Steve Kaplan's Gold Mining Outlook is moving to a new site! Here is the link to his new page: investor1.com and a direct link to his latest article:
investor1.com
Why the activities of Warren Buffet are more significant than their effect on the price of silver: The fact that Berkshire Hathaway has in recent months been involved in purchases such as zero coupon bonds (recently sold), and more recently in silver, has much more important implications than have been discussed by the general media. With a worldwide selection of equities available for investment, a man who has made his living buying stocks for the long term has diversified into bonds and metals in increasing proportions. The unstated but clear message is that U.S. equities no longer represent an unqualified top choice for someone who has believed in them for decades. In other words, if Warren Buffet is increasing his allocation of alternative investments, the rest of the world will not be far behind. Although most U.S. mutual funds currently have zero percent of their assets in gold mining shares, this was not the case in the 1970s and early 1980s, when they were held roughly in proportion to their aggregate capitalization as a percentage of the stock market's total value. Should mutual fund managers return these shares to their proper weighting, this would provide a substantial rally in these equities even without an increase in the gold price. More realistically, fund managers will become more interested and more heavily invested as prices rise, thus increasing the intensity of any rally. Ironically, the poor performance of gold mining shares in 1997 will cause their 1998 and subsequent performance to be enhanced in percentage terms, providing momentum for fund tracking services such as Value Line and Morningstar and thus increasing the likelihood of these shares being rated "timely" in the relatively near future--probably once gold has broken and held above $330 spot.
Robert |
