During their recent episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle discussed Buffett Buys $GOLD. Here’s an excerpt from the episode:
Tobias: Yeah, let’s segue. I’m reading Chris Bloomstran’s because Chris follows Berkshire closer than anybody else. It’s interesting, Berkshire upped their buyback but sold a whole lot of stocks. So Buffett’s still not done selling. They’ve tipped out of Oxy. That’s completely gone. It looks like JPM is gone. All the airs are gone. He’s bought some Bank of America which warms the cockles of my heart. I’m slightly burying the lead here, but the big headline was that he bought Barrick Gold or somebody, Ted or Todd, somebody bought Barrick Gold, I think it’s G-O-L-D. They’re a gold mine. You might be surprised, they’re the biggest in the world, I think. He’s tipped a lot of scorn on gold over the years. Do you think that means that this is much more likely that it’s one of boys?
Bill: I’ll tell you what I think is likely. I think that discussing Buffett and Gold is likely to get our clicks up.
Tobias: This is social media engagement gold right here.
Bill: Yeah, people can’t resist.
Jake: Value catnip.
Tobias: I think it was Friday that came out. I got Buffett and Gold into a tweet, slightly underperformed. Was a little bit disappointed. Everybody was in there at the same time, I guess.
Bill: Yeah, let me do my line of Buffett and Gold real quick. [snorts] Okay, that’s awesome.[laughter]
Bill: I have no idea what it means. It’s so tiny. It doesn’t matter.
Tobias: That’s funny thing. All of these things are just rounding errors now.
Bill: Yeah. [crosstalk]
Jake: [crosstalk] –it’s a lieutenant position myself. It’s a good signal, but not for the reason that people think. That tells me that those guys really can do whatever they want. And that Buffett’s not– he’s not riding shotgun with them.
Bill: I would not be shocked if they have a burner on Twitter and they just wanted to see Twitter explode. They were like, “Who gives a shit? This is nothing position, watch people freak out.”
Tobias: How much did they stick in? How much is in it?
Bill: I don’t know. It’s like a 0.27% position or something like that.
Bill: It’s super tiny.
Jake: That’s a lot of money though for [chuckles] because they have a pretty big book.
Bill: Well, like Huber pointed out, it’s like 1% with Apple is more notional than the entire value of this position. And people can’t help it. They’re like, “Oh my God.”
Tobias: So, why would you bother? What would be the point?
Bill: I don’t know. But I don’t need to.
Tobias: The gold has moved. Gold started moving for whatever reason. The yellow metal has started moving. I had a look at– all of the gold miners are pretty depressed. Berrick is on like seven times’ acquirers multiple. It’s pretty cheap. This is the problem. When gold gets moving, it probably does quite well. If gold gets really, really hot, then the margins stay pretty flat the whole way through because all of the inputs get more expensive too. But the miners will do very well, there’s no question about that. The miners are just like a leverage bet on the metal.
Bill: That’s what [unintelligible [00:37:36] told me. I don’t know.
Tobias: That’s what’s Spot says?
Bill: I guess. Yeah. But they have a huge incentive to tell you that. That’s what they sell.
Tobias: They’ve got the fizz and they’ve got the– Yeah, that’s a funny thing. I feel bad because I’m a value guy and I’m always like, get long value. But the gold guys are always like, when gold goes down, that means gold’s going back up again. When gold goes up, it’s working. They can’t lose.
Bill: It’s like uranium.
Tobias: Silver is down, it’s getting ready to run. That’s what you’d expect to see at the start of a bull market. A little pullback.
Jake: Just a little pullback to catch its breath and then–
Tobias: Buying opportunity.
Jake: –get going again.
Bill: “What do you do, sir?” “Oh, I run a gold fund. Don’t worry about it. I’m the one you need to give the money to. You can’t do this on your own.” I get it. [crosstalk]
Jake: The guy running a gold fund would wear that shirt. [laughs]
Bill: That’s arguably true. It looks like Montier.
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