Barrick Gold stock price soars after Warren Buffett's buys a stake?

Has Buffett bought gold? Buffett has not changed. Buffett does not want to hold physical gold, but he has never said that he will not buy shares in gold mining companies.

Looking at the entire market, there are not many stocks that fit Buffett's trading. And Barrick Gold Company is just one of them. Buffett bought nearly 21 million shares, and the current share value is $563 million.

We now look at the underlying logic of Buffett's purchase of Barrick Gold stock.

Compared with physical gold ETFs, gold mining companies can respond positively to market conditions. There are financial reports to analyze, With dividends and stock repurchase plans, gold mining companies have the right to reward shareholders through capital return plans.

In contrast, the physical gold ETF has no gains.

The market generally believes that it is still in the upward cycle of gold prices. The current international environment is one where black swans emerge one after another. While paying attention to the gold market, we must also keep an eye on changes in international politics, economy, and finance. As the US election approaches, unexpected news will increase. Based on experience, every three weeks, there will be a large-scale friction event in the United States or related countries, which will help the gold bull market.

Due to the strong demand for gold as a currency hedging tool, it is a reasonable phenomenon that gold prices are supported. Due to the epidemic, there will likely be a decline in the middle, or even for some time, but it is unlikely to fall sharply.

This upward cycle will create a favorable business environment for gold producers. According to the existing market conditions, gold producers can put new mines into use, or temporarily not use them, control costs, and the operability is very flexible. The management of most gold mining companies is still relatively conservative on large-scale capital expenditures.

This not only brought record-breaking profit margins, but also set free cash flow expectations to a new high, and is expected to further encourage companies to significantly increase shareholder dividends.

Barrick Gold Target Value

Barrick Gold Revenue

Barrick Gold Business

This is very much in line with Buffett's stock selection philosophy and is a wise move by Buffett under the premise of uncertainties and uncertainties in today's market environment. Of course, we also saw that Buffett only used a very small position area for investment. And I think

This investment will not be Buffett's long-term investment. As gold mining stocks are affected by the cycle, their trend will suddenly reverse. Therefore, Buffett sold bank stocks, that is, because of the current market environment, various uncertainties surrounding the US election, and the confrontation between China and the US, and thus began to reduce investment in financial stocks.

With the purchase of a large number of shares of Barrick Gold this time, it is obvious that Barrick Gold will bring him huge returns. The stock will reflect the value of gold for most of 2020. The stock has grown 45% so far this year. After Berkshire’s investment, the stock has risen 8.11% in after-hours trading.

Barrick Gold stock price chart

From the above analysis, it is easy to see that Buffett's attitude towards the price of gold is positive. This news has greatly encouraged the gold bull market. Many people naively think that Buffett's sunset is over. In fact, in the real world, the managers of global 100 trillion dollar fund management companies are all staring at Buffett. Currently, only about US$1 trillion is invested in gold, and investment in gold is less than 1%. As Buffett now invests in gold assets, the market expects that global capital allocation will increase significantly.

The positive sentiment surrounding gold means that Bitcoin's valuation will be pushed up. Because Bitcoin is considered digital gold, the price trend between gold and Bitcoin shows a certain correlation.

Since late March, since the global stock market crash, Bitcoin and gold have risen simultaneously. This shows that more and more investors are beginning to regard Bitcoin as a valuable asset, and I hold an open mind about Bitcoin. For Bitcoin, there is already a lot of controversy in the investment field. However, human society is always changing, some controversial emerging things, or will become mainstream things in the future, we should always pay attention to their development.

Comments

Will China's economy recover as the epidemic is under control?

