Friday, April 6, 2012

What if Apple Bought Gold?

Apple is now the most capitalized corporation in the history of the world, in dollar terms, having recently passed Exxon Mobil for the title.  Because Apple has enjoyed very high profits but has not been paying dividends, it is sitting on a cash hoard of almost $100b USD, or more money than the market cap of 474 of the S&P 500 companies (source: Should Apple Buy Gold? by Eric McWhinnie - the inspiration for this post generally). 

Now imagine that Apple deployed just half its cash position into gold, about $45 billion dollars.  Assuming they could purchase that amount without sending the price to the stratosphere, let's say they can secure an average price of $1650 (today's spot = @$1630).  This action would leave Apple sitting on over 27.27 million ounces of gold, or more than the total world production of the yellow metal so far in 2012 (a little over 23 million produced so far according to  It would also leave Apple with roughly the 7th or 8th largest gold position in the world, somewhere in the neighborhood of Russia, less than Switzerland, and ahead of Japan, India, and the ECB.

If they deployed the full $90+ billion, Apple would have more gold than any entity except the USA, Germany, IMF, Italy, and France.  This would make them a global commercial power unlike anything seen since possibly the British East India Company.  Maybe Apple knows something I don't about the value of sitting on depreciating US Dollars.  If another 2007-2008 style collapse occurs, that gargantuan pile of cash would put Apple in a very powerful position to acquire almost any assets they wanted.  But things rarely happen the same way twice in such a short time-frame.

Or they could pay the cash out in dividends, which would be epically boring, but is probably what will happen.  Apple is not going to be our generation's Bunker Hunt, but its fun to imagine what a gold or silver-bug could accomplish if given control of a corporate bank account that size.  Perhaps even more exciting, the silver market is so much smaller than gold that a company or individual only 1/100th the size of Apple could send the price rocketing.


Sunday, April 1, 2012

Banknote of the Month - April 2012, "The new Canadian $50 note"

This new high-security polymer note was released by the Bank of Canada in late March and looks fairly attractive in my opinion, although I would prefer a little more contrast rather than just all red.  The last 10 years have been a major bull market for Canadian dollars vs. US Dollars, but I personally doubt that their central bank will allow it to appreciate much farther (barring hyper-inflation in the US or some other major event) because Canada is such a major exporter to the United States.

Credit to Banknote News ( for the picture.

 Wow look at that movement!  Note the USD spike following the financial crisis, then it resumed its fall.