There’s just no pleasing some people. Despite how well bitcoin is doing as of late – the currency just swung past the $12,000 mark – Warren Buffett, the CEO of Berkshire Hathaway, is still turning his back on the world’s number one digital currency by market cap and investing in gold.
Warren Buffett Invests in Gold Mining Firm
Not that there’s really anything wrong with this. After all, the asset has been doing quite well as of late. It’s trading for a high of nearly $2,000 per ounce at press time, and many thought it could shoot up as high as $2,300 per ounce, though this has yet to occur.
In addition, Buffett isn’t necessarily saying that bitcoin is bad and going into one of his usual rants. He just seems to be doing what a lot of standard investors and Wall Street players are doing and turning to more traditional means of making money instead of looking at bitcoin as an asset that will stick around.
But what Buffett doesn’t realize is that his gold investments could potentially help bitcoin to do even better than it’s ever done in its short, yet significant history. At the time of writing, bitcoin and gold appear to be more correlated than ever. When one does well, the other follows suit. Bitcoin has been shooting up as of late and is now above $12,000, and gold has been boasting similar behavior with its recent price surges.
Buffett has announced plans to invest in Barrick Gold, a company that mines the precious metal from the Earth for use in investment strategies. Given that both gold and BTC are highly correlated at press time, mining more gold could potentially lead to further bitcoin price surges. The maneuver implies a potential global allocation to gold at a five percent minimum, which could ultimately give gold the boost it needs to spike to $5,000 per ounce.
The Correlation Is Super Strong
Given that the correlation lasts, this could ultimately cause bitcoin to jump all the way to $50,000 per unit. The latest investing maneuver represents a completely different take for Buffett, who just under ten years ago, expressed some rather unpleasant words towards gold. In a shareholder letter in the year 2011, Buffett made the following statement about the precious metal:
Gold will never produce anything. It is purchased in the buyer’s hope that someone else will pay more than them in the future.
How funny. This is exactly what Buffett has said about bitcoin in the past. Its value doesn’t mean much because it’s an asset whose price is based more on whether other people will pay higher prices than bitcoin’s original buyer(s). Now that Buffett appears to be warming up to gold a bit, perhaps things can change between the Berkshire Hathaway mogul and bitcoin in the coming future.