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Category Archives: Gold Stock

Berkshire Buys Barrick Gold, Dumps Goldman. Did Buffett Bet Against The U.S.?

Tyler Durden wrote . . . . . . . . .

This is going to get awkward.

Berkshire Hathaway’s latest 13F just dropped and contained inside is a signal that none other than the Oracle Of Omaha appears to now be quietly betting against The United States.

Why? Because for years – in fact for as long we can remember – Warren Buffet has denigrated gold:

In a speech delivered at Harvard in 1998, Buffett said:

“(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

He once famously said:

“Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything.”

In his 2011 letter, Buffett noted that for $9.6 trillion you could buy “pile a” — all of the gold in the world, or “pile b” — the entire US cropland (400 million acres) plus 16 ExxonMobils and still have another $1 trillion left over.

“Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold,” he wrote. “I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.”

In 2013, Buffett even went so far as to mock investors betting on gold, saying that there were better places to put your money.

“What motivates most gold purchasers is their belief that the ranks of the fearful will grow,” Buffett wrote in 2012. “During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As ‘bandwagon’ investors join any party, they create their own truth — for a while.”

At Berkshire’s 2018 annual meeting, Buffett compared $10,000 invested in stocks and gold in 1942 (the first year he invested in stocks):

“… for every dollar you could have made in American business, you’d have less than a penny of gain by buying into a store of value which people tell you to run to every time you get scared by the headlines.”

And in his 2019 letter he reiterated:

“The magical metal was no match for the American mettle.”

All of which makes the following even more stunning…

According to the latest 13F, Howard Buffett’s Berkshire Hathaway not only dumped all his airlines – as we learned previously 0 but has also liquidated huge amounts of its exposure to US banks (exiting Goldman Sachs entirely).

  • Berkshire’s JPMorgan Stake Down 62% to 22.2M Shrs
  • Berkshire’s Wells Fargo Stake Down 26% to 238M Shrs
  • Berkshire trimmed its bet on PNC Financial and M&T Bank as well as Bank of New York Mellon Corp., Mastercard, and Visa.
  • Berkshire Exits Goldman stake entirely

And while he modestly added to his positions in Kroger, Store Cap and Suncor Energy, the only new stock he bought in Q2 was… the world’s (formerly biggest) gold miner:

Berkshire took a new stake (20.9 million shares) in Barrick Gold, a holding that was valued at about $564 million at the end of that period.

Of course, we do note that this 13F filing reflects the stock picks of Buffett as well as his long-time deputies, Todd Combs and Ted Weschler. So it’s unclear who exactly put money to work in Barrick.

So, the famously anti-gold investor has abandoned banks – ‘the backbone of America’s credit-driven economy – in favor of a gold miner (which was the largest in the world until last year when Newmont bought Goldcorp).

Is Buffett betting against America with a levered position on precious metals?

Source : ZeroHedge

Read also an article by Buffet’s father at OneDrive:

Human Freedom Rests on Gold Redeemable Money . . . . .

Relative Performance of Gold Miners vs. Gold

NYSC Arca Gold Miners Index/Gold Spot Price ($/oz)

Source : Bloomberg

Junior Gold Miners Stock

GDXJ – Market Vectors Junior Gold Miners

CDNX – Canadian Junior Gold Miners

Enlarge chart ….

Gold vs Gold Miners Stock

Data Since September 2011

Enlarge chart ….

Gold Stock

GDX – Weekly since 2011

GDXJ – Weekly since Inception

iShares CDN S&P/TSX Global Gold Index Fund – Weekly since 2011

BMO Junior Gold Index ETF – Weekly since Reception

Gold Spot – Weekly since 2011

HUI – Weekly Since 2000

Gold Stock Update

HUI Monthly Since 1996

Enlarge chart ….

GDX Weekly

HUI Weekly

HUI Weekly Since 2001

XAU Daily

Gold Stocks Outlook

Steve’s comments:

  • After the 60s-70s bull market reached the top of a major upward leg (the points labeled 1 and 2 on our BGMI chart), more than 5 years elapsed before there was a decisive break to a new all-time high.
  • We shouldn’t blindly assume that the current long-term bull market will continue to track the earlier long-term bull market. Real-time analysis is required at each step along the way, because the current market could end up doing better or worse than the earlier one in response to contemporary fundamental developments.
  • On a ‘big picture’ basis the current bull market in gold stocks is unfolding in similar fashion to the earlier one.
  • A normal sequence would go something like this:
    1. The stock market reverses downward on an intermediate-term basis, indicating the start of a multi-quarter decline in economic confidence.
    2. During the first few months of the downturn, cash — especially the US$ variety — is king.
    3. The Fed panics and either introduces new inflation-promoting schemes or clearly hints that such schemes are in the offing.
    4. Gold begins to trend upward in anticipation of more Fed profligacy and its deleterious effects on money and the economy.

Gold vs Common Stock

Gold and S&P 500 Ratio

Gold Bug Index and S&P 500 Ratio

S&P 500 and Gold Bug Index

Stock and Sector Sentiment

Gold Miners New York

Gold Stock

The next few months will be very interesting to say the least, as there is a potential for a break down below support, but this breakdown has not been confirmed yet and the mining companies could still trend sideways within the 500-600 range.

iShare CDN S&P/TSX Global Gold Index Fund

XGD.TO on sell signal