Buffet Buys Gold - avalanche to follow

[r3volution 3.0]

He bought half a billion dollars worth of Barrick (GOLD), the largest gold miner in the world by ounces.

He's doing it wrong, though, too conservative (Barrick is far from a pure gold miner and they're already overvalued in PM terms).

...dumb dumbs (or people who don't know this market) buy the big overvalued companies.

But, the fact that a vocally anti-gold person like Buffet is putting ~1% of his multi-billion fund in PM is huge news.

If others like him do this, gold easily goes to (pick an arbitrarily large, extraordinary number).

 

[Brian4Liberty]

He bought half a billion dollars worth of Barrick (GOLD), the largest gold miner in the world by ounces.

He's doing it wrong, though, too conservative (Barrick is far from a pure gold miner and they're already overvalued in PM terms).

...dumb dumbs (or people who don't know this market) buy the big overvalued companies.

But, the fact that a vocally anti-gold person like Buffet is putting ~1% of his multi-billion fund in PM is huge news.

If others like him do this, gold easily goes to (pick an arbitrarily large, extraordinary number).

I’ve been lucky in that Buffet has pumped up a couple of my stock picks recently. I only hold Barrick via GDX. Unfortunately, I’m a drop in a bucket compared to him. A gold stock that I (and Ron Paul coincidently) had back in 2006 went up nicely when I believe Soros or Buffet took a liking to it.

 

[r3volution 3.0]

I’ve been lucky in that Buffet has pumped up a couple of my stock picks recently. I only hold Barrick via GDX. Unfortunately, I’m a drop in a bucket compared to him. A gold stock that I (and Ron Paul coincidently) had back in 2006 went up nicely when I believe Soros or Buffet took a liking to it.

There's nothing wrong with owning the GDX or GDXJ, but, if you think you can evaluate financial statements, there are larger opportunities.

Frankly, I'm amazed that Buffet, stock picker par excellence, picked GOLD.

That's what a person who knows nothing of the market would pick because he heard of it.

 

[r3volution 3.0]

Or maybe he picked it because he thinks it's big enough that no one will try to nationalize it, which is a serious concern.

The hat trick is to make a ludicrous amount of money and then send it abroad, along with oneself, before the capital controls come into effect.

 

[devil21]

But is he pied pipering into miners, GLD and SLV instead of physical, so that the fiat remains "on the plantation"?

I betcha Warren has a phat ass stash of physical himself but must only play with various equities for his public BH disclosures.

 

[Brian4Liberty]

There's nothing wrong with owning the GDX or GDXJ, but, if you think you can evaluate financial statements, there are larger opportunities.

Frankly, I'm amazed that Buffet, stock picker par excellence, picked GOLD.
...

Yep. Better to invest in the individual stocks in an index or ETF that perform the best. Holding an ETF means you hold the winners and losers. More of a category or sector play. Many considerations come into play with individual stocks. Future earnings, value, stability, taxes, management, dividends and momentum are just some factors. Buffet can create his own momentum, which comes in handy. Look at Apple. Don't underestimate Buffet's influence on that stock.

 

[Brian4Liberty]

But is he pied pipering into miners, GLD and SLV instead of physical, so that the fiat remains "on the plantation"?

I betcha Warren has a phat ass stash of physical himself but must only play with various equities for his public BH disclosures.

He probably does have a stash of physical. But miners is more of an investor play. Better liquidity.

 

[pmbug]

I'm guessing Buffet (or his investment team if it wasn't a personal decision) doesn't move a large chunk of money around unless he's familiar with the company management and possibly government regulators of the industry. I've got to think he has doors open to information that Joe Sixpack does not.

 

[RonZeplin]

 

[r3volution 3.0]

Yep. Better to invest in the individual stocks in an index or ETF that perform the best. Holding an ETF means you hold the winners and losers. More of a category or sector play. Many considerations come into play with individual stocks. Future earnings, value, stability, taxes, management, dividends and momentum are just some factors. Buffet can create his own momentum, which comes in handy. Look at Apple. Don't underestimate Buffet's influence on that stock.

A mine (i.e. hole in the ground with a liar standing next to it) is especially tricky. But it can be done with less than Buffet-level stock-picking skills. Apart from the usual analysis of the financials, you need some industry-specific knowledge, e.g. of the different ways that product in the ground is defined (proven, probable, etc). You also need to understand the life-cycle of a mine so that you can get in at the right time, i.e. after the most extreme risks are gone, but before everyone else realizes that and the upside is too limited. The ETFs and the like will do extremely well in this bull market, and that's probably what most people should focus on; but, if you're willing to do the work, there are really exceptional opportunities here, even after the recent run up. To give an idea of what I mean, gold is up about a 30% since the March lows, GDX 65%, GDXJ 85%, silver 115%, and good quality individual junior miners nearly 200%. And that out-performance of the (perceived) riskier assets will only increase. I like to apply a fairly conservative risk filter, to weed out the riskier bets, and then pick the most undervalued company that made the cut. In many cases, the valuations are still insanely low, based on current metal prices, nevermind likely future prices.

 

[flaversaver]

A mine (i.e. hole in the ground with a liar standing next to it) is especially tricky. But it can be done with less than Buffet-level stock-picking skills. Apart from the usual analysis of the financials, you need some industry-specific knowledge, e.g. of the different ways that product in the ground is defined (proven, probable, etc). You also need to understand the life-cycle of a mine so that you can get in at the right time, i.e. after the most extreme risks are gone, but before everyone else realizes that and the upside is too limited. The ETFs and the like will do extremely well in this bull market, and that's probably what most people should focus on; but, if you're willing to do the work, there are really exceptional opportunities here, even after the recent run up. To give an idea of what I mean, gold is up about a 30% since the March lows, GDX 65%, GDXJ 85%, silver 115%, and good quality individual junior miners nearly 200%. And that out-performance of the (perceived) riskier assets will only increase. I like to apply a fairly conservative risk filter, to weed out the riskier bets, and then pick the most undervalued company that made the cut. In many cases, the valuations are still insanely low, based on current metal prices, nevermind likely future prices.

Are you going to throw suggestions out for the rest of us to look into, or just keep shouting platitudes like a politician. As I say, put your money with your mouth is. I already own HL and SAND.