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Why Barrick Stock Surged Today

By Joe Tenebruso - Updated Aug 16, 2021 at 3:47PM

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In a shocking move, a legendary investor's company has purchased a $625 million stake in the gold miner.

What happened

Shares of Barrick Gold (GOLD 3.85%) jumped on Monday after financial filings showed that Warren Buffett-led Berkshire Hathaway (BRK.A -0.08%) (BRK.B 0.09%) 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. 

Gold bars next to a rising price chart.

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.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short September 2020 $200 calls on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Barrick Gold Corporation Stock Quote
Barrick Gold Corporation
GOLD
$16.20 (3.85%) $0.60
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$439,167.01 (-0.08%) $-361.91
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$292.34 (0.09%) $0.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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