Palantir Technologies is a big data analytics company that serves some of the most powerful organizations in the world. One of the three main segments of the company, Palantir Gotham, is a counter-terrorism tool and has a client list including the CIA, NSA, West Point, and Special Operations Command. It is no surprise that the company wants to become “the default operating system across the U.S. government.”
These relationships put them in an elite class of clandestine organizations with access to information seen by few. This advantage is what makes one of Palantir’s latest moves so interesting.
A single note in the company’s 93-page second quarter earnings report published in mid-August states that they purchased $50.7 million worth of 100-ounce gold bars. For the moment the bars are being held in a third-party location in the northeastern United States.
This move prompts one eager question: why?
The details are scarce but the COO Shyam Sankar explained that the move was part of the company’s aim to shift to more of a worldview. His next comment was more ominous. Sankar added, “You have to be prepared for a future with more black swan events.” His remark seems genuine given that the company has also decided to accept gold as payment from customers.
The market seems in agreement with this view given that gold surpassed a value of $2,000 per ounce for the first time in history as COVID fears mounted in 2020.
The threat of a Black Swan event seems ever-present as the COVID pandemic worsens. Before the term black swan entered the modern lexicon most knew this phenomenon as “tail risk.” A tail risk is the probability of a rare event occurring. The tail is the left and right portion of a normal distribution bell curve.
In a previous Blanchard article we discussed this characteristic of the market and the observation that the world presents risk that often goes unseen until it is too late.
The fact that Palantir made this decisive bet on the future of gold should rally investors to consider their own investments. Is it possible that Palantir is aware of a looming heightened risk? It is impossible to know. It is likely that they have acted on some information that is more than a passing impulse.
Palantir’s software enables businesses to become more efficient and more effective at leveraging what the data they have. This benefit resonates more deeply in a COVID and post-COVID world where gains through traditional business growth are hampered. For this reason more people are likely to take notice of Palantir’s recent investment.
Put simply, when Palantir speaks it is wise to listen. Their additional contracts with the HHS, the Department of Defense, the Justice Department, the Department of Homeland Security, and the SEC are giving Palantir deep roots within the US government infrastructure. Palantir is in the business of seeing just a little bit further down the road, and right now it appears that they see tail risk.
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