How to Become the Warren Buffet of Precious Metals
The world’s No. 1 in gold mining Barrick Gold flew off Wall Street after “the oracle of Omaha,” Warren Buffett, announced that it had acquired more than half a billion worth of gold company securities in the second quarter of 2022. This was a surprising announcement for the world as Buffett is known to be a long-time “value” investor and has long declaimed his aversion to gold, although the investor had invested billions in silver.
Why did Buffet’s approach change from being an enemy of gold, calling it a “useless cube,” to investing &563.6 million worth of Barrick Gold’s shares?
Here’s what investors can learn from this!
Why Did Warren Buffet Invested in Gold?
After criticizing gold investors for years with shattering statements, Warren Buffett gave in to the bullish rally in the precious metal and became a player in the sector, starting with the world’s No. 1 in gold mining, the Canadian Barrick Gold. It’s called changing your tune.
Warren had been investing in silver but openly disdained the yellow metal. From being an enemy to investing millions of dollars in gold, this real turnaround took the world by storm, giving investors a green signal to invest in precious metals, particularly gold.
It must be said that in these troubled times, investors rushed into safe havens, which brought the price of an ounce of gold above 2,000 dollars for the first time in its history.
With an increase of nearly 30% in 2020, gold became one of the best-performing active assets since the start of the year.
Buffett quit banking simultaneously with this acquisition of a stake in Barrick Gold, and Berkshire Hathaway significantly reduced its scope on banking stocks, which it had nevertheless defended on many occasions.
The conglomerate’s stakes in Wells Fargo and JPMorgan Chase fell more than $3 billion each during the second quarter of 2020. At the end of the first quarter, the company also dissolved its stake in Goldman Sachs, worth about $300 million. These sales represented a 26% drop in Buffet’s stake in Wells Fargo, of which they held 8.4% at the end of 2019.
At that point, Warren Buffett was no longer the largest shareholder of Wells Fargo (dethroned by Vanguard).
What Lessons Do We Learn from Warren Buffet?
The logic of investing in precious metals is generally to allocate a certain share to reduce the volatility of your portfolio, that is, a low positive correlation with the other assets in your portfolio. The advantage is that the risk-adjusted returns will be much better. This is why owning gold or precious metals allows a good allocation of your resources.
The allocation of precious metals in your portfolio must align with your profile, objectives, and investment horizon. The allocation to gold is sometimes lower than other asset classes (although this may tend to reverse) because gold, by itself, does not produce any economic wealth. The price of gold tends to rise during times of uncertainty, such as geopolitical tensions, war, pandemic downturn, dollar depreciation, etc.
However, in a context of distrust of the international monetary system, precious metal investment is much more than an alternative but, above all, a new way to save and consume without totally depending on the financial system.
So, if you were bullish on gold when prices peaked in August 2020, you should be bullish now that prices have corrected and you have a better entry point. Always remember that you only have control over your portfolio and not the external environment, so you should pursue the strategy that suits you best to choose the frequency and the right time to invest.
Reach Out to a Trusted Precious Metal Exchange Dealer Today!
The U-turn of one of the top investors, who was once a proclaimed enemy of gold, encouraged many investors to acquire precious metals with complete peace of mind. And investing in precious metals today is better than ever, considering the current economic uncertainty.
So, if you’re convinced and looking for a trusted gold investment dealer, contact Orion Metal Exchange, a reference name in the precious metal industry.
Call 1-800-559-0088 or visit the website to buy, sell, or exchange precious metal products gold, silver, platinum, and palladium products- and expand your precious metals investment portfolio in the best way.
