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    Negative Points of Buffett Buying Gold-Mining Stocks| KOL Forex Analysis•Jasper Lo

    Abstract:In mid-August, it was revealed that Buffett bought gold-mining shares this Q2. As gold prices hovered around US$1,571.80-1,785.78 at that time, the investment of Warren Buffett is still profitable at present prices. This episode occasionally reminds me of a story nine years ago.
    Jasper

      In mid-August, it was revealed that Buffett bought gold-mining shares this Q2. As gold prices hovered around US$1,571.80-1,785.78 at that time, the investment of Warren Buffett is still profitable at present prices. This episode occasionally reminds me of a story nine years ago.

      The story happened in 2011, when gold prices eased back after hitting the all-time high of $1,920 on September and closed the year at $1,562.92. Generally, gold prices in the year rose by 12% while the Canadian Barrick Gold Corp, the world's largest gold-mining stocks, decreased by 14%. According to records, some small-scale gold-mining stocks even lost as high as 40% at that time, which made many prominent investors suffer a great deal from these stocks, and even masters such as Soros and Paulson were not immune.

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      This story from nine years ago sheds some light on the fact that traders shall not blindly jump into the market as even best investors like Soros cannot get a golden touch in gold markets. Long-term gold traders should consider gold ETFs rather than gold-mining stocks as the trends of gold prices and gold-mining stocks are not necessarily synchronized.

      In Q2, Buffett's Berkshire Hathaway added gold-mining stocks in its trading list for the first time in its history, and reduced, or even sold out financial stocks at the same time. Gold prices climbed to $2,015 in the wake of the news but fell to $1,902 afterwards as no further support available. It is obvious that there were major players selling gold at a high price level which was pushed up by the news, with the sold amount large enough.

    圖片.png

      Buffett used to be a well-known anti-gold investor who has repeatedly stated that gold was not worth holding for long. The reason is that gold pays back no interest but requires storage charges, while stocks do pay back interest income. In my opinion, the situation that gold purchase becomes popular among investors who have never bought any gold or even are against buying gold is just similar to what described in Wall Streets famous saying: when the shoeshine boys talk stocks it was a great sell signal in 1929. The reason is that people who shouldn't trade stocks also trade stocks, reflecting that a bubble has appeared in the stock market. In addition to the trend of the greenback, traders should also pay attention to the development of vaccines around the world. Besides Russia, many countries in Europe and America are expected to claim approval of vaccines, which will certainly hamper gold prices.

      [About The Author]

      Since 1987, Jasper Lo has been engaged in the financial industry

      (forex, futures and gold) for more than 32 years and holds forex R.O.,

      securities and futures broker licenses. Mr Lo is an expert in trading

      forex, precious metals and commodity futures and an basic and technical

      analyst.

      Over the years, Mr Lo won many individual and team sales champion

      awards, as well as outstanding employee awards. He was invited, as a

      guest mentor, to the University of Hong Kong, Guangdong Ocean University

      and Guangzhou Jinan University. And he was also appointed as the chief

      training consultant by Hantang Securities and Dongguan Securities in

      China.

      Mr Lo's experience as guest of honor invited by media including Chinese and English newspapers and columnist:

      -Guest of honor invited by TVB New Channels such as Finance Channel, Forex Focus, Global Watch

      -Guest of honor invited by Now Finance Channel - Forex Reports

      -Guest of honor invited by i-CABLE Finance Info Channel - Forex Opportunities

      -Guest of honor invited by ViuTV - Investor Smarter Group

      -Columnist of Finance and Forex Market of Ming Pao

      -Presenter of Finance and Forex Forecast of Ming Pao

      -Presenter of Investment 36 Stratagem and Technical Analysis in 1 Min of Ming Bao Finance

      -Appointed lecturer of Ming Pao Investment Seminar and Paid Course

      -Author of the best seller Investment 36 Stratagem

      -Columnist of Forex Expert, Forex Analyst, Marathon Weekly of ET Net

      -Guest of honor of Open Good Morning of ET Net

      -Guest of honor of Metro Finance Channel - Market Opening, Instant

      Market Fighting, Guangdong-Hong Kong Finance, Finances Power, Market

      Analysis

      -Guest of honor of New Era of Investment of RTHK

      -Columnist of Capital Commodities of Capital Weekly

      -Guest Presenter of Wang Guanyi Online Finance Channel - Fund and Commercial Bond

      -Columnist of Wealthub Finance and Investment Smart Platform of Enrich Culture

      -Guest presenter of Weekly Investment in the World of Enrich Culture

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