A $10 Trillion Response to the Global Pandemic

Author: Frank Holmes
Date Posted: March 20, 2020 Read time: 53 min

This week I was introduced to a board game called Pandemic. In the game, players are up against the clock to find the cure to viral outbreaks and contain them before they spread across the entire globe.

By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

Frank Holmes on Bloomberg March 2020

This week I was introduced to a board game called Pandemic. In the game, players are up against the clock to find the cure to viral outbreaks and contain them before they spread across the entire globe.

What makes Pandemic especially unique is that, unlike most games, it’s cooperative. Players are not opponents, as they are in, say, Monopoly. Instead, they must work as a team to eliminate the viral threat, or die trying.

The real-life situation involving COVID-19 is very much the same. Preventing the spread of this disease will require the vigilance and cooperation of everyone on the planet in some capacity or another. While we await treatments and a vaccine to be developed, the most impactful thing people can do is keep their distance from others and, of course, wash their hands. To that end, California, New York and now Illinois have imposed stay-at-home orders this week, joining a growing number of countries, some of which are fining people and companies that choose not to comply. People entering Australia from abroad right now face up to $11,000 in fines and six months in jail for ignoring a 14-day self-isolation quarantine.

These extreme measures appear to be having great success, particularly in Asian countries. Whereas the number of cases continues to rise in Italy, Spain, Iran and elsewhere, the number has begun to stabilize, if not plateau, in Asian countries.

Spread of COVID-19 has slowed in Asian countries
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Synchrony among central banks and finance ministers will also be key in softening the virus’s economic and financial blow, which by some projections will be unprecedented. Goldman Sachs estimates that the U.S. economy could contract as much as 24 percent—roughly one-fourth—in the second quarter alone.

Such a drop, according to Goldman analysts, “would be nearly two-and-a-half times the size of the largest quarterly decline in the history of the modern GDP statistics.”

Get Ready for Synchronized Monetary and Fiscal Stimulus

As a result, we’re seeing rates being cut to near-zero—at least 38 central banks lowered rates this week alone—while fresh rounds of quantitative easing (QE) are quickly being rolled out. Unheard-of amounts of money are being printed to add liquidity, with more on the way.

On the fiscal side of things, President Donald Trump announced today that the government will be waiving all interest payments on student loans and pushing back the income tax deadline to July 15. This is on top of a $1 trillion stimulus package, which is currently being debated in the Senate.

In a webcast conducted this week by Jeffrey Gundlach, the DoubleLine Capital founder said that he predicts the U.S. deficit will grow from $1 trillion today to $3 trillion on stimulus spending, and that within the next two to three years, total national debt will top a head-spinning $30 trillion.

All of this is to say that combating COVID-19 is not going to come cheap. My guess is that once the dust settles, this global health scare may well have cost us upwards of $10 trillion, potentially making it one of the most expensive crises in human history.

Gold Well-Positioned to Climb to New Record Highs on Unprecedented Volatility

That’s why I believe adding to your gold position is so crucial right now. The yellow metal is trading around $1,490 an ounce, discounted down nearly 13 percent from its 52-week high as investors have liquidated their holdings to cover margin calls and pay upcoming income taxes. The U.S. dollar soared as a result, with the Bloomberg Dollar Spot Index hitting an all-time high on Thursday before pulling back after California Governor Gavin Newsom issued the statewide stay-at-home order.

Cash is king: U.S. dollar hit a new all-time high
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With the dollar this strong, it’s been an exceptional time to accumulate gold. Real rates are negative in the U.S., which is positive for the yellow metal, so when the dollar pulls back, I expect gold to take off. Unlike the greenback, the metal has been trending up and to the right since the gold bull market started nearly five years ago.

Gold has been in an uptrend for close to five years
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Eventually, though, I see gold hitting new all-time highs—possibly surpassing $10,000—on the ballooning monetary base and ballooning debt, not to mention the unmatched fear that’s gripping Wall Street.

This week the CBOE Volatility Index (VIX), known as the “fear gauge,” hit its highest-ever recorded level. The VIX closed at 82.69 on Monday, beating the previous high set in November 2008. Not only was Monday’s close a new record, but it was also the biggest one-day spike in VIX history, jumping almost 25 points in a single session.

Wall Street's fear gauge surged to a new all-time high
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As further evidence of the deteriorating market sentiment, our proprietary U.S. Global Sentiment Indicator fell to an all-time low on Wednesday. The indicator—which tracks 126 commodities, indices, sectors, currencies and international markets to help monitor volatility and cash flow levels—plunged below 20, indicating that the market is extremely oversold, even more so than it was during the financial crisis.

The U.S. Global sentiment indicator falls to an all-time low
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With gold doing well and poised to go higher, I anticipate that gold mining stocks will report strong earnings and cash flow for the first quarter.

The Coronavirus Is the Biggest Threat to Globalization

A final word this week on the virus. An interesting op-ed appeared in the Wall Street Journal yesterday, titled “Coronavirus Vindicates Capitalism,” and in it, the columnist, Kimberley Strassel, argues that the reason the U.S. is faring so much better than other countries in the fight against COVID-19 comes down to the strength of our commitment to capitalism.

