— This is the script of CNBC's news report for China's CCTV on August 18, 2020, Tuesday.
Berkshire Hathaway bought stocks of Barrick Gold, analysts said it was an "earthquake event" in the gold market. Its influence was also evident in Monday's trading, financial assets linked to gold all got a boost. In addition to the gains in gold futures and Etfs, shares of Barrick Gold benefited directly, jumping nearly 12% throughout the day and hitting their highest level since February 2013.
We know that Buffett hasn't really been a big fan of gold. Many believe that it may not be done by Buffet. But it is also a very important sign that even Warren Buffett's Berkshire Hathaway can't ignore, or want to miss, gold's rise. As for the immediate reason for buying Barrick gold, some believe it was to hedge against its holdings in Apple. Berkshire Hathaway owned more than $90 billion of Apple stock as of the second quarter, and the company is up more than 55 percent this year. Tech stocks as a whole have risen remarkably this year, it has raised some alarm bells.
On the other hand, in the broader context, it is a follow up to the rising trend of gold. The price of gold has risen nearly 50% since last May. In addition to Buffett, we have seen a number of other financial industry titans openly bullish on gold or announcing that they hold golds.
They include Dario, founder of Bridgewater, the world's largest hedge fund; Jeffrey Gundlach, founder of DoubleLine Capital; and Paul Tudor Jones, a prominent hedge fund manager. But they don't invest in gold the same way. Bridgewater, for example, has recently been buying gold EFT. Its two gold Etfs, SPDR and iShares, which both track physical gold. had a combined value of more than $1 billion as of the second quarter.
As gold prices have risen, inflows into gold Etfs have totaled $252bn so far this year and this year's inflow could be a record. One clear market message is not to stand at the opposed position to Fed.
This time, Buffett chose to have gold mining companies' shares directly. Gold miners' share prices tend to be more volatile due to operating conditions than spot and futures gold prices, but the benefit is that they offer a dividend.
Based on more than a decade of historical data, gold miners' share prices have generally underperformed gold futures.
As gold miners are seeing an increase profit under outbreak, that situation may reverse. Acquisitions and mergers between companies could also boost share prices.
ETF DATABASE CIO, DIRECTOR OF RESEARCH
Fundamentally this is a commodity of psychology, it is worth if people are willing to pay for it, and when people getting nervous, they need now it is the time to buy gold, i don't see any particular reason for that to change, until we see any change in sentiment change, people are really want to put all of their money back on risk , and i just don't see that happen in over the next few month, obviously, the broad market being doing great, but what we are see in gold, just further evidence that a lot of investors are actually in kind of risk off mode, i mean despite what's going on in equities. We have negative flows in equities in the last 3 months. But here we are talking about gold and gold stocks. I think it is quite risky, for all the years susceptible to both the movement and the price of gold and the movement of these companies, and when you start to put company to work, there is only a single stock blow up risk when you start putting companies to work, right? Things happen, management can be bad at their job, there are all sorts of things that can go wrong in a company.
Is it a good choice for Buffet to invest in gold? We will keep an eye on that.