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Wobbygong

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29/08/20

11:35

Post #: 46917392
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Originally posted by timbuckley: ↑

The purchase of Barrick by Berkshire Hathaway is small change to them.
The main aspect of this purchase signals a couple of possibilities to me - one is that the people making the investment decisions at BH has changed and perhaps the list of sectors that BH will invest in has changed. That would be very difficult with WB still alive imho and so i wonder - did WB sign off/agree to purchasing Barrick.
This is the important thing, imho, as WB has seen mining cos, in the main, as having assets that shrink in size or need replacing over time.and being price takers - he has always stated that mining cos are a poor investment generally.
I can understand taking a position as a hedge against currency debasement but if that was the view, purchase of physical would give better hedge.
So another possibliity - Barrick is probably being looked at for its cashflow and its long life assets coupled with weak USD and reduced revenues in many other cos in many other sectors. If BH is looking at the gold sector hoping for returns, im sure other investors/funds are doing the same.
It doesnt need much $$ to enter the gold sector to push prices higher over the med term.
Stock markets are at high levels, with most of the rises being in a small number of the constituent stocks rather than an overall lifting of all boats.
The over valued stocks will eventually revert to the mean. With gold stocks backed by a high POG and with POG likley to move higher, at some point i would expect more $$ to come into the sector - probably closer to end of year.

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A question from a novice here... If WB was buying physical gold / silver, would we know ??

Value at posting: $1,391.7
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