Then, in 2009, when asked about gold’s prospects for the next five years, Buffett said: “I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you.” Clearly, gold was not Buffett’s favourite investment.

It seems his attitude may be changing. On Friday, his company Berkshire Hathaway said that it has just made a gold-related investment.

Buffett just made a gold investment

To be clear, Buffett hasn’t bought gold itself. He hasn’t loaded up on gold bullion bars or invested in a gold exchange-traded fund (ETF).

But what he has done is buy a large number of shares in Barrick Gold – one of the world’s largest gold mining companies. In a 13F filing detailing its US-listed investments as of 30 June, Berkshire disclosed a new 21m shareholding in Barrick, worth about $570m.

What does this tell us?

This is certainly an interesting move from Buffett. Especially when you consider that the filing also revealed he has been selling shares in some of his financial services holdings, including Wells Fargo, JP Morgan Chase, and Goldman Sachs.

We can’t be sure exactly why Buffett has bought a gold stock. However, in my view, this move  suggests Buffett is concerned about the unprecedented stimulus packages that central banks have announced this year. He may also be concerned about inflation (gold can act as a hedge against inflation).

If the gold price continues to rise, Barrick Gold should do well for Buffett. This is because a rise in the gold price can have a dramatic impact on a gold miner’s profitability. If the gold price rises significantly above a company’s cost of production, the increase tends to go straight to its bottom line. That can drive the company’s share price much higher.

Looking for UK gold stocks?

If you’re interested in following Buffett’s lead and buying a gold stock, you’ve plenty of options as a UK investor. There are many gold stocks on the London Stock Exchange.

I’ll point out, however, that Buffett’s choice, Barrick Gold, is a giant. It has a market-cap of nearly $50bn and generated revenues of $9.7bn last year. In other words, Buffett isn’t messing around with a tiny, speculative gold miner. He’s made a small investment (for him) in a large-cap, dividend-paying gold stock.

The most similar stock in the UK is probably FTSE 100 company Polymetal International. It’s a top-10 global gold producer with a market capitalisation of £9.4bn.

Just remember though, gold mining is a complex business. There are many things that can go wrong. This means gold stocks don’t always rise when the gold price is climbing.

If you’re thinking about investing in UK gold stocks, my advice is to spread your capital over a number of different stocks to minimise stock-specific risk.

The post Warren Buffett just made a shock move: he bought a gold stock! appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

In the UK, there are many gold stocks listed on the London Stock Exchange (LSE). Whether you’re looking for a large-cap FTSE 100 gold miner or an under-the-radar small-cap gold explorer, you have plenty of options. Here, I’ll provide a concise overview of some of the main UK gold stocks. 

Large-cap UK gold stocks

In the large-cap area of the UK stock market, there are a few companies that produce gold. One of the major players is FTSE 100 firm Polymetal International. It’s a top-10 global gold producer with a market capitalisation of £7.7bn.

Also in the FTSE 100, there’s Antofagasta and Fresnillo. Both of these companies produce gold, however, it is not the main commodity they focus on. Antofagasta’s primary focus is copper, while Fresnillo’s is silver.

Mid-cap LSE gold miners

In the mid-cap area of the market, there are a number of companies that are engaged in the mining of gold. One of the best known mid-caps is FTSE 250 gold miner Centamin. It’s focused mainly on mining gold in Egypt and has a market cap of nearly £2bn.

Other UK gold stocks in the mid-cap arena include Petropavlovsk and Highland Gold Mining, which are both focused on mining gold in Russia. There’s also Hochschild Mining, but it has a large focus on silver.

Small-cap gold stocks

It’s the small-cap space that offers UK investors the most choice when it comes to gold stocks. In this area of the market, there are lots of gold stocks. Many of these are listed on the LSE’s Alternative Investment Market (AIM).

Some of the best known small-cap UK gold stocks include:

• SolGold, an Australian gold and copper mining company.

• Greatland Gold, which is focused on gold mining in Australia.

• Pan African Resources, a mid-tier Africa-focused producer.

• Chaarat Gold Holdings, which operates in the Kyrgyz Republic.

• Shanta Gold, which focuses on gold in Tanzania.

• Trans-Siberian Gold, which has a portfolio of gold assets in Russia.

All of these small-caps have a market capitalisation of at least £50m.

What you need to know about UK gold stocks

Of course, before investing in gold stocks, it’s important to understand the risks. One thing you should know about such stocks is that they tend to be volatile. While they can deliver strong returns when gold is rising, they can also deliver big losses if gold is falling.

I’ll also point out that gold mining is a complex business. There are many things that can go wrong. This means that gold stocks don’t always rise when the gold price is rising.

If you’re thinking about investing in UK gold stocks, my advice is to focus on risk as well as return. Spreading your capital over a number of different stocks is generally a smart strategy.

The post Want to invest in UK gold stocks? Here are some LSE-listed companies I’d consider appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Fresnillo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.