Palantir Purchases $50 Million in Gold

Palantir, the $46bn megalith in the big data analytics space, has shocked traditional markets with a 10-Q filing showing their acquisition of physical gold. Denominated in 100 ounce bars, the company now has $50.7m of gold holdings on their books. Significantly, rather than taking a position in an ETF which has been the more common vehicle for major funds like Bridgewater Capital, or a miner in the case of Berkshire Hathaway, Palantir have elected for exposure to the yellow metal in the form of physical holdings that they have full access to. 

From the 10-Q Filing:

“During August 2021, the company purchased $50.7 million in 100-ounce gold bars. Such purchases will initially be kept in a secure third-party facility located in the northeastern United States and the Company is able to take physical possession of the gold bars stored at the facility at any time with reasonable notice.”

A spokesperson for the company explained the move by saying that the company is preparing for another “black swan event” by stockpiling gold bars. This follows on the theme we spoke about in yesterday’s article of growing uncertainty in market participants bracing for a major reversal in indices. While the company still isn’t turning an operational profit, they have a reported $2.3 billion in cash reserves, raised partly from stock issuance of their own stock PLTR, and exercising stock options in other companies they have stakes in. As a result, they are looking for a return on that cash stash. With the flash crash earlier this month bringing prices down better than 20% below all-time-highs, they may have just been ‘buying the dip’ as retail investors were.  

Chief Operating Officer, Shyam Sankar, has previously stated that Palantir Technologies is now inviting customers to pay for its data analysis software in gold. If they go ahead and begin accepting gold for services rendered, we can add ‘medium of exchange’ to gold’s use cases. This isn’t the company’s first foray into non-traditional currencies, the company has previously voiced interest in accepting Bitcoin as a payment method. According to Sankar, accepting Crypto and Bullion “reflects more of a worldview”, and that “you have to be prepared for a future with more black swan events.” That worldview portending a major liquidity event in the near-term horizon, is one that is increasingly being shared by more market participants as inflation continues to quicken.

The Palantir gold move is a high profile one, which is likely to have other corporate boards putting gold reserves on the agenda of their next meetings. Commentators on CNBC’s Fast Money weighed in with Karen Finerman pointing out that it’s unusual to see gold reserves on a company's balance sheet, except in the case of gold miners. Guy Adami emphasised that this is an actual gold investment as opposed to an ETF, and that ‘this is one of those days you bookmark. This is [Palantir] saying Central Banks are out of control - black swan event. Good for them.”     

While difficult to extrapolate a trend from an individual event, we may be at the start of a similar period that saw Microstrategy as a vanguard of corporate Bitcoin adoption, followed by Tesla and the rest of the ‘in-crowd’ on Wall Street. If that’s the case, gold bugs may live to see the mainstream re-adoption of gold.