Warren Buffett has invested $562 million in a gold mining company, the Canadian Barrick Gold.
There would be nothing unusual were it not for the fact that the American billionaire has always been hostile to gold, almost as hostile as he is towards Bitcoin.
Specifically, his Berkshire Hathaway bought 21 million shares of Barrick Gold, one of the world’s largest gold mining companies, with mining operations in 13 states.
Listed on the NYSE and Toronto Stock Exchange, after the announcement of the investment by Warren Buffett’s company, the price of the shares literally soared by 12%. Since the beginning of the year, the value of GOLD (the stock ticker on the NYSE) has increased by 62%.
Off the banks, Buffett invests in gold
It’s no surprise that Warren Buffett changed his mind about gold. After all, what is considered the ultimate safe-haven asset has recently hit its historical record, going to a price of over $2,000 an ounce.
Gold has probably been affected by the global economic crisis triggered by the Coronavirus. And as the dollar depreciates in the wake of the inflation generated by the Fed’s liquidity injection, investors are once again looking at gold as the real “store of value”.
Even Warren Buffett is not exempt from such reasoning. And it is no coincidence that, in addition to investing in Barrick Gold, he also sold some of the shares he had in institutions like Goldman Sachs, Wells Fargo and JP Morgan.
In March, he sold his airline shares. A choice that turned out to be a good one considering the almost total shutdown of flights between the various states in the wake of fears about the spread of the Coronavirus contagion.
Warren Buffett, after Barrick Gold, will he choose Bitcoin?
Warren Buffett didn’t endorse gold just like he never did Bitcoin. About the precious metal he said:
“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”.
Then came the Coronavirus and an unprecedented economic crisis that caused the price of gold to skyrocket. Much like the price of Bitcoin is going up. The two assets seem to be correlating again.
As gold hit record highs, Bitcoin’s resistance of $12,000 was broken again. We are still far from the $20,000 peaks reached in December 2017, but this time Bitcoin, strengthened by the halving, seems to be surrounded by a wave of optimism and interest that has never been so strong.
Who knows whether Buffett will eventually change his mind about Bitcoin and cryptocurrencies too. During the charity dinner with Justin Sun, who gave him a Bitcoin, Buffett said for sure: his grandchildren would rather receive their inheritance in dollars than in Bitcoin.
Days after the dinner, he reiterated the concept by saying that cryptocurrencies have neither value nor utility. It was February, the market was going up. It then collapsed and slowly and inexorably recovered, demonstrating a resilience that was unexpected for some.
This resilience could eventually convince even the most hostile that cryptocurrencies have a future and that it is worth betting on them.