During the Chinese Spring Festival, novel coronavirus broke out in Wuhan, and the Chinese stock market was hit hard. Subsequently, the Chinese government quickly took strict measures to block Wuhan, a city with a population of tens of thousands of people, to prevent the further spread of the epidemic, and to take corresponding epidemic prevention measures in other cities. When the worst of the epidemic had already occurred, the Chinese stock market quickly rebounded. As the number of infections continues to decline, China's Shanghai Composite Index is expected to rise further. Sars Period Looking back on similar events in the past, the SARS epidemic in 2003, the stock market also made a short-term decline, and then the SARS epidemic was brought under control, the stock market immediately went up for a long time. According to past historical data, the impact of the novel coronavirus epidemic on the stock market may be short-lived. China Fund Capital Flow Howeve...

Shopify stock forecast 2025：Is it worth buying?

In the last year, the stocks rose relatively well. Another sector is e-commerce. Whether it is Amazon, Alibaba, JD.com, Pinduoduo, SEA or vertical e-commerce platforms Etsy and Chewy, all of them have experienced huge gains, while another category has benefited from the e-commerce sector. The company is a website building tool company such as Shopify BigCommerce Holdings. Today I will talk about shopify, the leader of website building tools. First, let's briefly talk about shopify's business model. To put it simply, shopify is a fool-like website building platform. In the past, when a company wanted to build a corporate website, it generally needed to find a dedicated person to design and maintain the website. If you want to add shopping functions to the website, the cost of building the website will also increase. This is true for many small businesses and individual businesses. A very difficult thing. Shopify uses the SAAS model to provide websit...

The stock market entering a bear market？

On March 6, 2020, the US stock market continued its decline today after a few days of rebound. Is this the beginning of a bear market in the stock market? Next, let's analyze one important indicator of entering the bear market, Treasury bonds yield. What is the yield of Treasury bonds? Treasury bonds are a tool issued by the state to raise funds. When the bonds are issued, they promise to repay the principal and interest on a specified date. The ratio of the return of Treasury bonds to the principal invested is the return of Treasury bonds. The main factors affecting bond yield include coupon rate, maturity, face value, holding time, purchase price, and sale price. Rising bond yields and falling bond prices mean investors are selling bonds, turning to invest activities, or entering the stock market. In a healthy economic environment, the longer the Treasury bonds, the higher the bond yield. Because short-term bonds are more liquid, investors are willing to accept lower ...

The Federal Reserve implements interest rate hikes or cuts？

Generally speaking, the Federal Reserve implements interest rate hikes or cuts. Interest rate rises are austerity monetary policies, and interest rate cuts are a loose monetary policy. When the rate hike cycle begins, it indicates that the Federal Reserve is optimistic about the future economic outlook, economic data shows a positive outlook, and market sentiment is optimistic. To avoid excessive economic growth, the Federal Reserve has implemented austerity monetary policy and implemented interest rate hikes. When the interest rate cut cycle begins, it means that the Federal Reserve is bad on the future economic outlook, the economic data shows a bad trend, and the market is pessimistic. To stimulate economic growth, the Federal Reserve has implemented a loose monetary policy and implemented interest rate reductions. Correlation between the S & P 500 and Federal Reserve interest rates Historical data from the S & P 500 shows that when the rate hike cycle begins, the sto...

Coinbase stock forecast 2025: it's first quarterly report

After the trading hours on May 13 (this Thursday), Coinbase Global (COIN) will release its first quarterly report. Take this opportunity to give us a glimpse of the prospects of the first share of cryptocurrency exchanges. Actually, on April 6, before Coinbase went public, it had already released a forecast for the first quarter of this year. The core data are as follows: Revenue in the first quarter was approximately US$1.8 billion, a year-on-year increase of 842%; before the net profit was between US$730 million and US$800 million, the median was US$765 million, a year-on-year increase of nearly 23 times! Assets on the platform are 223 billion US dollars, accounting for 11.3% of the market share of encrypted assets; 56 million verified users, and 6.1 million monthly transaction users (MTU). It is worth noting that Coinbase's net profit margin reached a terrifying 42.5% in the first quarter, and the business model of “casino” is really profitable! ...

FinanceLinkway

Search This Blog