One piece of news from last week that certainly helped gold early this week was that Berkshire Hathaway invested in Barrick Gold. Yes: Warren Bufffet, a loud and longtime gold detractor, invested US$565 million in the world’s second largest gold miner.
Buffett is a value investor. He has said many times that gold is unproductive, unpredictable, and useless. So news of this move certainly took the market by surprise.
Lots of points to make:
On Monday, after news of Buffett’s move spread over the weekend, gold miners shone. Gold rose 1.5% but the GDX index of major gold miners was up over 8% on the day. Barrick was up almost 14%.
Generalist money makes things happen. Buffett is fuelling that charge.
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