Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Warren Buffett: From Gold-Hater to Gold Bug

Commodities / Gold & Silver 2020 Aug 25, 2020 - 06:37 PM GMT

By: The_Gold_Report


Peter Krauth discusses Warren Buffett's big move into gold and discusses why the price of the metal is likely to climb much higher.

Warren Buffett has long been known as one of the biggest gold-haters around.

Yet in one move he's helped gold go mainstream.

The "Oracle of Omaha's" about face could be the ultimate Buy Signal.

For millions of investors, seeing Buffett dump banks while buying gold is likely to have a profound impact.

But as I'll show you, what's going on in the gold markets goes way beyond Buffett.

Around the world economic conditions have become so extreme, some people are desperately selling their gold, while others are happily buying it.

It's a sad state that proves gold has become more valuable than ever and yet, still has much higher to go.

Dig it Up, Bury it…Then Buy it!

Warren Buffett is widely known for his disdain of gold. For him, it apparently has no utility.

He famously 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."

Yet recent 13-F filings show Berkshire Hathaway just bought nearly 21 million shares of Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) worth $630 million, while selling shares in JPMorgan Chase (JPM) and Wells Fargo (WFC).

Clearly, he's had a change of heart.

This is a big deal, as it's sure to attract much more attention to a sector that is not widely followed.

And that could help support and propel gold to unimagined new heights.

Many self-proclaimed Buffett groupies will find themselves following the Sage's footsteps straight into the gold sector, helping them weather the coming economic storm.

But others are resorting to selling their gold to pay for essentials.

If anything, it's all demonstrating gold's increasingly critical role as both a store of value and a chaos hedge.

Gold is Proving Crucial Around the World

We already know the pandemic lockdowns have had devastating economic effects on business, jobs and the population in general.

But here are a few examples from around the globe that expose this fact on a granular basis.

In Madrid, Spain, some families have now gone several months with no income at all. They're resorting to food banks. Following the lockdown, as businesses were gradually allowed to reopen, a chain of stores called Compro Oro, which buys gold, has seen a booming business.

Customers carefully watch the gold price, and bring in pieces of jewelry to sell for badly needed cash. Meanwhile, many new small investors come in and buy, while other clients make large purchases of gold bars, even at current record prices.

In Lebanon, the story is similar. U.S. dollars have become scarce. Even before the Covid-19 pandemic and recent massive explosion that injured thousands, the country's banking system had broken down and inflation was soaring.

Armed with scarce greenbacks, gold dealers have been doing a brisk business. Many have resorted to selling jewelry and other gold items in exchange for U.S. dollars. Their gold gets melted down and shipped mainly to Europe where eager buyers await to shelter their assets.

In Bangladesh, jewelry shops have seen sales drop to nearly zero. Instead, cash-strapped families devastated by job losses and weaker incomes are selling gold and gold ornaments.

According to Enamul, owner of Sharmin Jewellers, said, "People don't have money due to the pandemic. How will they buy ornaments? They are selling whatever gold they have to meet family needs." Jewelers are typically buying at 20% below market prices.

And in Turkey, the parallels are clear. Its currency, the lira, has been reaching its lowest levels in history versus the U.S. dollar and the euro. Unemployment is just under 25%.

Turks have been hoarding foreign currencies as they've watched theirs fall. It's a trade that's become all too familiar. But now many are trading in those foreign currencies for physical gold, as they've watched the metal climb to all-time record highs. Some are even contemplating selling their cars and houses to buy gold.

And while that certainly sounds extreme, it's also a sign of how dire conditions have become in many parts of the world.

Gold Needs to Digest Recent Gains

Over the past week, gold has bounced back with a vengeance after a hard selloff that took it down by over $200 from about $2,080 to $1,880 between August 6 and August 11.

Since then gold has been steadily climbing back and now sits around $2,000 as I write.

Still, the correction may not have been deep enough or long enough yet to shake out weaker hands. Renewed weakness could still take gold lower to its 200-day moving average near $1,850 or even $1,825.

These would certainly be levels that would make sense to either initiate a larger position or add to an existing one if you don't feel you own enough yet.

As for gold stocks, even news of Buffett's big purchase of Barrick Gold (NYSE:GOLD; TSE:ABX) may not be enough to shift momentum to buying on a very near-term basis.

GDX has yet to best its August high of $44.53. The most likely downside targets are $39 or perhaps even $37 as gold stocks continue to consolidate and work off some lingering froth.

The weakening U.S. dollar is providing some support as it continues to make new lows.

Any bounce to 93.5 or even 95 would likely help towards finding a near-term bottom for precious metals.

Given the macroeconomic picture, an argument could be made that gold's corrected enough and will either consolidate or resume its climb from here. If gold can close this week above $2,000, then this scenario will appear more likely.

Meanwhile, anyone who doesn't own any gold would be wise to start with at least a small initial allocation to gain some exposure.

Buffett's recent move into gold is pivotal as it demonstrates his lack of confidence in the macroeconomy, unbridled central bank money printing, and the eventual inflation effect.

And given his long-time well-known contempt for gold, this bold move should not be underestimated.

I'll keep tracking precious metals price action for their next moves.

Gold could still have to digest recent gains before resuming its climb. Expect volatility. But a legendary climb to unimaginable highs still lies ahead.

Peter Krauth is a former portfolio adviser and a 20-year veteran of the resource market, with special expertise in energy, metals and mining stocks. He has been editor of a widely circulated resource newsletter, and contributed numerous articles to, BNN Bloomberg and the Financial Post. Krauth holds a Master of Business Administration from McGill University and is headquartered in resource-rich Canada.

Disclosure: 1) Peter Krauth: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector. 2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. 3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 5) From time to time, Streetwise Reports and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules