Legendary investor Warren Buffett has always expressed his aversion to gold as an investment. However, recently the CEO of Berkshire Hathaway made a surprise move, having bought a stake in Barrick Gold Corp., one of the world's top gold mining firms.
On August 17, Warren Buffett unveiled his purchase of 21 million shares of Barrick Gold Corp. to the amount of $563 million. In parallel, the billionaire sold the shares of the leading US banks, Wells Fargo and JPMorgan Chase.
Wall Street experts and most gold investors view this milestone deal as a shift of Warren Buffett’s priorities. Some analysts reckon that the deal undermines the domestic economy because he ditched stocks of the largest American banks in favor of the Canada-based gold miner.
A lot of experts share the viewpoint that the purchase of Barrick Gold’s shares is a stepping-stone for Wall Street. According to analyst Max Keiser, Berkshire Hathaway’s owner is discouraged because leading central banks have lost their influence over mechanisms of the global economy. Warren Buffett does not believe in the efficiency of central banks. At the same time, Berkshire Hathaway is still a heavyweight company in the US banking sector.
Interestingly, some experts disagree with the viewpoint that Warren Buffett revised his stance on gold. Citing Mike Shedlock, an investment advisor at Sitka Pacific Capital Management, the billionaire wants to adjust his portfolio for ongoing turbulence in the financial sector induced by the COVID-19 crisis. In this context, Warren Buffett is also keen to benefit from the stunning gold rally. His financial acumen suggested a quality company like Barrick Gold. A weighty argument is that the company pays solid dividends to its stockholders.
At present, the US equity market is trading at elevated levels. On the week from August 10 until 15, the Dow Jones logged a weekly gain of 1.8%. The S&P 500 also extended its climb with a nearly 1% rise. Besides, the Nasdaq Composite confirmed strong performance of US hi-tech companies.
