‘Buffet is buying gold stocks and he is selling financials’

By Jit Kumar
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Believe it or not, Warren Buffet is betting big on gold these days.

To be specific, his firm Berkshire Hathaway bought gold mining shares to the tune of over $500 million in Barrick Gold in recent times. This was disclosed by Peter Shiff in a recent podcast, citing a disclosure by the firm.

Barrick is the largest gold company in Canada by market capitalisation.

Schiff says that Buffet who once publicly expressed his reluctance to consider the precious yellow metal as an investment, wouldn’t be buying gold stocks if he wasn’t bullish on gold itself. And this seems to indicate that Buffet knows exactly what’s going on in the economy and that gold is money.

“In order to get income from your dollars, you need to invest those dollars. You need to loan it out. You need to buy a bond. You need to buy real estate. You need to buy stocks. But what if you think all of those markets are overpriced and you don’t want to use your dollars to buy an income-producing asset? What are you going to do with them? Well, Buffet is telling you — convert them into gold,” he said.

According to Schiff, gold stocks are a leveraged bet on gold. With gold prices soaring and the US dollar falling, global investors are heading toward the safe haven of the precious yellow metal

The American financial commentator, in fact, suspects that Berkshire Hathaway might have more gold mining stocks in its portfolio.

“I’m willing to bet that Berkshire Hathaway might actually own another gold stock in addition to Barrick Gold. And the reason I feel that that’s possible is because Warren Buffet knows that once people know that he’s buying gold stocks, well, now he’s going to have a lot of competition.

“So, if Warren Buffett is smart, he knew that he would have another seven-week window to quietly buy more shares of Barrick Gold before the street wised up to what he was doing, and maybe buy more shares of other gold mining companies,” he said.

According to Schiff, gold stocks are a leveraged bet on gold. With gold prices soaring and the US dollar falling, global investors are heading toward the safe haven of the precious yellow metal.

“In order to buy gold stocks, you generally have to be super-bullish on gold, because you want to have an investment that is leveraged to the price of gold, meaning that it will go up more than the price of gold if gold goes up. So by buying Barrick Gold, Buffett is showing that he’s even more bullish on gold,” he said.

In his podcast, Schiff also claimed that while on the one hand Berkshire Hathaway has been buying gold stocks, on the other hand, it’s liquidating its positions on financials, particularly banking stocks.

“He’s buying gold stocks and he is selling financials. Now, he’s not completely out of the financials, but the writing is on the wall,” he said.


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