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Warren Buffett Buying Gold, Signals Stock Market Will Crash?

Jakarta, CNBC Indonesia – One of the richest people in the world, Warren Buffett, who is also the owner of the investment company Berkshire Hathaway Inc which is listed on the New York Stock Exchange (NYSE) with the stock code BRK, apparently eager to spend his investment funds in energy companies and gold mining.

This was revealed in a Canadian media article founded in 1998, The Motley Fool. The information was quoted by The Motley Fool from the disclosure of performance information in the second quarter of 2020 through the 13F document submitted by Berkshire.

Form 13F complies with the rules of the US Securities and Exchange Commission (SEC) is a quarterly report that all institutional investment managers must file with assets under management of at least US $ 100 million.


It said Warren Buffett bought an additional five million shares of Suncor Energy to boost his position in the Canadian energy sector giant.

Suncor Energy is a Canadian company engaged in the energy sector. Suncor Energy’s main focus is the oil and gas mining industry.

The 13F filing also revealed that Buffett sold all of his stake in Restaurant Brands International, owner of the Burger King franchise brand.

Finally, the seasoned investor nicknamed the Oracle of Omaha (the fortune teller from Omaha) made a surprising move by investing heavily in Barrick Gold. Barrick is listed on the Toronto Exchange under the code ABX and NYSE with the code GOLD.

Barrick Gold Corporation is a gold and copper mining company with 16 operations in 13 countries, headquartered in Toronto, Ontario, Canada.

Buffett Buying Gold

Although all three investment moves took investors by surprise, Buffett’s decision to bet on gold was the most confusing for an investor who has followed his investing career closely.

For those in the know, Warren Buffett has enjoyed numerous successes throughout his decades-long career without getting into this rare precious metal stock.

He has had a negative impression of gold over the years. Buffett feels gold has no real value other than being used only for the jewelry industry. Until he finally bought Barrick’s stock, Buffett had never invested in a gold mining or gold company before.

However, gold is highly regarded as an asset safe-haven (safe investment assets) around the world.

It seems that this legendary investor ‘kind of swallowed his own saliva’ against gold, for that was indeed the most practical decision to be made.

According to Adam Othman, author of the article from The Motley Fool, Buffett may be expecting a major stock market crash, and betting on investing in gold would be ideal for making the best of the situation.

Solid Gold Investment

So far, the investment appears to be paying off for Oracle Omaha’s.

Gold prices have surged due to turbulence in the stock market. The stock valuation of gold mining companies has reached a higher level, and Barrick Gold outperformed the price of gold and other gold mining stocks.

Many believe that gold can still continue to rally. Higher gold prices are likely to boost gold miners’ earnings for several quarters.

Barrick Gold reported an adjusted profit of US $ 726 million or the equivalent of Rp.10.16 trillion (exchange rate of Rp.14,000 / US $), an extraordinary increase from the previous quarter, or up 78% from year to year (year on year). The gold miner’s performance exceeded analyst expectations, which only increased by 25%.

Barrick is one of the biggest gold miners in the world. The company also has one of the most efficient gold mining operations in the gold mining industry.

So, it makes sense that Warren Buffett decides to invest in stocks of gold issuers.

He may still dislike the rare and precious metals that are driving Barrick’s profits. However, Barrick’s fundamentals are so strong, and it has a strong balance sheet that makes it an attractive investment during these difficult times.

It is clear that Warren Buffett has an attitude bullish (project an increase) in the shares of gold mining companies and gold at this time.

However, keep in mind that the price of gold is a major factor in investing in gold stocks.

Playing commodities can be risky if there are unexpected variables involved. The price of gold could go up in value if there was another market crash, but it could go down if the situation improved.

A drastic drop in gold prices towards mid-cycle levels can make investors Barrick Gold experience heavy losses. With prices barely touching US $ 2,000 per troy ounce, many gold investors believe that the current gold price is unsustainably high.

If there are positive developments with the global pandemic, it could improve the economy as a whole. The result could be a price drop, and it’s already happening.

The latest data records, thanks to the corona vaccine, the price of gold has not yet risen above US $ 1,900 / troy ounce. Data from Kitco noted that on Monday afternoon (23/11), the spot gold price was at the level of US $ 1,868 / troy ounce.

Warren Buffett’s investment in Barrick has undoubtedly inspired investor confidence in the performance of gold and gold miners like Barrick.

However, the author at The Motley Fool advises to be careful with how much investors invest if they choose to follow Oracle of Omaha’s investment tips.

As for the author, Adam Othman, claims he has no position in any of the stocks mentioned. But The Motley Fool owns shares and recommends Berkshire Hathaway shares. The Motley Fool also recommended the shares of Restaurant Brands International Inc.

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