Berkshire Hathaway Inc., headed by billionaire Chairman Warren Buffett, has added Barrick Gold Corp. to its portfolio, leading to a surge in Barrick’s share price. The purchase of 20.9 million shares, which equals 1.2% of Barrick’s outstanding stock, has a market value of $565 million USD, according to a regulatory filing from Friday, 14 August. Following the purchase, Barrick’s shares rose 7.4% in after-hours trading in New York and have since risen by 14.78% as of Monday, 17 August.
This has been an unexpected move as Buffett has historically not been a fan of gold, however, surging gold prices have, in recent months, been boosting miners profit margins, making them more attractive investments especially for the generalist investors who have not had any interest in the sector for years.
There’s been a jump in gold prices over the past few months, as a weak dollar and pullback in US treasury yields has boosted demand for the safe-haven asset.
This move into gold comes as Berkshire Hathaway sold 62% of its stake in JPMorgan Chase & Co as well as 26% of its stake in Wells Fargo & Co, in the midst of the COVID-19 crisis. The firm has also reduced their positions in a number of other financial services firms over the past few months, a sign that the economic downturn and global crisis will last longer, and possibly get worse before it gets better.