The securities issued by the companies we profile should be considered high risk and, if you do invest, you may lose your entire investment. Please do your own research before investing, including reading the companies’ SEC filings, press releases, and risk disclosures. Information contained in this profile was provided by the company, extracted from SEC filings, company websites, and other publicly available sources. We believe the sources and information are accurate and reliable but we cannot guarantee it.
Please read our full disclaimer at CrushTheStreet.com/disclaimer