PLTR Stock: Palantir Just Sold All Its Gold. Should You?

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Palantir (NYSE:PLTR) stock is up more than 30% over the past five trading days after the big data analytics company reported its first-quarter earnings. Along with earnings, Palantir also disclosed that it had sold its entire stake of 100-ounce gold bars for $51.1 million some time during the three months ended March 31. The stake was originally purchased in August 2021 for $50.9 million.

This means that within a 17- to 20-month period, Palantir returned just 0.393% on its investment. Still, the investment managed to outperform the S&P 500, as the benchmark index lost about 8.8% from August 2021 to March 2023. At the same time, a less than half a percent return in almost two years is nothing to brag about.

PLTR Stock: Palantir Dumps Its Gold Bar Stake

Palantir did not disclose the reason for its purchase or sale of gold. However, the purchase was likely enacted as a bet against inflation. Meanwhile, the sale was likely enacted in order to use the cash for other business ventures or to invest it into U.S. Treasury securities.

With rising rates, government securities produce a higher yield for investors. As of today, the federal funds rate sits at 5.08% with a targeted range of between 5% and 5.25%, up 25 basis points compared to May 3 due to a rate hike. Palantir disclosed in its Q1 earnings report that it held $1.62 billion worth of U.S. Treasury securities. For context, the 1-year treasury bill currently has an annual yield of about 4.74%.

“Some gold investors fail to consider its volatility as well as its opportunity cost, while others fail to anticipate storage needs and other logistical complexities of gold ownership,” explains Investopedia, “For these and other reasons, some view U.S. Treasury bills as a superior safe-haven alternative to gold.”

Meanwhile, Palantir’s Q1 earnings seem to have struck a positive cord with Ark Invest’s Cathie Wood. Back in March, Ark sold out of PLTR stock after owning over 30 million shares at the start of February. Yesterday, however, the ARK Innovation ETF (NYSEARCA:ARKK) and ARK Next Generation Internet ETF (NYSEARCA:ARKW) disclosed purchasing over 4.3 million shares of the company.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. 

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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