Palantir Bought Gold Bars

Palantir Bought Gold Bars

We recently got the news that tech/intelligence firm Palantir (PLTR) bought $50 million worth of physical gold to hold on its balance sheet. They’re not telling us where they put the gold, which is understandable.

Palantir is what I call a gifted and talented camp. Very bright and eccentric people work there. I owned the stock at one point, but no longer do. I hope to buy it again someday. You want to bet on gifted and talented camps.

Palantir bought the gold in the case of a “black swan”. We don’t know what that might be, but we have some guesses. It might be a big freaking war, for starters, the chances of which ticked up a bit after the Afghanistan debacle. Or a currency collapse. Or who knows what. We seem to have big black swans every few years, so it’s probably not a bad idea to keep some gold around.

We had a black swan last year with the pandemic -  and gold went down, at least, initially. Mostly because people were selling all assets to raise cash. That actually happened in the early part of the financial crisis as well - gold peaked at $1,000 an ounce on the Bear Stearns take-under. Then it sold off 30% heading into the fall. It didn’t make any sense.

Gold never makes any sense, but it’s outperformed stocks since 2002.

In a sense, this isn’t much different than MicroStrategy (MSTR) or Square, Inc. (SQ), or even Tesla (TSLA) buying bitcoin. Although the motivations are different. Palantir bought gold as an insurance policy of sorts. MicroStrategy and Tesla are engaging in rank speculation. You could make the argument that Square is holding it to facilitate payments someday. But nobody holds bitcoin because they think the world is going to end, because if that happens, as a risk asset, bitcoin will probably go down. Bitcoin also wouldn’t do so well with the power off.

As gold investors (I hold a bunch), maybe we should stop thinking about gold as a trade or an investment and start thinking about it as an insurance policy. But if we did that, people would have to do some serious thinking about why they hold gold. If you have homeowner’s insurance, you don’t hope that your house will burn down so your insurance policy will pay off. A lot of gold investors seem to want the planet to go down the tubes. They get sweaty palms thinking about it.

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Disclaimer: The Mauldin Economics website, Yield Shark, Thoughts from the Frontline, Patrick Cox’s Tech Digest, Outside the Box, Over My Shoulder, World Money Analyst, Street Freak, Just One ...

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