Wall Street Baffled As Palantir Acquires $50 Million In Gold Bars

A rising U.S. Dollar Index is putting downward pressure on hard assets markets this week.

Dollar bulls are counting on the Federal Reserve to start tightening its ultra-loose monetary policy. They expect the Fed to begin tapering its monthly asset purchases later this year. Minutes released on Wednesday from the FOMC’s latest meeting suggest policymakers are leaning in that direction. 

But there is a massive gulf between beginning to taper bond purchases and finally hiking their benchmark interest rate several times to exceed the inflation rate.  Anything short of a positive real Fed funds rate still represents accommodative monetary policy.  And that will be in place for the foreseeable future.

The Fed can be counted on to continue to debase the currency. What’s less certain is whether other national fiat currencies will fall or rise in exchange rates versus the U.S. dollar. But over time, they will all fall versus real assets as inflation persists.

Traders in fast-moving markets can be very short-sighted, though, especially if they are employing leverage. Commodities and precious metals futures markets got hit with lots of sell orders this week, although gold prices are holding up fairly well here.

Gold sometimes serves as a sort of safe haven within the hard assets space. And that was true this week as crude oil, copper, and the white metals all got hammered.

Even as the precious metals sector is currently out of favor among mainstream investors, contrarians are seizing the opportunity to accumulate. Some big institutional buyers are entering the market.

The technology company Palantir purchased $50 million worth of gold bars in recent weeks. The news surprised and confused some of the talking heads on CNBC. But analyst Guy Adami stepped in to explain why physical gold makes sense in an environment of uncertainty and inflationary monetary policy.

CNBC News Report:           Data analytics company Palantir buying more than $50 million worth of... get this… gold bars in August, according to a regulatory filing. The company is able to take physical possession of the gold at any time with reasonable notice.

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William K. 1 month ago Member's comment
Perhaps they have a product that requires a bit of gold as one of its constituent elements. It is a tech company, after all.