Posted 12 months ago | by Ben Armstrong
Berkshire Buys Gold via Barrick – is Buffett Betting Big on Alternative Assets?
Warren Buffett – still the head at investment powerhouse Berkshire Hathaway – might be turning his back on the Wall St. money making machine. Berkshire's most recent 13 F showed that the company bought around $500 million worth of Barrick Gold shares, and also dumped shares in JP Morgan Chase and Goldman Sachs.
All of this looks very curious, given Buffett's long-standing criticism of gold. He has gone on the record over the last few decades a many times with gems like this,
“Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything.”
Or this peach,
“What motivates most gold purchasers is their belief that the ranks of the fearful will grow...During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As ‘bandwagon’ investors join any party, they create their own truth – for a while.”
The second quote is a simple description of what George Soros calls a 'reflexive' relationship, which Buffett is clearly misapplying to the present situation. It was written in 2012, when things in the financial world were amazing when compared to the present situation.
The Abyss is Smiling Back at Buffett
Did anyone see the S&P500 log near-record highs last week?
It did (although it couldn't hold them), and that should be taken as a big warning sign.
If US equities are smashing to the top of their historic trading range, the argument that fear is ripping through the markets is a pretty hard sell.
The answer to this riddle is simple – global central banks have created an absolutely astounding amount of money, and it is bidding up financial assets.
To be fair to Mr. Buffett, there very well may be a fear trade in play. There is just too much money sloshing around the global markets for it to affect financial asset prices – which exist in a central bank cushioned cradle that won't be allowed to tip over.
Bitcoin isn't on Their Radar Yet
We don't know if Buffett made the call to buy Barrick, or not. He has a few minions that may have made that move, or it could be Buffett waking up to the fact that the US economy he built his fortune in is long gone.
Whatever the case, Buffett and the horde of investors who have followed him for decades still haven't figured out that is gold is good cryptos are great.
The global banking system has been pigging out for a long time on shifting data around, and taking on no-lose positions that are guaranteed to pay out via central bank bailouts.
Cryptos are the next logical step for anyone who as assets in the fiat system, and understands that the actions taken by central banks over the past decade (and this year) will end the global financial system as we know it.
Given the fact that so few people globally have bought into cryptos – it is more than fair to ecco Dave Portnoy's call for Bitcoin to rally to $12,000,000,000
I meant 12000000000 https://t.co/o7TyVUM4wq
— Dave Portnoy (@stoolpresidente) August 13, 2020