Berkshire Hathaway adds Barrick Gold to portfolio despite former gold aversion

Warren Buffett

WARREN Buffett’s Berkshire Hathaway added Barrick Gold to its portfolio in the second quarter, sending shares of the world’s second-largest miner of the metal surging, said Bloomberg News.

Berkshire took a new position in Barrick, buying 20.9 million shares, or 1.2% of the company’s outstanding stock.

Buffett, the billionaire chairman of Berkshire, cautioned against investing in gold in the past because it’s not productive like a farm or a company, said the newswire.

Now, gold miners are benefiting from surging bullion prices that are boosting profit margins as costs of production have steadied, making them increasingly attractive investments. Large miners including Barrick and Newmont have been hoping to woo back generalists who fled the sector years ago, said Bloomberg.

Buffett has bet big on metals before: in 1997, he bought 129.7 million ounces of silver, banking on demand exceeding production and re-use. He bought most of it for less than $6 an ounce and sold it soon after, he said nine years later. “I was the silver king there for a while,” he said at the time.

The jump in gold prices has boosted investors’ willingness to pump billions into the industry, with precious-metals miners raising $2.4bn in secondary equity offerings during the second quarter, said Bloomberg.

Gold has gotten a boost as Federal Reserve interest-rate cuts and a plunge in real government bond yields lifted demand for the metal, which doesn’t offer interest.