Buffett’s Gold Investment in Perspective

Let’s put Berkshire Hathaway’s investment in Barrick Gold in perspective. Their 1.2% investment amounts to approximately 1/1000^th  of Berkshire’s market capitalization.  Insignificant to say the least.  It’s also unclear if it was his decision or one of his lieutenants, although as always he’s aware.

Buffett likened the amount of gold in the world to a cube sized tennis court, a rock that generates zero income.  A stone that operates strictly on the greater fool theory, of selling the unproductive asset to someone dumber than you to profit.

However, he didn’t buy the metal; he’s purchasing part of a best in class business that profits from its low cost production. 

We all know about gold being a hedge against inflation and market downswings.  We know massive money printing should lead to devaluation, and gold is a medium of exchange with a long history.

Remember, Warren Buffett doesn’t suck his thumb.  If he likes a business he buys it, all of it.  He bags elephants.  He deals in mega billions.  Barrick can be had for $50 billion, his stake is approx 1/230^th of his Apple ownership, small among his 46 investments and the Berkshire empire.  Put this investment in perspective.  No big deal, yet.