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GOLD and Groceries - Buffett's new darlings

Aug 17, 2020

By Kevin Vincent. The world’s most iconic investor has finally taken a seat at the gold table. The news that Warren Buffett has jumped into gold investing is creating goosebumps for longtime gold investors. Why? Until the second quarter of this year, Buffett hated gold. Now it’s his part of his COVID money-making strategy.

Buffett, loaded up on Barrick Gold according to a Berkshire Hathaway regulatory filing released Friday.

Buffett bought just under 21 million shares worth $563 million USD. Buffett held zero shares of Barrick in the first quarter of 2020. Barrick traded down 0.59% to $26.99 Friday. However, the company shot up in after-hours trading when the news broke, and the stock hit $29.

Buffett’s move into gold included him dumping stocks like United Airlines, American Airlines, and he significantly reduced Berkshire’s holdings in financial institutions like JP Morgan, Goldman Sachs, and Wells Fargo.

During a speech at Harvard University In 1998 Buffett shared his thoughts on gold:

“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

During a television interview with CNBC in 2009, Buffett said the following:

“I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money, and there will be a lot — and it’s a lot — it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that."

Buffett’s firm also sold all 18.9 million Occidental shares it had owned at the end of the first quarter.

Berkshire Hathaway bought 3 million more Kroger shares in the second quarter, lifting its investment in the grocer to 21.9 million shares.

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