Bold Buffett Buys Gold! Really?
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Bold Buffett Buys Gold! Really?
What a mouthful! But it's catchy, right? I am sure you've heard the news about Buffet buying gold. It's everywhere. Let's unpack what really happened.
According to its last SEC filling, Buffett's company, Berkshire Hathaway, bought gold during the second quarter of 2020. Not that gold though, the other gold, I mean the ticker GOLD for Barrick Gold Corporation. Even though there are related, they are totally different gold. One is a shiny piece of metal that can be found around fingers and pays no dividend, the other is a company that essentially extracts gold and copper around the world, headquartered in Toronto.
Warren Buffett's Berkshire takes $500-million stake in Barrick (Financial Post)
Why the buzz? Good question. Probably because Buffett always showed disdain for the shiny metal. And all of sudden, media make a big deal about the fact that he bought gold, omg, except that they forgot to mention that it's Barrick Gold Corporation, not to be confused again with the precious metal.
Click bait, you got me here. Again. Darn media.
So he must have bought a lot of shares to make the headlines, right?
Guess what? He bought about 21 millions shares of Barrick for about USD$500 millions. Although it seems a lot, it represents less than 0.3% of his entire portfolio, compared to the 44% allocation to Apple, see below:
Berkshire Hathaway allocation (June). Barrick Gold (0.3%) doesn't even show
The result? Berkshire Hathaway is still negative for the year, despite its 44% in Apple (see below). Did the Barrick Gold allocation help improve the annual return of BRK? Not a chance with a 0.3% allocation. In other words, this news about Buffett buying gold is simply much ado about nothing. Pure noise. At least for now.
Berkshire Hathaway, year-to-date, still negative
What's Cooking In Da Kitchen?
Unlike Buffett's buffet (sorry), there is physical gold on ETF Kitchen's menu, next to the other gold, Barrick. Both gold have been on our menu for many months now, thanks to our holdings in GLD, GDX, CGL.TO and XMA.TO.
For September, we will stop offering bonds on the menu after being served since the end of February. Bonds literally acted as comfort food for the last six months. They helped us navigate very stormy markets.
August was a great month for our USD portfolios thanks to SP500 (SPY) and techno (XLK). Gold miners and bonds were the laggards.
ETF Kitchen Portfolios and World Indices (click to enlarge)
Year-to-date, our ETF portfolios have returned between a whopping +25% and -4.8%, averaging +9.2% for the year!
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