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Palantir Technologies Inc. bought $50.7 million in gold bars this month as a hedge against another “black swan event.” The company is also inviting customers to pay for data analysis software in gold.
Peter Thiel and Alex Karp co-founded the software development firm. The company’s website says, “We make products for human-driven analysis of real-world data.” According to Bloomberg, governments worldwide have used the company’s software to analyze the coronavirus pandemic.
The company has a reputation as a bit of a maverick in the tech world. In an interview, Palantir Chief Operating Officer Shyam Sankar compared the company culture with an “artist colony.”
The gold purchases were noted in a securities filing reporting its quarterly financial results. According to the filing, the company will store the gold bars in a secure third-party northeastern US location.
The company is able to take physical possession of the gold bars stored at the facility at any time with reasonable notice.”
The company is also reportedly considering investing in bitcoin. Accepting nontraditional currencies “reflects more of a worldview,” Sankar said.
You have to be prepared for a future with more black swan events.”
Investopedia defines a black swan as an “unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences.”
Gold has long been considered a “safe haven” in times of economic, political, or social upheaval.
As the coronavirus pandemic evolved, the price of gold soared to record levels above $2,000 an ounce, even as many other traditional safe-haven assets including the dollar and US Treasuries stalled.
Why was gold the only safe haven left standing for a time? Peter Schiff explained in a podcast at the time.
Because the real risk, the real threat, is not, or was not, plunging stock prices or COVID-19. The real threat is inflation. That’s what people are seeking out a safe haven from. It’s the central banks. It’s not that we have COVID-19 and a recession, but it’s the monetary policy response to the recession. It’s not the damage done from COVID-19. It’s the damage done from the monetary policy response to COVID-19 and to the monetary policy response to the fiscal policy response.
Of course, the fiscal policy response is to spend money. The Fed’s response is to print money to make the spending possible. All of this stimulus produces a sugar high, but it’s harmful in the long run.
That is what investors need safety from. So, the reason gold is the only safe haven that’s still going up is it’s the only safe haven that provides safety, that is a haven against inflation and global fiat currency debasement.”
We’ve seen the inflation over the last seven months, but Federal Reserve Chairman Jerome Powell has managed to convince the markets that inflation is “transitory” and the mainstream remains convinced the Fed is set to tighten monetary policy. As a result, gold has dropped from those 2020 highs.
This created a nice opportunity for Palantir to buy gold. But Peter says the promised Fed tightening won’t materialize as expected and we’re just getting started with inflation.
Everybody still believes the Fed, at least all of the mainstream investors that control the lion’s share of the investible money. They believe the Fed, and they’re not worried about inflation, even though it’s here. What they’re worried about is the Fed having to fight inflation. In fact, they’re confident that the Fed is going to fight inflation. They believe that they will battle inflation by tapering their asset purchases and eventually ending the asset purchases altogether, and by normalizing interest rates – raising rates from zero. And so, since the Fed is going to fight inflation, investors don’t want to fight the Fed. That is an age-old Wall Street adage. ‘Don’t fight the Fed.’ And if the Fed is going to be fighting inflation, well, you don’t want to own gold, because in that environment, where you have the Fed tightening policy, everybody believes that environment is bad for gold, and that’s why the price of gold has been weak.”
Peter said investors are wrong. Not only is the price of gold not going to go down in the future; it’s going to go up.
The Fed is not going to fight inflation at all. It’s probably going to surrender and inflation will win by default. But even if it tries to fight inflation, it will lose and inflation will win. And it is a fantastic environment for gold.”
And this is exactly why Palantir bought gold.
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