Guru and Metal: Reason vs. Speculation

XAU/USD

Key zone: 3,950.00- 4,050.00

Buy: 4,050.00 (on strong positive fundamentals); target 4,200.00; StopLoss 3,980.00

Sell: 3,950.00 (on a pullback after retesting the 4.000 level); target 3,750-3,700; StopLoss 4,020.00

The current dynamics of precious metals look so attractive that even Morgan Stanley’s Chief Investment Officer now recommends replacing the traditional 60/40 portfolio model with a new 60/20/20 allocation—where 20% is gold instead of conventional bonds.

Billionaire Jeffrey Gundlach, known as Wall Street’s “Bond King,” has long promoted gold as a permanent portfolio diversifier rather than a speculative bet.

Nevertheless, not all market authorities see gold as a cure-all for financial problems.

Warren Buffett’s company, Berkshire Hathaway, released its 10Q report on Saturday, showing that as of Q3, cash holdings reached a record $381.7 billion (+$37.6 billion QoQ). This resulted from Berkshire selling more shares than it bought for the twelfth straight quarter, reducing its equity portfolio to $283.2 billion.

For reference, Berkshire Hathaway hasn’t executed any stock buybacks since Q2 2024.

This partly explains its 34% underperformance versus the S&P 500 since Buffett announced his retirement, though officially “Uncle Warren” remains active until the end of this year. Yet 2025 shows that the capital discipline model, large cash reserves, and focus on insurance and infrastructure remain intact — the same “Berkshire strategy” that post-Buffett successor Greg Abel pledged to maintain.

Berkshire’s top three holdings—Apple, American Express, and Bank of America—remain solid. But in any market turbulence, the company prefers to “go to cash,” rather than gold, unlike panicking traders.

Warren Buffett is an investor, not a speculator. He has never hidden his view that gold is a “nonproductive asset”: it generates no cash flow and doesn’t increase intrinsic value without a constant inflow of new buyers.

Buffett describes gold as “a way to profit from fear—but to do that, you must hope that in a year or two, people will be even more afraid than they are now. If they are, you’ll profit; if they’re less afraid, you’ll lose money. But gold itself produces nothing.”

As the guru invests consistently in businesses that create real value, he tends to favor gold miners over the metal itself. He has done this before: in Q2 2020, Berkshire Hathaway acquired roughly 21 million shares of Barrick Gold worth $560.6 million, but the position was almost entirely liquidated by the end of that year.

Additionally, gold “disrupts” Berkshire Hathaway’s risk management philosophy—specifically, its approach to “opportunity cost.” Long periods of sideways gold movement (real returns after storage/insurance costs) historically lag behind dividends, buybacks, reinvestment, and other productive business strategies.

Buffett believes that if one must bet on gold, it should be on mining companies with free cash flow and capital discipline—not on speculative spot assets. The Barrick Gold episode proved that entry can be profitable, but flexibility for a rapid exit is essential.

Still, completely ignoring gold deprives any investment portfolio of assets that historically correlate with market panic and fear in currency and commodities markets. For short-term hedging, nothing yet beats gold.

At this point, there are no strong reversal signals for gold. A correction is possible, but trading it is not advised. The fundamental backdrop remains aggressive—watch the dollar closely.

So we act wisely and avoid unnecessary risks.

Profits to y’all!