Barrick Gold is up by more than 40% in what is turning out to be a break out year for the gold mining stock. The rally has come at the backdrop of gold prices powering to record highs amid a spike in risk-aversion in the market. The cutting of interest rates to record lows has also worked in favor of gold sentiments in the market.
Buffett Barrick Gold Bet
In recent weeks, Barrick Gold Corp (NYSE: GOLD) sentiments have edged higher on regulatory fillings indicating that Billionaire investor Warren Buffett remains bullish about the company’s long term prospects as a leading gold miner. A confirmation that Berkshire Hathaway purchased 21 million shares of the gold mining company is a development that continues to strengthen the company’s sentiments in the market.
The investment came as a surprise given Buffett has always been a critique of gold. In 2011 he is quoted as saying that owning an ounce of gold for eternity amounts to owning an ounce to the end. Therefore, an investment in Barrick Gold marks a change of sentiments about gold’s ability to generate long term value for the billionaire investor.
The acquisition of stakes in Barrick gold comes at the backdrop of Berkshire Hathaway dumping stakes in the financial sector. Regulatory filling indicate that the firm sold out stakes in JPMorgan Chase and Wells Fargo. The firm has also pared stakes in credit card giants Visa and Mastercard.
Safe-Haven Push
The change in investment sentiments in favor of gold, affirms Berkshire push into safe-haven amid uncertainty in the global economy. The COVID-19 pandemic has taken a toll on many sectors of the economy forcing investors such as Buffet to scamper for safety in safe-havens such as gold.
The global economic outlook is looking increasingly bleak in the wake of a second wave of coronavirus infections. With unemployment levels at record highs, defaults in the financial sector are likely to edge higher. In a bid to hedge against such losses, investing in safe-haven such as gold via Barrick Gold seems more viable for Berkshire Hathaway.
