3 Reasons Buffett's Barrick Gold Buy Isn't Such a Crazy Move

Warren Buffett has been an investor for a long time, and his company, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), has generated huge returns during his tenure. Yet as the Oracle of Omaha approaches his 90th birthday and Berkshire's stock has dramatically underperformed the broader market recently, some investors are questioning whether his investment decisions are really still up to snuff.

Late Friday, Berkshire Hathaway released its latest stock portfolio holdings as of June 30. Among them was a completely unexpected company: gold miner Barrick Gold (NYSE: GOLD). Given how Buffett has criticized gold as an investment repeatedly in the past, the investment might seem on its face to contradict everything the Berkshire CEO stands for. Yet investors who question Buffett's motives here should understand a few reasons why buying a stock with the ticker symbol GOLD isn't inconsistent with the strategy that got Berkshire where it is today.

Buffett's criticism of gold as an investment has always focused on the metal itself. In his 2011 shareholder letter, Buffett talked about how with $9.6 trillion -- the value of the 170,000 metric tons in gold worldwide at the time -- you could buy every acre of cropland in the U.S. and have enough money left over to buy ExxonMobil 16 times over. You'd even still have $1 trillion in cash left over. The Berkshire CEO noted that the cropland would be immensely productive and ExxonMobil would pay huge dividends, but the block of gold would still be the same block of gold.

Source Fool.com