Warren Buffett is arguably the most successful investor of our time. But lately, people have been doubting the wisdom of the Oracle of Omaha.
He took a bath in airline shares, selling when they collapsed at the outset of the coronavirus pandemic. Then his bank stocks took a dive when interest rates plunged and bad debt reserves soared thanks to the huge spike in unemployment.
But what investors have forgotten is that his biggest position by far, Apple, is about to break the $2 trillion valuation. That’s definitely not peanuts when you own 250 million shares and counting. So when he made a big purchase – close to $600 million worth of Barrick Gold (NYSE: GOLD) shares – the market took note.
Barrick Gold is not new to War Room members. I first recommended it back in May of 2019 when it was trading for less than half the current price. Members made money then and several more times since on both short- and long-term plays on the precious metals sector.
When Buffett made his buy, we had no less than three positions in the metals sector. One of them, the Direxion Daily Gold Miners Index Bull 2X Shares (NYSE: NUGT), is a favorite short-term trading vehicle that Bryan uses to play the trend. After the Buffett news went public, members made close to 200% on that short-term trade.
Our other positions also moved higher on the news, which brings me to Kirkland Lake Gold (NYSE: KL), the company Buffett should have bought. Members have made money on this pick several times.
This time, members own a vertical call spread on Kirkland Lake Gold and are up nicely after just a couple of weeks. They bought in at the low point of the recent correction.
Kirkland Lake Gold has a much better growth profile than Barrick Gold’s. It’s a midtier producer with one of the lowest cost structures in the business, as well as some of the highest-grade mines in the world.
The company is valued at around $14 billion, which makes it about a quarter of Barrick Gold’s market cap. It doesn’t produce as much gold and silver as Barrick Gold, but it’s growing its production and reserves at a much faster rate.
For War Room members, Kirkland Lake Gold is a better bet than Barrick Gold. It offers them two things…
- More upside thanks to its growth profile and topflight management team
- A nice acquisition target for none other than a company like Barrick Gold or the other metals giant, Newmont Gold. I’ll take that bet anytime!
About Karim Rahemtulla
Karim began his trading career early… very early. While attending boarding school in England, he recognized the value of the homemade snacks his mom sent him every semester and sold them for a profit to his fellow classmates, who were trying to avoid the horrendous British food they were served.
He then graduated to stocks and options, becoming one of the youngest chief financial officers of a brokerage and trading firm that cleared through Bear Stearns in the late 1980s. There, he learned trading skills from veterans of the business. They had already made their mistakes, and he recognized the value of the strategies they were using late in their careers.
As co-founder and chief options strategist for the groundbreaking publication Wall Street Daily, Karim turned to long-term equity anticipation securities (LEAPS) and put-selling strategies to help members capture gains. After that, he honed his strategies for readers of Automatic Trading Millionaire, where he didn’t record a single realized loss on 37 recommendations over an 18-month period.
While even he admits that record is not the norm, it showcases the effectiveness of a sound trading strategy.
His focus is on “smart” trading. Using volatility and proprietary probability modeling as his guideposts, he makes investments where risk and reward are defined ahead of time.
Today, Karim is all about lowering risk while enhancing returns using strategies such as LEAPS trading, spread trading, put selling and, of course, small cap investing. His background as the head of The Supper Club gives him unique insight into low-market-cap companies, and he brings that experience into the daily chats of The War Room.
Karim has more than 30 years of experience in options trading and international markets, and he is the author of the bestselling book Where in the World Should I Invest?
