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Buffett’s Berkshire Hathaway Exits Banks And Puts Their Money On Gold

By August 17, 2020 No Comments

Warren Buffett’s Berkshire Hathaway revealed a new position on Gold amid a roller-coaster week in the precious metals market. Gold is back to its upward trajectory.

On Friday, August 14, 2020, MarketWatch reported that Warren Buffett’s Berkshire Hathaway Inc. unloaded more than a quarter of its stake in Wells Fargo & Co. and about 61% of its position in JPMorgan Chase, while acquiring a new position in Barrick Gold Corp. By Monday morning, August 17, 2020, the gold price was already soaring.

Berkshire’s moves appeared to reflect a mass exposure to the large-capitalization of banks during the worst public health crisis in generations. Some analysts began to wonder if Buffett is losing faith in the US economy.

Berkshire sold 85.6 million shares of Wells Fargo, representing about 26% of its stake and putting its ownership to about 3% from 5.3%. The insurance conglomerate also shed 35.5 million shares of JPMorgan, 61% of its position, which now represents 1% of Berkshire’s overall portfolio from 3% in the prior period.

Meanwhile, the investment firm snapped up nearly 21 million shares of Barrick Gold worth $563 million, representing 0.3% of Berkshire’s holding. Berkshire also reduced its holding in PNC Financial Services, selling 3.85 million shares to cut its position to 0.3% from 0.5%. Berkshire didn’t change its holdings in Apple Inc. where the firm owns at 245.156 million shares, despite its latest conundrum with Fortnite.

According to Yahoo, Berkshire also exited its stake in Goldman Sachs, selling the remaining 1.9 million shares, the filing shows. Elsewhere, Berkshire added to its stake in grocery chain Kroger (KR), buying 3 million additional shares in the quarter. The company last held 21.9 million shares in Kroger, a position valued at $742.6 million at the end of the quarter.

What does this mean for the overall market climate? Berkshire Class A and B shares were down by about 0.6% and 0.5% at Friday’s close. Meanwhile, shares of Wells Fargo were down 0.8% in after-hours trade on Friday, JPMorgan shares edged 0.1% lower, while Barrick’s stock was up 3.9% after Friday’s closing bell. The Dow Jones Industrial Average had a meager gain on the day, while the S&P 500 index and technology-laden Nasdaq Composite Index closed in negative territory. Overall, all three benchmarks booked weekly gains and are continuing to rise so it will be interesting to see how the market reacts in the coming weeks.

Is gold positioned to be the next stable investment for investors?  Gold has rallied to a peak performance this year, but many investors are still debating whether or not it can maintain it’s position. The price of gold will continue to climb as more and more money is pumped into the economy by the Federal Reserve.  If you want to learn more about the rise in the price of gold and other precious metals, contact Allegiance Gold today for information.  It is better to start diversifying your portfolio today, than waiting for another market crash to happen.

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