NGD - Does Buffett's Bet On Gold Signal It's Time To Buy Again?
Warren Buffett’s Latest Market Maneuvers Have Investors Looking At Gold Again
I’m sure that by now you’ve heard the news and obviously gold stocks are surging because of it. Late last week it was revealed that Warren Buffett started taking a position in gold stocks; namely Barrick Gold (GOLD Stock Report). Berkshire Hathaway (BRK.A Stock Report) bought 21 million shares of Barrick worth some $564 million in the last quarter.
However, the action comes as a bit of a surprise to some “Buffettites” who’ve followed his moves for decades. The “Oracle of Omaha” as he’s been labeled, has been critical of gold. He’s gone as far as saying that it isn’t as good of an investment as businesses, farms, real estate, etc. But there’s no denying the fact that the precious metal has been on fire in 2020.
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After dropping from its all-time high of $2,089.20 last week, the price of gold has mounted a mini-rally. Will the “mini” rally turn into the next leg in a longer uptrend? If Buffett’s latest moves are to be believed, that could be the suggestion right now. Since lows of $1,874.20 last Wednesday, gold prices have bounced back by as much as 6.8% so far.
Barrick Gold Stock Surges On Monday
Obviously gold prices weren’t the only thing on the move starting this week. Barrick Gold stock gapped up to open at $29.62 and continued to highs of $30.27 during the first half of the day. Considering that Friday saw Barrick Gold stock price close at $26.99, this was a noticeable move. GOLD stock also saw its highest share volume day on August 17th following the Berkshire news.
But let’s also not forget that a bet of this size isn’t necessarily breaking the bank for Buffett. Compared to its $89 billion position in Apple stock, this is “peanuts”. However, it did put the firm as the 11th largest shareholder of the gold mining company according to FactSet data.
Barrick wasn’t the only gold stock moving higher on Monday. With an industry like this, sympathy trades are always in the spotlight. That’s especially true following news of a gold bear turning into a bull.
Gold Stocks Trading Higher Following Bullish Berkshire
Whether or not the Oracle himself actually placed the trade is second to what it represented for the firm in my opinion. It also helped trigger an about-face for many gold stocks this week. That’s considering the fact that so many had gotten sold down on by Friday amid exuberance on the potential for the economy getting back to normal.
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Kinross Gold stock (KGC Stock Report), Hecla Mining (HL Stock Report) and New Gold Inc. (NGD Stock Report) had all surged higher on Monday. Among the trio, New Gold stock posted the highest percentage gain, moving over 8% during the session. On the higher-priced end, Franco-Nevada (FNV Stock Report) and Royal Gold Inc. (RGLD Stock Report) both turned green on Monday. Furthermore, the news sparked a move that so gold stocks nearly fill last week’s sell-off gap.
Will this mark the next leg for gold? That will depend on many more factors aside from Berkshire buying shares of Barrick Gold stock. Comment with your thoughts below on where you think gold is heading next.