Forecasts, Commentary & Analysis on the Economy and Precious Metals
Celebrating our 48th year in the gold business
“Gold shone with the placid certainty of received tradition. Honored through the ages, the standard of wealth, the original money, the safe haven. The value of gold was axiomatic. This view depends on a concept of gold as unchanging and unchanged—nature’s hard asset.” – Matthew Hart, Vanity Fair magazine
Facing down our investment fears
Courage comes from a strategy you can genuinely believe in
“As markets shake off their summer slumbers,” writes London-based analyst Bill Blain, “what should we be worrying about? Lots..! From real vs transitory inflation arguments, the long-term economic consequences of Covid, the future for Central Banking unable to unravel its Gordian knot of monetary experimentation, and the prospects for rising political instability in the US and Europe.”
Facing down your investment fears can only come from a strategy you can genuinely believe in. One of the great quotes on gold ownership came many years ago from Richard Russell, the now-deceased editor of the Dow Theory Letters. “I still sleep better at night,” he wrote, “knowing that I hold some gold. If or when everything else falls apart, gold will still be unquestioned wealth.” It is not a complicated strategy, but it is an effective one.
Though rarely discussed, gold ownership has as much to do with personal philosophy and how we wish to conduct our lives as it does finance and economics. In many ways, it is a rational portfolio decision that suits the times, but it is also a lifestyle decision that provides some peace of mind no matter what happens with the pandemic, the mania on Wall Street, or the political maneuvering in Washington D.C.
Palantir buys $50.7 million in gold bars to hedge black swan events
The prospect of sleeping better at night played largely in Palantir Technologies’ $50.7 million purchase of gold last month – 28,000 troy ounces in 100-ounce bars. In a move that surprised Wall Street, the Denver-based firm founded by Peter Thiel and Alex Karp said it purchased the gold as a hedge against “a future with more black swan events.” It is interesting to note in the context of black swan events that among Palantir’s many data-based products, it offers the AI-ready Gotham operating system – a program, according to its website, that surfaces “insights from complex data for global defense agencies, the intelligence community, disaster relief organizations, and beyond.”
“Risk,” says US Global Investors’ Frank Holmes in a piece posted at Seeking Alpha, “is precisely the reason why Palantir Technologies decided to make an investment in gold. … [N]amed for the all-seeing crystal balls in Lord of the Rings – [Palantir] is also allowing customers to pay for its software in gold.” Holmes also cites a National Inflation Association subscriber note that the company’s decision “is only the beginning of what will soon be many major corporations diversifying their U.S. dollar cash into gold.”
In a detailed article posted at ETF Trends on the Palantir acquisition, Jared Dillian recommends a way of viewing gold we have advocated since the publication of the first edition of The ABCs of Gold Investing in 1996. “As gold investors (I hold a bunch),” he suggests, “maybe we should stop thinking about gold as a trade or an investment and start thinking about it as an insurance policy.”