Warren Buffett is now betting on gold mines

S.he American investor Warren Buffett has had a lucky hand for decades. There were repeated shifts in the portfolio: Most recently, he threw airlines on a large scale from the portfolio of his investment company Berkshire Hathaway. These simply no longer met his profitability criteria. But during the Corona crisis, Buffett was noticeably reluctant to make new acquisitions. This reluctance has now fallen, as the investor announced on Friday after the market closed in the United States.

After keeping the banks in line for a long time, this is now probably the end: Berkshire Hathaway has reduced its stake in the two big banks Wells Fargo and JP Morgan. At Goldman Sachs, Berkshire had even completely withdrawn, according to a message from the company, which lists the investments as of June 30. In July, however, Buffett had topped up at Bank of America. The investment company now owns a total of around one billion Bank of America shares valued at $ 25.8 billion.

What is more interesting, however, is where the money is now flowing instead: Buffett is betting on gold mining stocks. Specifically, Berkshire bought 20.9 million shares of Barrick Gold: that’s around 1.2 percent of the company’s shares, which are worth around $ 565 million. The stock price rose about 7 percent after the hours of trading, even if Barrick is just a minor position for Berkshire.

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To the detailed view

Warren Buffett’s rejection of the precious metal was legendary for a long time. Many will remember his performance at Harvard University in 1998. There he said, “Gold is being dug out of the ground. Then we melt it down, dig another hole, hide the gold in it again, and then pay people to stand around and guard it. Gold is just useless. If Martians saw that, they would scratch their heads. “

But Buffett also calculated it coolly in a letter to shareholders from 2011: If all the gold in the world had been melted down, it would have been worth around 9,600 billion dollars at the time. Or for that amount you could buy all of the farmland in the United States and still buy a company like Exxon Mobil 16 times – the most profitable company in the world at the time. Farmland and the corporations would then provide income while gold just lying around.

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To the detailed view

Where did the change of heart come from? The fall in gold prices in 2013 led many producers to rethink their approach. Many gold producers took the plunge in prices as an opportunity to bring their balance sheets into shape. Depreciation was made and less profitable units were sold. Now that gold is rising again, it pays off as production costs have remained stable. In view of these numbers with the currently rising gold prices, Buffett could not resist either.

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