Fake Headline: Warren Buffett Buys Gold

Kitco says Warren Buffett buys gold

If Kitco would have changed the headline slightly to "GOLD" it would have been accurate but misleading.

GOLD is the symbol for Barrick, a gold miner. It pays a dividend. 

Kitco enhanced its poor headline with a number of Tweets that mostly made the same purposeful mistake.

Not exactly.

Peter Schiff gets the headline correct but Buffett is not tuning into Schiff.

Huge Cave In?

Sea of Change?

Not really. Buffet knows financials are struggling due to Covid. And Barrick pays a dividend.

Barrick Dividends

Barrick Gold Dividends

The above from the Dividend Investor.

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Buffett Statements

  • 1998 Harvard Speech: “(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.”
  • 2009 CNBC Interview: “I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money, and there will be a lot — and it’s a lot — it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that."

Terrible Timing

Buffett's announcement nailed the top. 

A year ago, Buffett could have bought Barrick for $11.50. In April, Barrick was on sale for $12.61. 

I cannot find what price Buffett paid. We do know Berkshire holds 20.9 million shares valued at $563.5 million at the end of the quarter.

Huge Contrarian Indicator Again?

Buffett was a huge contrarian indicator in 1998 and 2009. Perhaps Buffett provides another one now. 

Regardless, there is no indication Buffett has changed his mind or that buying Barrick represents a sea of change. Barrick is a mere 0.3% of Berkshire's holding.

OK Buffett Dumped Goldman Sachs and some of his Wells Fargo holding, and added to Kroger. 

But this is neither a huge cave-in nor a fundamental sea of change regarding gold. Potentially it is a short-term sell signal that corresponds to the recent pullback.

Addendum

I am not calling a top in gold and I am very heavy in miners. The point of this article was to take exception to the misreporting that Buffett bought gold.

Mish

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