Commodities
Why Warren Buffett’s company is buying shares of a gold mining company
Gold prices have gained 24% this year, and likely to score more gains.
Warren Buffett’s Berkshire Hathaway Inc has bought a new 20.9 million shares in Toronto-based Barrick Gold Corp, one of the world’s largest mining companies.
This was disclosed in a regulatory filing detailing its US-listed investments as of June 30, 2020, according to Reuters.
Meanwhile, it has minimized some of its investments in America’s top banks. This includes America’s most valuable bank, JPMorgan Chase and other leading financial brands like Wells Fargo & Co and eliminating a stake in Goldman Sachs Group Inc.
READ MORE: Gold rockets above $1850 as it continues 9-year high
Why Warren Buffett might be investing in Gold now?
Gold prices have gained 24% this year, and look likely to score more gains in the coming weeks.
The likely reason Warren Buffet might be buying shares of Barrick Gold Corp is related to the macro that quantitative easing isn’t helping enough to calm the global financial markets. This is coupled with exhausted fiscal policies that include tax breaks, tax holidays, and cash credits to low-income families, have done little in stabilizing the world’s fragile economy.
Also, global inflation levels are on the upside, and that seems to be good news for a deflationary asset like gold.
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In addition, the resurgence of COVID-19 has heightened geopolitical uncertainty pushing precious metal higher, gold traders believe that the present record levels of gold might just be the norm, as more stimulus packages find its way to an already over-bloated financial system.
Investors usually monitor Berkshire’s quarterly filings to see what Warren Buffett and his portfolio managers are investing in.
Commodities
Oil prices surge over China’s growing appetite for energy
British based contract ticked up by 0.3% to trade at $63.59 a barrel while the WTI futures edged near $60 a barrel.
Oil prices rallied high at the second trading session of the week as data from the world’s second-largest oil consumer’s (China) import growth picked up coupled with rising tensions in the Middle East after rebels from Yemen disclosed that they fired missiles on Saudi’s energy infrastructure.
At the time of writing this report, the British based contract ticked up by 0.3% to trade at $63.59 a barrel while the West Texas Intermediate futures edged near $60 a barrel.
READ: Oil prices soar above $70 a barrel over terrorist attacks on Saudi’s oil station
The world’s second-largest economy recorded impressive gains for last month in yet another boost to China’s economic recovery as global demand gained momentum. Crude oil imports into China surged by 21% in March from a low base of comparison a year earlier.
Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on the parabolic of the energy market, as oil traders seem to be uninspired on the resurging COVID-19 virus;
“The oil market’s magnetic attraction to the $63 level should tell us much about the near-term outlook amid conflicting signal of new Covid waves coming to shore ahead of what should be a summer gasoline buying bonanza.
READ: Did OPEC+ April fool the oil market?
But overall, this is an oil market that feels completely uninspired outside of a few micro lurches here and there.
Still, positive comments on the US economy from Fed Chairman Powell help to reassure the outlook for oil demand, balancing concerns about the continued spread of Covid-19 in some regions.”
What to expect
Recent price actions suggest oil traders might hold the $60 a barrel baseline in the near term even if U.S Treasury yields surge while struggling to resolve with what form and fashion the next leg of the reflation trade will take.
Commodities
Oil prices stay on course as Saudi’s Energy Minister reassures traders
British based oil contract traded at about $63 a barrel while the WTI futures were trading slightly below the $60 price level.
