Is Warren Buffett Buying Gold in 2020?
US billionaire Warren Buffett recently made news about his acquisition of gold. This surprise is a shock to people who follow him and his portfolio. Welcome to my blog, where everything a beginner needs to learn about stocks, financial management, freedom, and lifestyle can be found. If you haven’t subscribed, do so and don’t miss out. Before we go on, hit your like button, comment and spread the love, your support means a lot to me.
For those neophyte stock investors who would like to learn all basic stock information, then scroll over to my post ‘The beginner’s guide to stock investment 2020.’ In my last post about Warren buffet ‘This 2020 Warren Buffet is buying a stock, should you be buying?’ I spoke on the new stock Buffet is concentrating his money on. Now the same man is shocking the world by buying gold. Before we begin, remember that everything stated here is my opinion and should not be regarded as law. And any figure noted here is accurate for the day 28th of August.
Warren Buffett’s opinion on gold
As said earlier, Buffet has been in the news recently, and gold has been added to his lists of stock. It is known that Warren and Charlie Munger regularly trash gold in the investment world. They have characterized gold in one of their moments as an “unproductive asset”. Warren Buffett explained at an annual meeting in 2000 that he would choose to invest in good businesses and competent managers with products that have always been consumers’ favourite and have a potentially successful future over investing in gold.
He also says that gold is not a valuable product worth storing. According to his point, he and his company won’t store up gold for future growth because even if you save a million tons of gold for hundred years, they will remain as a million tons of gold in the then. He goes on to explain that he would choose to put his money in any other form of investment. Saying that no matter how risky the investment might be or how uncertain the business could be, he would be sure of a reasonable profit in comparison to choosing gold.
Munger, on the other hand, had something similar to say. As a man who speaks very undiplomatically, he has explained that he chose to live a happier life by investing in businesses, people and companies rather than investing in gold. Expressing that those who deal In gold tend to be a horrible crowd to follow as an investor.
With the above submissions about gold, it is evident that the duo is no fan of one of the most costly natural items on earth. But recently the billionaire has acquired gold. The question now remains, “If his conviction on gold is this strong, and if he has valued gold as a non-worthy investment, why is he buying gold? Is he even really buying gold? And is Buffet the one who made this purchase?
The Wall Street Journal said this weekend that Buffet and his company Berkshire Hathaway Inc. joined the league of companies affiliated with gold mining in the USA. This means that the company is now an investor and an advocate for gold and gold investment. The company holds over $500 million in the company Barrick Gold Corp Inc. This company is the second biggest gold miner in the USA.
This 500 million-plus investment gives Buffet’s company the eleventh place on the shareholder’s list. $565 million held in stake, seems to be very far from the nature of Warren. He is a billionaire, and he doesn’t have deals in millions but billions. To support these claims, Buffett has two closer pals that are sort of money handlers for him. They are allowed to pick interest in buying possessions that Warren may not likely buy.
So here is my conclusion;
First, this Barrick Company isn’t a gold company; instead, they are a gold mining company meaning that they don’t sell gold per se but mine gold. So in a sense Buffet did not change his stance. The second point to note is that Buffet never really buys in millions. If you know Buffet, he buys in billions and billions alone. Take companies like Coca-Cola and even his recent buy at BoA, and you will see that he only buys in billions.
So my point here is that he might not be the one buying. It could be his two sidemen doing the buy. But even if he is, he isn’t buying gold but a gold mining company which is a business. I need to state this point because it seemed so amazing. Because Buffet had some link to gold and the company Barrick Gold Inc. the company’s stock value rose significantly, and the value of gold has also gone up. This is all because Buffet is involved in it somehow.
Buffett and Bank
Buffett’s company Hathaway drastically let go of their status in a few of the biggest US Banks. They sold billions in value of the stock from JP Morgan, Chase Wells, Fargo and other money institutions. On Friday Berkshire Hathaway said that it had let go of nearly 100 million shares of Wells Fargo stocks. This took their stock status lower on the companies list.
They did the same for their stocks in JP Morgan, which made them a minority stockholder in the company. Again they sold their entire holding in Goldman Sachs at the end of march earning a few hundred dollars from the sale. He did the same to Bank of New York Mellon, M&T Bank, Visa, Mastercard, and Us Bancorp. All these had a significant impact on the company and its shares. In total, they earned over 12 billion dollars this last quarter from all their sales.
Viewing Berkshire Hathaway’s various sold financial stocks, it was obvious that only two stocks appeared not to be affected like the rest. The US Bancorp and the Bank of America. This is a good indication that if you have these two stocks added to your portfolios, you might need to worry less as Warren has decided not to cut down their stake.
My suspicion on Warren Buffett
Despite being a long-term investor who has several investments and stocks of different companies to his name, it’s kind of suspicious that even at the moment, Warren is hardly buying anything. Not even a single stock whatsoever, except for the stock that was purchased in the last quarter.
This seems to be somehow strange and suspicious to buy a new single stock in a whole quarter. Even with enough cash available in his company and about billions in hand and investment readily available. The question remains, with tons of money available, why isn’t Buffett adding to the long term existing stock?
Possible Reasons Buffett isn’t adding anything new
In the latest quarter, it was recorded that Warren Buffett bought back his stock. This is another obvious sign that Warren is far from investing in several millions worth of investment. According to Buffett, he’s made it known that if he’s buying anything, it’s going to be his stock because there’s nothing he has invested more money in than his company.
With these words, could it be said that; is he scared to buy more stock or uncertainties surrounding his thoughts on companies in this period? Or could it be concluded that he is disconnected at the moment?
Even when there’s currently no shut down of the global economy, what could be behind why is not adding new stock? Another point that could be the cause is, does Buffett know something about the coming years? Will there be a drastic rise and fall in the price of stock and anything relating to the market? Would this result in the crashing down prices? Who knows really?
And the last thing I believe could be a reason for Buffett’s present actions is maybe he is not just ready to invest again. He could be watching and weighing the situation of things. Whatever his reasons are we are all shocked, and it seems the world is keen to know what his intentions are and what these intentions will lead to.
There is so much to know about the investor King Buffet. He is a man with a lot of investment experience, and you can say that his actions always have a reason we need to know why. What are your opinions on Warren Buffett and his actions let me know in the comment slot? If you have not subscribed, then you should be doing so now, to get my latest blogs. Don’t forget that your support is important to me, so be sure to like and share if you found this blog vital to you.
Recommended books for further reading:
- Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage
- The Stock Market Investing Guide #2020: From Beginner to Intelligent Investor within 30 Days — How to Save Money, Generate Passive Income and Reach Financial Freedom
- Practical Investing Advice — Investing for Beginnners
- The Warren Buffett Way
- Smarter Investing: Simpler Decisions for Better Results