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What We Know About Buffett's Bet On Gold

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What We Know About Buffett's Bet On Gold

Billionaire investing guru Warren Buffett's opposition to gold has been well-known for decades. Yet on Friday, his company Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) confirmed a stake in gold miner Barrick Gold Corp (NYSE: GOLD).

What Happened: Buffett said in a 1998 speech at Harvard University that gold has "no utility." The commodity is dug out of the ground and melted, only to be put away in storage, where people have to be paid to guard it, he said.

"Anyone watching from Mars would be scratching their head," he said.

Buffett's view on gold hasn't changed over the years. So when Berkshire confirmed in a regulatory filing on Friday a new $562-million stake in Barrick Gold, investors were naturally asking questions.

Why It's Important: It's unclear whether the "Oracle of Omaha" himself authorized the purchase. Buffett is known to give buying authority to his two top right-hand people, Ted Weschler and Todd Combs.

The gold position should be put in perspective. A roughly $500-million stake in a gold miner completely pales in comparison to Berkshire's largest holding, a massive $89-billion stake in Apple Inc. (NASDAQ: AAPL).

Berkshire also doesn't rank as a top-10 shareholder in Barrick, CNBC reported.

Barrick's stock was up 10% Monday morning after what could be seen as a seal of approval from one of the world's greatest investors.

What's Next: Gold prices are up nearly 30% in 2020, and  shares of several gold and silver miners are up even more. Investors and experts are mixed on whether the outlook for the commodities is just as bullish or if the recent momentum will soon run out of steam.

GOLD Price Action: Barrick shares were up 10.6% at $29.85 at last check Monday. 

Related Links:

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Why BofA Is Double Downgrading Iamgold

 

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