What happened
Shares of Barrick Gold (GOLD 1.40%) jumped on Monday after financial filings showed that Warren Buffett-led Berkshire Hathaway (BRK.A +0.18%) (BRK.B +0.03%) had taken a stake in the gold mining company.
As of 3:20 p.m. EDT, Barrick Gold's stock was up more than 10%.
So what
Berkshire purchased nearly 21 million shares of Barrick Gold in the second quarter, according to its 13F filing on Friday. Those shares are valued at roughly $625 million after today's gains.
Barrick Gold's stock rose sharply on news that Berkshire Hathaway had purchased its shares. Image source: Getty Images.
The news came as a shock to many investors. Buffett has spoken out against owning gold, which he argued was an inferior investment compared to stocks. Either Buffett has changed his view, or he is making a distinction between the precious metal itself and a company that mines gold, and thus can produce the type of cash flow that Buffett loves. It's also possible that it was one of Buffett's lieutenants -- either Ted Weschler or Todd Combs -- that made the investment.
Now what
Gold has rallied roughly 30% to nearly $2,000 per ounce in 2020, as investors have flocked to what has historically been a safe-haven investment. Investors often turn to gold to preserve their wealth during periods of economic calamity, such as the current coronavirus-driven crisis. Others buy gold -- a relatively scarce asset -- to protect their wealth from the ravages of currency depreciation, which many fear could take place as central banks around the world print their currencies at an unprecedented rate, in hopes of warding off an even deeper recession.
The rise in gold prices has helped to fuel Barrick Gold's gains. The miner's stock is up 60% so far this year.
While it's unclear which of Berkshire's stock pickers chose to add Barrick Gold to its portfolio, this much is certain: One of its highly respected investors thinks the stock is headed even higher in the years ahead -- and investors are taking notice.
