(Bloomberg) -- Barrick Gold (NYSE:GOLD) Corp. advanced the most since March, leading a surge in precious-metals miners after Warren Buffett’s Berkshire Hathaway Inc . (NYSE:BRKa) added the company to its portfolio.
Barrick, the world’s second-largest miner of the metal, jumped as much as 12% and a Bloomberg Intelligence gauge of senior gold miners climbed after Berkshire on Friday reported a purchase of 20.9 million shares as of the end of the second quarter. Greenwood Village, Colorado-based Newmont Corp., the largest producer, also gained Monday, along with Kinross Gold (NYSE:KGC) Corp. and Harmony Gold Mining Co.
Gold miners are benefiting as near-record bullion prices boost profit margins and help them lure back generalists who fled the sector years ago. In the past, Buffett, the billionaire chairman of Berkshire, cautioned against investing in the metal because it’s not productive like a farm or a company. The filing shows moves made by Buffett or his two investing deputies, Todd Combs or Ted Weschler.
“Seeing Buffett come into the space is obviously very interesting and it will spark a bit more general interest,” Bryan Slusarchuk, chief executive officer of Vancouver-based Fosterville South Exploration, said in a telephone interview. “The sector is relatively small so when you see just a small change in sentiment added, it doesn’t take a huge shift in asset allocation to drive the gold equities higher.”
Streaming companies, which provide upfront payments to miners in exchange for the right to buy metals at a discount in the future, also rose on Monday.
As real interest rates remain below zero and governments from the U.S. to China work to provide economic relief from the toll of the coronavirus, analysts including those at Goldman Sachs Group Inc (NYSE:GS). see further increases for the metal. Goldman’s Jeffrey Currie said Thursday that “we’re not out of this crisis yet,” and that stimulus could last into 2021.
“There’s still a substantial amount of demand for gold and silver, in particular from retail accounts,” Daniel Ghali, a commodities strategist at TD Securities, said by phone. “We are, in my opinion, in a speculative frenzy here, and so this news helps to convince these speculators to add to gold, considering that the Oracle (NYSE:ORCL) of Omaha is stepping in.”
Toronto-based Barrick advanced 11% to $30 at 1:05 p.m. in New York after rising the most intraday since March 24. Newmont added as much as 6.7%, while the BI Global Senior Gold Valuation Peers index of 13 producers climbed 4.8%.
Spot gold rose 2.1% to $1,985.83 an ounce in New York. Prices have surged more than 30% this year and reached a record $2,075.47 earlier this month.
(Updates with comments from mining executive and analyst in fourth and seventh paragraphs)
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