[miles]

Surprising move from the man who said something along the lines of[1]:

"Gold gets dug out of the ground in Africa, or some place. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

[1] https://quoteinvestigator.com/2013/05/25/bury-gold/

[soulofmischief]

Buffet was commenting on the social absurdity of the situation, but that has little bearing on his investment strategies. Money is money, and I'm sure Buffet has similar contempt for quite a few industries he's invested in.

[cafebabbe]

A very forgiving description for what is just plain hypocrisy.

[soulofmischief]

If I think that fidget spinners are a stupid trend, but I know a guy who will buy 100 boxes from me, I'm going to make that transaction. There is nothing hypocritical about this. I can happily take money from people while holding them in contempt. Don't you do this at your own job when you get a paycheck from your boss?

[dunce2020]

That's not hypocrisy.

[thedudeabides5]

Yeah it’s called “shifting the portfolio” and seems a reasonable thing to do for the worlds best fundamental investor in this time of unlimited printing.

[WealthVsSurvive]

Yeah, he's actively betting on people making poor choices in times of panic, not on Gold. Gold is merely the medium. It's not hypocritical at all.

[klodolph]

Not sure I count that as a surprise--in one breath I'll talk about how C is a terrible language, and in another breath I'll talk about my latest project which I'm writing in C.

[refurb]

The headline hides the fact he’s not buying gold, but rather a gold mining company.

Yes, the stock tracks the prices of gold, but the stock beat gold by 45% so far this year.

It sounds like buffet is investing in a mining business not actual gold (albeit they are linked somewhat).

[vijayr02]

Equity in a gold mining company is a leveraged play on gold: since the company has debt, the equity will react more than the price of gold (on both the upside and the downside) with a floor at 0. So he's purchased a call option on gold.

[vitobcn]

The gold mining company can generate future incoming cashflows, gold doesn't.

[vijayr02]

The equity in the gold company is a call on the gold in the ground: the cash flows of the company come from extracting this gold. Getting a bit more detailed, the leverage comes from 2 elements: (a) operating leverage i.e. company generates more revenue with same fixed operating costs and (b) financial leverage i.e. company generates more net operating income with same fixed interest costs. The basic point is that the cash flows all come from extracting gold, so the equity is a derivative on this underlying.

[pete762]

I see no problem here. He is buying a gold miner, so he is buying a business profiting off this weird desire for gold. You could basically say the same about chocolate: "People pay money to buy what is basically compressed sugar to then die from diabetes" (little exaggerated). Doesn't mean it's not profitable to own chocolate companies (as Buffett does)

[waihtis]

There's not much utility to many things in daily life if you scrap it to its base components.

It reminds me of the story of how Steve Jobs got John Sculley, then CEO of Pepsi, to join Apple: “Do you want to sell sugar water for the rest of your life or come with me and change the world?”

[malux85]

I think thats a reflection on his thoughts on Goldman Sachs more than anything

[divbzero]

There’s also a difference between buying gold and investing in a gold miner: the former is purely speculative while the latter can provide a stream of income.

[fspeech]

He has investment managers who can make independent decisions. Selling out of GS is obviously his move. Buying a gold miner? We can't be sure.

[theredlion]

I don't think that quote makes this move surprising

[missedthecue]

Well he didn't buy gold, he bought shares in a company whose main business is gold mining.

[raverbashing]

This reminds me of that "sells shovels" way of becoming a millionaire

[nurettin]

He would probably have an equally or more estranged view of goldman sachs.

[onetimemanytime]

not surprising at all. His goal is to make money (legally) so if people drive the price of gold up, he will profit if possible. Very simple.

He will also sell if he thinks it no longer makes investment sense.