KEY POINTS

  • Warren Buffett’s Berkshire Hathaway invested in the second largest gold producer while unloading multiple financial stocks
  • The sentiment that gold will appreciate soon based on Buffett's investment could indicate that Bitcoin's value will increase as well
  • One analyst notes Bitcoin could reach $50,000 if correlated with gold’s future market cap

Warren Buffett’s company Berkshire Hathaway has invested in gold mining firm Barrick Gold, fueling speculations that it would benefit Bitcoin due to its correlation with the shiny metal and the narrative that it is "digital gold." 

While Buffett did not actually buy gold but rather invested in a mining company, the billionaire's gold play implied an expected global allocation to the shiny metal at 5% minimum, which would put its price at $5,000, said Heisenberg Capital founder Max Keiser. As Bitcoin is digital gold, the investor expects at least 1% of that as BTC global allocation, putting its cap at $1 trillion. “This implies $50,000 for Bitcoin Expect PTJ ups to 10%,” he said on Twitter.

Ikigai Fund founder Travis Kling also believed Buffett buying gold today is like the billionaire not buying the shiny metal in 1998. At that time, the billionaire said the metal’s value is nothing more than the market’s willingness to protect its value. He doubled down in 2011 when he called gold an unproductive asset. “Gold will never produce anything, but are purchased in the buyer’s hope that someone else will pay more than them in the future,” he said in his shareholder letter that year.

In a Twitter post, Kling said the reasons for buying gold are self-apparent at this point, noting the future value of Bitcoin. "Just in case you’re wondering what the coming years are going to look like for Bitcoin, this was Buffett on gold in 1998," Kling added.

These gold and Bitcoin predictions are indicative of the benchmark cryptocurrency’s correlation with the shiny metal. Data from skew.com suggest that both assets have increased their value in tandem in the last four months, said Cointelegraph.

Bitcoin and gold’s price rally are hinting on both assets being considered as stores of value in times of uncertainty. In his thesis "The Unfolding", macro trader Raoul Pal predicted a future collapse of the current financial system and said the only way to protect value is through Bitcoin and gold. 

While not a clear indication of the trend mentioned by Pal, the company's investment in Barrick Gold, the second largest gold producer, came with the disclosure that Berkshire Hathaway also unloaded multiple financial stocks. Most notably, Buffett sold his last investment to Goldman Sachs while significantly cutting his company’s shares on other firms like US Bancorp, JP Morgan Chase and M&T Bank.

Warren Buffett, CEO of Berkshire Hathaway, arrives at the May 2019 shareholder meeting in Omaha, Nebraska Warren Buffett, CEO of Berkshire Hathaway, arrives at the May 2019 shareholder meeting in Omaha, Nebraska Photo: AFP / Johannes EISELE