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Warren Buffett traded Goldman Sachs for gold
- miles 6y agoSurprising move from the man who said something along the lines of[1]: "Gold gets dug out of the ground in Africa, or some place. 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." [1] https://quoteinvestigator.com/2013/05/25/bury-gold/ https://quoteinvestigator.com/2013/05/25/bury-gold/
- theredlion 6y agoI don't think that quote makes this move surprising
- klodolph 6y agoNot sure I count that as a surprise--in one breath I'll talk about how C is a terrible language, and in another breath I'll talk about my latest project which I'm writing in C.
- nurettin 6y agoHe would probably have an equally or more estranged view of goldman sachs.
- malux85 6y agoI think thats a reflection on his thoughts on Goldman Sachs more than anything
- soulofmischief 6y agoBuffet was commenting on the social absurdity of the situation, but that has little bearing on his investment strategies. Money is money, and I'm sure Buffet has similar contempt for quite a few industries he's invested in.
- cafebabbe 6y agoA very forgiving description for what is just plain hypocrisy.
- dunce2020 6y agoThat's not hypocrisy.
- thedudeabides5 6y agoYeah it’s called “shifting the portfolio” and seems a reasonable thing to do for the worlds best fundamental investor in this time of unlimited printing.
- WealthVsSurvive 6y agoYeah, he's actively betting on people making poor choices in times of panic, not on Gold. Gold is merely the medium. It's not hypocritical at all.
- soulofmischief 6y agoIf I think that fidget spinners are a stupid trend, but I know a guy who will buy 100 boxes from me, I'm going to make that transaction. There is nothing hypocritical about this. I can happily take money from people while holding them in contempt. Don't you do this at your own job when you get a paycheck from your boss?
- fspeech 6y agoHe has investment managers who can make independent decisions. Selling out of GS is obviously his move. Buying a gold miner? We can't be sure.
- divbzero 6y agoThere’s also a difference between buying gold and investing in a gold miner: the former is purely speculative while the latter can provide a stream of income.
- waihtis 6y agoThere's not much utility to many things in daily life if you scrap it to its base components. It reminds me of the story of how Steve Jobs got John Sculley, then CEO of Pepsi, to join Apple: “Do you want to sell sugar water for the rest of your life or come with me and change the world?”
- onetimemanytime 6y agonot surprising at all. His goal is to make money (legally) so if people drive the price of gold up, he will profit if possible. Very simple. He will also sell if he thinks it no longer makes investment sense.
- missedthecue 6y agoWell he didn't buy gold, he bought shares in a company whose main business is gold mining.
- raverbashing 6y agoThis reminds me of that "sells shovels" way of becoming a millionaire
- refurb 6y agoThe headline hides the fact he’s not buying gold, but rather a gold mining company. Yes, the stock tracks the prices of gold, but the stock beat gold by 45% so far this year. It sounds like buffet is investing in a mining business not actual gold (albeit they are linked somewhat).
- vijayr02 6y agoEquity in a gold mining company is a leveraged play on gold: since the company has debt, the equity will react more than the price of gold (on both the upside and the downside) with a floor at 0. So he's purchased a call option on gold.
- vitobcn 6y agoThe gold mining company can generate future incoming cashflows, gold doesn't.
- vijayr02 6y agoThe equity in the gold company is a call on the gold in the ground: the cash flows of the company come from extracting this gold. Getting a bit more detailed, the leverage comes from 2 elements: (a) operating leverage i.e. company generates more revenue with same fixed operating costs and (b) financial leverage i.e. company generates more net operating income with same fixed interest costs. The basic point is that the cash flows all come from extracting gold, so the equity is a derivative on this underlying.
- pete762 6y agoI see no problem here. He is buying a gold miner, so he is buying a business profiting off this weird desire for gold. You could basically say the same about chocolate: "People pay money to buy what is basically compressed sugar to then die from diabetes" (little exaggerated). Doesn't mean it's not profitable to own chocolate companies (as Buffett does)
- muzika 6y agoThere must be something coming to our economy soon if he is willing to bet so much on gold.
- loxs 6y agoI don't think that 560M of Berkshire's stock qualifies for "bet so much". It's a drop in the bucket.
- muzika 6y agoThank you
- erk__ 6y agoGold is currently at all time high so he may alrady have won on it.
- mvn9 6y agoOr something is coming to Goldman Sachs. With zero-interest rates and quantitative easing, there is no need for countries to borrow money because they can start printing it. At the same time, China controls more and more business processes which leaves less to companies that operate within Goldman Sachs' merger and acquisition world. Taken even further, market economies could come to an end because they cannot exist in a world where China can be a loss-leader in every strategically important market. If China is poaching TSMC's engineers [1], what does stop them from doing that to all relevant production processes? Either TSMC and all the other companies need artificial profits to pay more to their engineers or there need to be other barriers. Either way, the importance of markets could decline and so could Goldman Sachs. [1] https://news.ycombinator.com/item?id=24129861 https://news.ycombinator.com/item?id=24129861
- redis_mlc 6y ago> market economies could come to an end because they cannot exist in a world where China can be a loss-leader in every strategically important market. This. Already happened with rare earth processing and pharma.
- mxschumacher 6y agoBerkshire's public equity holdings are worth about $215bn. The Barrick position represents about 0.25% of that. It really isn't a big deal. Aside from Buffett, Todd Combs and Ted Weschler each have about $10bn to invest - it is entirely possible that they made this investment without consulting Buffett (they don't have to ask for permission). In the past they've also bought Amazon - another non-Buffett pick.
- kstenerud 6y agoHe's not buying actual gold; he's buying into a gold mining company.
- ralph84 6y agoBuffett spent the last six months panic selling. "Be fearful when others are fearful" is his new motto. He doesn't have the same political connections he had during the GFC to get in on the sweet government-backed bailout deals this time around.
- onetimemanytime 6y agoNot connections, this time the FED bailed out companies. Last time they had no government cash or was very scarce so they had to call the one person with a purse. And Buffet made the rules, accordingly to the power he held over the borrowers.
- mxschumacher 6y agoMoving less than 5% of one's portfolio can hardly be considered panic selling. The long equity exposure is over $215bn.
- totalZero 6y agoDollar delta changes as stock rallies. If you want to maintain a fixed dollar exposure, you can trim your position when stocks rally and add to your position when they depreciate.
- moneywoes 6y agoFor a gold miner* misleading title
- mxschumacher 6y agothe ticket symbol of barrick is GOLD
- totalZero 6y agoCaterpillar is CAT, but you don't see headlines that say "Blackrock traded Microsoft for cat."
- ramblerman 6y agoClarification for anyone going off the title. He bought stock in a gold mining company. Not gold itself. I find the title to be a bit disingenous.
- blackrock 6y agoI suspect that gold is a very common metal throughout the inner solar system, and the asteroid belt. It’s only valuable now, because of its rarity on earth. But once we can mine the lower gravity of Mars, then someone might dig up a gold mine. And Venus I would suspect has a lot of gold. If we can slow it’s runaway global warming, then we might be able to establish a colony there, and mine gold. The same concept goes for Mercury. I’m surprised that the Moon hasn’t revealed trace elements of gold yet. I suspect that it might be buried deep inside the core, where it sunk, while the moon was still molten and forming. If someone can find a gold mine deposit there, then they can build a mass driver to launch it on a return trip back to earth. Or just use it to build new spacecraft in outer space.