[MRM]

When you buy any mining or extraction stock, you're buying the company's reserves times the market price minus their cost of production. Many mining companies also keep an inventory to sell when prices are high. Buffet must have found a stock he thinks is undervalued, either because the expected future value of gold hasn't been factored into the stock yet, or he thinks the company's reserves and inventory are bigger than the the market has valued. Since he doesn't like to invest in gold based on market timing the price, he must think their reserves are bigger, or cheaper to extract, than the rest of the market has evaluated.