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Barrick Gold stock price soars after Warren Buffett's buys a stake?


Has Buffett bought gold? Buffett has not changed. Buffett does not want to hold physical gold, but he has never said that he will not buy shares in gold mining companies.


Looking at the entire market, there are not many stocks that fit Buffett's trading. And Barrick Gold Company is just one of them. Buffett bought nearly 21 million shares, and the current share value is $563 million.

We now look at the underlying logic of Buffett's purchase of Barrick Gold stock.

Compared with physical gold ETFs, gold mining companies can respond positively to market conditions. There are financial reports to analyze, With dividends and stock repurchase plans, gold mining companies have the right to reward shareholders through capital return plans.

In contrast, the physical gold ETF has no gains.

The market generally believes that it is still in the upward cycle of gold prices. The current international environment is one where black swans emerge one after another. While paying attention to the gold market, we must also keep an eye on changes in international politics, economy, and finance. As the US election approaches, unexpected news will increase. Based on experience, every three weeks, there will be a large-scale friction event in the United States or related countries, which will help the gold bull market.

Due to the strong demand for gold as a currency hedging tool, it is a reasonable phenomenon that gold prices are supported. Due to the epidemic, there will likely be a decline in the middle, or even for some time, but it is unlikely to fall sharply.

This upward cycle will create a favorable business environment for gold producers. According to the existing market conditions, gold producers can put new mines into use, or temporarily not use them, control costs, and the operability is very flexible. The management of most gold mining companies is still relatively conservative on large-scale capital expenditures.

This not only brought record-breaking profit margins, but also set free cash flow expectations to a new high, and is expected to further encourage companies to significantly increase shareholder dividends.

Barrick Gold Target Value
Barrick Gold Target Value

Barrick Gold Revenue
Barrick Gold Revenue

Barrick Gold Business
Barrick Gold Business

This is very much in line with Buffett's stock selection philosophy and is a wise move by Buffett under the premise of uncertainties and uncertainties in today's market environment. Of course, we also saw that Buffett only used a very small position area for investment. And I think

This investment will not be Buffett's long-term investment. As gold mining stocks are affected by the cycle, their trend will suddenly reverse. Therefore, Buffett sold bank stocks, that is, because of the current market environment, various uncertainties surrounding the US election, and the confrontation between China and the US, and thus began to reduce investment in financial stocks.

With the purchase of a large number of shares of Barrick Gold this time, it is obvious that Barrick Gold will bring him huge returns. The stock will reflect the value of gold for most of 2020. The stock has grown 45% so far this year. After Berkshire’s investment, the stock has risen 8.11% in after-hours trading.

Barrick Gold stock price chart
Barrick Gold stock price chart

From the above analysis, it is easy to see that Buffett's attitude towards the price of gold is positive. This news has greatly encouraged the gold bull market. Many people naively think that Buffett's sunset is over. In fact, in the real world, the managers of global 100 trillion dollar fund management companies are all staring at Buffett. Currently, only about US$1 trillion is invested in gold, and investment in gold is less than 1%. As Buffett now invests in gold assets, the market expects that global capital allocation will increase significantly.

The positive sentiment surrounding gold means that Bitcoin's valuation will be pushed up. Because Bitcoin is considered digital gold, the price trend between gold and Bitcoin shows a certain correlation.

Since late March, since the global stock market crash, Bitcoin and gold have risen simultaneously. This shows that more and more investors are beginning to regard Bitcoin as a valuable asset, and I hold an open mind about Bitcoin. For Bitcoin, there is already a lot of controversy in the investment field. However, human society is always changing, some controversial emerging things, or will become mainstream things in the future, we should always pay attention to their development.

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