News that Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B)took a position in a gold miner for the first time may send the metal price higher again. In its quarterly 13-F filing, the fund added Barrick Gold (NYSE:GOLD). After last week’s rough drop, chances are good that gold and silver will rebound for fundamental reasons. Irresponsible Central Bank actions will damage the U.S. dollar.
Gold and silver are the main physical assets investors have to protect the store of value.
Since the coronavirus pandemic started, the Federal Reserve, along with the European Union, boldly printed money to raise asset values. This prevented the market crash (of stocks falling 30%) in March from continuing. Instead, the S&P 500 will reach new highs amid falling employment and a worsening pandemic. Markets grew tired of the asset inflation and are either holding the metals or buying cryptocurrency.
Eventually, the U.S. currency reserve status could deteriorate as uncertainties loom.
Looking ahead, the U.S. election will heighten the unknown. Plus, continued bond-buying from the Fed and zero percent interest rates will no longer lift stocks to new highs.
The Berkshire buy of a miner does not necessarily reflect Buffett’s opinions. The fund has other managers making key decisions. Besides, the gold holding is 0.28% of assets managed. Investors should realize miners face variable costs and its value will fluctuate. Holding gold (GLD) will have less volatility.
