Palantir dumps $50 million gold investment less than two years after buying precious metal

In August 2021, data analytics software vendor Palantir bought over $50 million worth of 100-ounce gold bars. Less than two years later, Palantir said goodbye to the precious metal.

“During the three months ended March 31, 2023, the Company sold all of its gold bars for total proceeds of $51.1 million,” Palantir said in its first-quarter financial filing Tuesday. The company said the sale resulted in “an immaterial realized gain” on its statement of operations.

At the time of Palantir’s investment in gold, the market was in a much different spot. Stocks were months away from peaking, crypto was flying high and interest rates were near zero. Other tech companies were pumping cash into equity investments and even bitcoin, but Palantir chose a more conservative path in parking some of its extra cash.

Palantir didn’t say at the time why it bought gold, noting only that the bars were “located in the northeastern United States” and that the company could “take physical possession of the gold bars stored at the facility at any time with reasonable notice.”

In its latest filing, the company gave no explanation as to why it made the sale, and a spokesperson didn’t immediately respond to a request for comment.

As a hedge against inflation, Palantir made a savvy bet.

Food and energy prices, which were already on the rise by mid-2021, soared through mid-2022, with the year-over-year consumer price index peaking at 9.1% in June. That number has since come steadily down, reaching 4.9% last month, the slowest pace since April 2021.

Gold prices are up more than 12% since early August 2021, while the S&P 500 has dropped about 6% over that same stretch.

But gold as an alternative to cash loses its appeal for many investors in an environment of rising interest rates, because there’s suddenly money to be made in government bonds and high-yield savings products.

According to the quarterly filing, Palantir closed the period with $1.62 billion in U.S. Treasury securities, accounting for more than half of its cash, equivalents and short-term investments. That’s up from zero at the end of 2022, according to its annual report.

“Cash equivalents primarily consist of money market funds and U.S. treasury securities with original maturities of three months or less, which are invested primarily with U.S. financial institutions,” Palantir’s filing said.

The disclosure comes a week after the Federal Reserved raised its benchmark rate by another 0.25 percentage point, its 10th increase in a little over a year, to a target range of 5%-5.25%, the highest since August 2007.

Palantir shares soared 23% on Tuesday after the company reported earnings and revenue that topped analysts’ estimates. The stock rose another 4.1% Wednesday to $9.94.

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