Gold Is The Ultimate Reserve Asset

Imagine your favorite company getting sued for holding too much cash.

I know, that’s a big statement. But hear me out.

Corporations, pension funds, and insurance companies – anyone responsible to stakeholders - could one-day face class-action lawsuits if they don’t diversify into other reserves assets.  It’s not beyond the realm of possibility, especially in today’s litigious-happy world.

Michael Saylor famously bought bitcoin last year to diversify and protect the buying power of MicroStrategy’s surplus cash…half a billion dollars’ worth. Elon Musk recently did the same for Tesla, plowing $1.5 billion into bitcoin. Before either of these was Overtstock.com.Remember them?

That was back in 2018. Then CEO Patrick Byrne moved Overstock.com into blockchain and cryptocurrencies in a big way. Shares are up almost 500% since.

Clearly, these are sharp stewards of their companies. Their move into bitcoin and blockchain was wise in hindsight, having paid off handsomely.  

Many sit on massive mounds of cash. And it could soon, almost literally, start burning holes in their pockets.

Too Much Cash

Alphabet’s (GOOGL) pile is $137 billion, Microsoft’s (MSFT) is $132 billion, Apple (AAPL) has $77 billion, Amazon (AMZN) $84 billion, and Facebook (FB) is sitting on $62 billion. 

That’s half a trillion dollars, just amongst these five.

Many large companies, the world over, have huge cash reserves. It’s not that surprising. With stocks at all-time highs and dizzying valuations, there’s not much to buy without overpaying.

Maybe that’s at least one reason so many have resorted to stock buybacks. We know several have borrowed, at historically low-interest rates, to do this. From management’s perspective, at least, it’s a no-brainer. But is it really in shareholders’ best interest? Saylor recently took his bitcoin binge to another level. In December, MicroStrategy took on $650 million in debt to buy even more bitcoin.

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