Gold Is The Ultimate Reserve Asset
The comments below are an edited and abridged synopsis of an article by Peter Krauth
Corporations, pension funds and insurance companies—anyone responsible to stakeholders—could face class-action lawsuits if they don’t diversify.
Michael Saylor bought Bitcoin to diversify and protect the buying power of MicroStrategy’s surplus cash. Elon Musk recently did the same for Tesla.
Clearly, these are sharp stewards of their companies. Their move into Bitcoin and blockchain was wise in hindsight, having paid off handsomely.
Many sit on massive mounds of cash, but it could soon start burning holes in their pockets.
Last year, Berkshire Hathaway bought shares of Barrick Gold Corp., a first gold investment for Warren Buffett. In doing so, he joined other seasoned fund managers, like Bridgewater’s Ray Dalio and Greenlight Capital’s David Einhorn.
Gold’s diversification and inflation-hedging properties has attracted others. The Ohio Police & Fire Pension Fund approved a 5% allocation into gold; the Teacher Retirement System of Texas has a gold fund. A dozen US states have accepted gold and silver as legal tender, some even eliminating taxes on precious metals.
Idaho wants to permit the State Treasurer to hold a portion of state funds in physical gold and silver to help secure state assets against the risks of inflation and financial turmoil and/or to achieve capital gains as measured in Federal Reserve Notes. The legislation has support from the Sound Money Defense League.
Gold may be affected as the world turns to Bitcoin, cryptocurrencies and even silver as an alternative; smart investors will treat that as an opportunity.
Consider Tesla’s recent 10-k filing. As part of its investment policy, “….we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds, and other assets as specified in the future.”
