Tesla needs silver and may invest in gold bullion as it recently indicated that it could potentially invest in gold and gold-backed exchange-traded products.
In a recent filing, Tesla said it “updated its investment policy” in January and now wanted to invest in “reserve assets”.
Tesla ‘may invest in gold bullion’
It’s no secret that Elon Musk’s company Tesla bought around $1.5bn (£1.1bn) of Bitcoin and suggested it might accept bitcoin as a form of payment for people who wish to buy tesla vehicles with the cryptocurrency.
While Bitcoin got all the attention, what might of been missed within this recent statement, is the fact that they also implied that Tesla is looking to invest some of its cash in gold.
In a filing with the Securities Exchange Commission they state that:
“In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity”
Tesla goes on to state:
“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,”
Elon Musk has been particularly active on twitter regarding the cryptocurrency space, recently changing his twitter profile to just, ‘Bitcoin’ before removing it again.
He has also been controversially pushing another crypto called Dogecoin, which is a token based on an online dog meme that originally started as a joke in 2013.
Famous rock star Gene Simmons, who is the frontman for the rock band Kiss, has also jumped on the Dogecoin bandwagon, promoting the crypto via his twitter account.
Recently retail investors have also jumped in on Dogecoin pumping up the price dramatically.
No one really knows Musk’s true intentions with all these recent crypto memes but is seems that he is indicating that he has lost trust the U.S. dollar.
Musk recently tweeted that, “Bitcoin is almost as bs as fiat money”
It could be interpreted that Musk simply wants people to think for themselves, do their own research into the history of money and make their own informed decisions.
With Tesla’s reference to gold and crypto, is Elon signalling that the company is fully aware of systemic risks of fiat currency, particularly U.S. dollar, because of the now obvious risks of inflation and currency debasement?
The company said in a filing, “We transact business globally in multiple currencies and have foreign currency risks related to our revenue, costs of revenue, operating expenses and localized subsidiary debt denominated in currencies other than the U.S. dollar,”
“If we do not have fully offsetting revenues in these currencies and if the value of the U.S. dollar depreciates significantly against these currencies, our costs as measured in U.S. dollars as a percent of our revenues will correspondingly increase and our margins will suffer.”
Either way, Tesla’s decision to invest in cryptocurrency particularly bitcoin, as well as potentially investing in gold bullion, is showing the business and investment world that they are expecting high inflation and therefore, are looking to hedge against inflation with alternative reserve assets.
Tesla needs Silver.
Tesla needs silver as Tesla’s main product is electric vehicles and the company is seen as a ‘green’ energy company, there is no way around it, Tesla needs silver.
Electric cars and vans require silver, as electric vehicles use more silver than a standard combustion engine vehicle.
Silver has the highest known electrical and thermal conductivity of all the metals; this makes it ideal for use in electric vehicles and many electronic products.
Silver is often used in electric vehicles for electrical connections within the car as well as being used in luminescent displays, window defoggers and heated seats. The electric engine, battery pack, and battery management system require silver.
New research by the RAC has found that in the UK, electric car ownership has jumped by more 50% over the last year. Source.
The UK Government is set to ban the purchase of new petrol and diesel cars in 2030.
Silver is now seen as a ‘green’ metal to tie in with the new green initiatives being introduced by governments across the globe.
Silver plays a key role in our modern lives as it is a major component for the technology and green energy sectors.
These sectors are set to explode in 2021 and beyond as investment continues to pile in, not only from the private sector but also from government green initiatives.
If big companies like Tesla want to continue to expand their green energy goals, then there is no other way around it, they have to buy silver!
Silver is a key component in the so called green revolution. Read more about green energy and silver here.
As the world demands more technology and ‘green’ initiatives, this can only result in increased demand for silver.