Peter Schiff: Warren Buffett Is Making a Bet on Gold
Warren Buffet has bought into gold.
Gold mining to be specific. Peter Schiff talked about what Buffett is telling us in his podcast.
According to the latest 13F filing by Berkshire Hathaway, the company now has positions in Barrick Gold to the tune of over $500 million. This was as of the end of June. Peter said he suspects Berkshire Hathaway has a lot more shares now.
I’m willing to bet that Berkshire Hathaway might actually own another gold stock in addition to Barrick Gold. And the reason I feel that that’s possible is because Warren Buffet knows that once his disclosure is made public, once people know that he’s buying gold stocks, well, now he’s going to have a lot of competition. There are a lot of people who like to mimic what Warren Buffett is doing. And so once it becomes public knowledge that he’s buying gold and gold stocks, he’s going to have a lot of competition. So, if Warren Buffett is smart, he knew that he would have a another seven-week window to quietly buy more shares of Barrick Gold before the street wised up to what he was doing, and maybe buy more shares of other gold mining companies.”
Buffett wouldn’t be buying gold stocks if he wasn’t bullish on gold itself. In fact, as Peter pointed out, gold stocks are a leveraged bet on gold.
In order to buy gold stocks, you generally have to be super-bullish on gold, because you want to have an investment that is leveraged to the price of gold, meaning that it will go up more than the price of gold if gold goes up. So by buying Barrick Gold, Buffett is showing that he’s even more bullish on gold than he would be if he were just buying, for example, GLD, which he may have already bought too. We’ll find out when they file the next 13F for this quarter.”
Peter said this has the potential to by a watershed moment for gold and mainstreaming gold and gold stocks, and he’s pretty sure Buffett’s move will greenlight over investors to buy gold mining stocks.
Not only did Buffett buy Barrick Gold, but he also sold off financials. Berkshire Hathaway lightened up on all of its bank positions. Peter said Buffett is basically doing what he already did.
What have I been telling people on my podcast? Get out of banks and buy gold stocks. In fact, that is the one thing that really differentiated my value fund. And the reason that the value fund was performing so poorly over the past several years and the reason it is performing so well this year – and it went from last place to first place – is because one of the key differences between my fund and all my competitors was that I owned no financials in the fund. And the index has a heavy weighting to financials. I didn’t like financials. But what did I buy instead of financials? I bought gold stocks.”
Peter said he wasn’t concerned about short-term losses with this strategy.
I knew that in the long run, the financials were in trouble. And I would rather make a bet on gold than paper currency and the whole monetary bubble that I knew was going to pop. So, I’ve already positioned, and now Warren Buffett is moving the Berkshire portfolio to look more like my portfolio. He’s buying gold stocks and he is selling financials. Now, he’s not completely out of the financials, but the writing is on the wall.”
Peter said Berkshire’s move is not only bullish for gold stocks; it is also bullish for gold.
Warren Buffett is making a bet on gold. He now likes gold.”
This seems to indicate Buffet knows exactly what’s going on in the economy and that gold is money.
In order to get income from your dollars, you need to invest those dollars. You need to loan it out. You need to buy a bond. You need to buy real estate. You need to buy stocks. But what if you think all of those markets are overpriced and you don’t want to use your dollars to buy an income-producing asset? What are you going to do with them? Well, Buffet is telling you — convert them into gold. Because he knows if he thinks stocks are expensive, and he just wants to hold cash, he knows cash is going to lose value. He understands that the Fed is printing all this money, and he can’t get any interest if he just puts his money in the bank. So what Warren Buffett is saying is that, ‘I believe assets are overpriced, but I don’t want to be in dollars because I don’t want to get wiped out by inflation. So, while I am waiting for better opportunities, I want to buy gold.”
Peter called this a massive about-face.
Buffett is saying, ‘You know, now is the time to buy gold and that’s why I”m buying gold stocks, because this is where the money’s going to be made.'”
It’s not just a vote of confidence in gold. It’s a vote of no-confidence in the dollar.