For decades, the credo of investor legend Warren Buffett has been to invest in companies and their value creation instead of speculating on price gains. "Useless" gold had no place in his portfolio. Now the 89-year-old breaks with his own dogma.
It's just a small item in Warren Buffett's portfolio: his holding company Berkshire Hathaway has invested $ 562 million, or just 0.3 percent of its capital, in stocks of gold producer Barrick Gold in recent months. By comparison, Berkshire's Apple stake is worth nearly $ 90 billion. But the investment in one of the largest gold miners in the world, which became known through a mandatory announcement at the end of last week, is causing a stir. Barrick stock now responded by jumping ten percent at the start of pre-trading.
It's a remarkable change of course for Buffett, the fifth richest person in the world. Because his credo has been value investment for decades, investing in value creation by companies as opposed to speculating on price gains. Gold, on the other hand, has no real value in Buffett's previous view, but actually generates costs. "It's dug out of the ground in Africa or somewhere. Then we melt it, dig a new hole, bury it again and pay people to stand around and guard it. It's no use," Buffett reportedly once said. If Martians were to observe this, they would "scratch their heads" in amazement. It is precisely with this "useless" business that Barrick earns his money – currently a lot of money thanks to the gold price rally.
At the same time as he switched to gold, which he had previously disdained, Buffett significantly reduced his holdings in several major banks in the past quarter. At Goldman Sachs, Buffett even dropped out completely. Berkshire only bought in at Bank of America. This shift from bank stocks, whose development is traditionally tied to general economic developments, to precious metal, which is considered a crisis currency, raises the question of whether Buffett's unwavering belief in the US economy has cracked. Just a few weeks ago, Buffett had advised Birkshire shareholders at the general meeting: "You should never bet against America."
Buffett himself did not buy any gold in physical form or as security. The business and thus also the share price of gold producers like Barrick is closely linked to the development of the price of the precious metal, which had reached a new all-time high at the beginning of this month. "It's exciting that Warren Buffett is getting out of American bank stocks, which he had very heavily overweighted, and has now discovered gold," said ntv stock market expert Frank Meyer. He emphasizes that not only the gold price has risen sharply in the past few months, but also the Barrick share price. Gold skeptics have already missed the "first 100 percent" price gain.