Buffett who once mocked gold market now invests in it

Warren Buffett’s Berkshire Hathaway Inc. has added the world’s second-largest gold miner Barrick Gold Corp. to its portfolio, reported Bloomberg. The move by Buffett, seen as a the market guru by millions, has resulted in a surge of the share value of Barrick Gold, the report added.

The move comes as a surprise to many as Buffett has always warned against investing in gold claiming it to be unproductive. But by buying 20.9 million shares, or 1.2 percent of Barrick’s outstanding stock, that has a current market value of $565 million Buffett taken a U-turn in his stand.

The move may not be surprising to keen observers of market. Surging bullion prices are boosting profit margins for gold firms after costs of production steadied, making them increasingly attractive investments, the report said.

Besides, Federal Reserve interest-rate cuts and a plunge in real government bond yields have also aided the interest on the metal, as per report.

Further Buffett himself, despite his vocal aversion to metal, is not alien when it comes to backing metals. He bought 129.7 million ounces of silver, in 1997 for less than for $6 an ounce banking on demand exceeding production and re-use. “I was the silver king there for a while,” he had reportedly said as per the media.

Courtesy: CNBC