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March 5, 2024

Financials Matter

"It's Not Just About Finance"

Buffett’s Berkshire Buying Barrick Part 2

 

Yesterday we alluded to the idea that Warren Buffett’s two up and coming deputies at Berkshire Hathaway were responsible for the recent $563 Million stake in Barrick Gold (symbol GOLD).

We still don’t know for sure, seeing how Uncle Warren and Mr. Magoo have openly hated gold and derided investors who bought gold and silver.

The point is, their money is moving into precious metals.

Unfortunately, for Warren and Magoo, Barrick is one of the few gold mining stocks they could buy without creating a panic among the gold miners.

Why?

Barrick has an average daily volume of around 19,000,000 shares traded every day.

Translation:  Unlike most mining stocks, Barrick has plenty of liquidity.

This presents some great opportunities for investors who like to buy some of the smaller mining companies.

Why?

Companies like Barrick or Newmont (NEM) will eventually buy up most of the smaller companies.

Why?

It’s cheaper for the “big boys” to buy out companies with proven reserves than it is for them to try and dig for more gold themselves.

Example:  In 2010 the cost to take an ounce of gold out of the ground (start to finish) was around$1,350 per ounce.  The high in gold back then reached $1,929.

That translated into a cool 43% profit margin.

Today – because of cost cutting and especially the price of gas/diesel – the costs of taking the same ounce out of the ground (start to finish) have fallen to roughly $1,000 per ounce.

With gold currently trading at $2,000 per ounce the profit margins are near or above 100%.

This, by itself, fits the profile of a “Value” investment.

Cue up the gold haters (Buffett and Magoo) 180 on gold being a value investment.

Oh, the hypocrisy irony.

There are plenty of other reasons for buying gold AND silver miners today but we can’t possibly cover them in an email.

We even know certain companies whose total costs for taking gold out of the ground are as low as $498 per ounce.

Ironically (or NOT) Buffett can’t buy them.

Why?

They’re too small.

However, we’ll highlight a few of them along with more reasons why you should buy them in tomorrow’s email and especially in our upcoming September issue of “…In Plain English.”

Get your copy (HERE).

 

 

 

 

 

Yesterday we alluded to the idea that Warren Buffett’s two up and coming deputies at Berkshire Hathaway were responsible for the recent $563 Million stake in Barrick Gold (symbol GOLD).

We still don’t know for sure, seeing how Uncle Warren and Mr. Magoo have openly hated gold and derided investors who bought gold and silver.

The point is, their money is moving into precious metals.

Unfortunately, for Warren and Magoo, Barrick is one of the few gold mining stocks they could buy without creating a panic among the gold miners.

Why?

Barrick has an average daily volume of around 19,000,000 shares traded every day.

Translation:  Unlike most mining stocks, Barrick has plenty of liquidity.

This presents some great opportunities for investors who like to buy some of the smaller mining companies.

Why?

Companies like Barrick or Newmont (NEM) will eventually buy up most of the smaller companies.

Why?

It’s cheaper for the “big boys” to buy out companies with proven reserves than it is for them to try and dig for more gold themselves.

Example:  In 2010 the cost to take an ounce of gold out of the ground (start to finish) was around$1,350 per ounce.  The high in gold back then reached $1,929.

That translated into a cool 43% profit margin.

Today – because of cost cutting and especially the price of gas/diesel – the costs of taking the same ounce out of the ground (start to finish) have fallen to roughly $1,000 per ounce.

With gold currently trading at $2,000 per ounce the profit margins are near or above 100%.

This, by itself, fits the profile of a “Value” investment.

Cue up the gold haters (Buffett and Magoo) 180 on gold being a value investment.

Oh, the hypocrisy irony.

There are plenty of other reasons for buying gold AND silver miners today but we can’t possibly cover them in an email.

We even know certain companies whose total costs for taking gold out of the ground are as low as $498 per ounce.

Ironically (or NOT) Buffett can’t buy them.

Why?

They’re too small.

However, we’ll highlight a few of them along with more reasons why you should buy them in tomorrow’s email and especially in our upcoming September issue of “…In Plain English.”

Get your copy (HERE).

 

 

 

 

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