“To the extent America is weathering this moment,” Strassel writes, “it is in enormous part thanks to the strength, ingenuity and flexibility of our thriving, competitive capitalist players,” including drugmakers.

I couldn’t agree more. Even as Joe Biden said during his debate with Bernie Sanders, Italy’s single-payer health care system has not appeared to have benefited the Italian people.

Similarly, I think the coronavirus has exposed America’s vulnerabilities related to its supply chain. Globalization has been great at keeping prices low for consumers and saving manufacturers money, but we’re finding out the hard way that it can also result in shortages in essential drugs and medical supplies and equipment, including testing kits. Germany, for instance, has restricted the export of face masks. It’s being reported that China is hinting at withholding certain drugs.

Where this is all leading, I believe, is an even stronger resurgence in economic nationalism. Because of the impact the coronavirus has had on supply chains, we may start to see drugmaking and health care manufacturing return to the U.S. Just this week, the Austin American-Statesman reported that a small medical diagnostics company, Everlywell, will be offering coronavirus home test kits starting Monday.

Everlywell’s exactly the sort of ingenuity, flexibility and competitiveness Kimberley Strassel was referring to in her op-ed. As long as the U.S. remains a free and capitalistic society, challenges such as COVID-19 won’t stand a chance.

If you missed my reflection this week on the bear market, you can read it now by clicking here!  

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Gold Market

This week spot gold closed at $1498.65, down $31.18 per ounce, or 2.04 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week lower by 0.42 percent. The S&P/TSX Venture Index came in off 8.84 percent. The U.S. Trade-Weighted Dollar rose 3.67 percent as investors sold anything to get their hands on cash, creating a spike in demand for dollars.

Date Event Survey Actual Prior
Mar-17 ZEW Survey Expectations -30.0 -49.5 8.7
Mar-17 ZEW Survey Current Situation -30.0 -43.1 -15.7
Mar-18 Eurozone CPI Core YoY 1.2% 1.2% 1.2%
Mar-18 Housing Starts 1500k 1599k 1624k
Mar-19 Initial Jobless Claims 220k 281k 211k
Mar-24 New Homes Sales 750k 764k
Mar-25 Durable Goods Orders -1.0% -0.2%
Mar-25 Hong Kong Exports YoY -22.7%
Mar-26 GDP Annualized QoQ 2.1% 2.1%
Mar-26 Initial Jobless Claims 775k 281k


  • The best performing metal this week was gold, down just 2.04 percent. BullionStar, a bullion dealer in Singapore, has seen a record number of orders, order revenue and number of visitors to its center over the past month, according to a post on its website and as reported by Bloomberg. “We have managed to replenish a bit of gold on Saturday but it’s very difficult to find any supply anywhere.” A lack of physical gold supply is positive new for buying and a sign that demand is strong. Bloomberg’s Andrew Cinko writes that gold has a love/hate relationship with equity bear markets. At first, havens such as gold are a good bid, but then they are sold to raise cash. This is what happened this week, with investors selling gold to raise cash. Gold traders are also selling out of their futures contracts, which are dragging on gold’s price. Margin calls hit hedge funds on derivative trades and their traders are forced to sell and pony up cash with gold being liquid.
  • On Tuesday, the 10-year Treasury yield surged the most since 1982 and the moves in term premium and real rates were the largest in recorded history. Cornerstone Macro writes that those moves reflect a serious lack of liquidity in the market. UBS’ Joni Teves writes that gold’s correction this week coincides with higher real interest rates and a stronger U.S. dollar and is broadly in line with performance during the 2008 selloff. “Gold is down, but not out.”
  • Dymon Asia Capital Chief Investment Officer Danny Yong said in a Bloomberg TV interview this week that investors should be long gold as the U.S. dollar strength won’t last. Yong added that periods such as now with extreme volatility serves as a reminder that there is still a place for active fund managers. Australia is expected to overtake China as the world’s largest gold producing country in 2021, according to its Department of Industry, Science, Energy and Resources. Australia hopes to produce 383 tons of gold in 2021, due to higher prices. The coronavirus outbreak is likely to reduce China’s production by 2.9 percent in 2020 to 369 tons. Nord Gold SE said that it submitted a proposal to acquire shares in Cardinal Resources Ltd. that it doesn’t already own. Bloomberg reports that the preliminary takeover proposal is an 83 percent premium to Cardinal’s March 13 closing price.


  • The worst performing metal this week was platinum, down 19.63 percent as hedge funds cut their bullish positioning to a 6-month low.  The leveraged loan market fell to levels not seen since the financial crisis, signaling higher default rates and a potential funding crunch ahead, writes Bloomberg’s Lisa Lee. The average price on loans to the riskiest and most-indebted U.S. companies was 84.6 cents on the dollar on Tuesday. In less than two weeks, the amount of distressed debt has doubled to half a trillion dollars. U.S. corporate bonds that yield at least 10 percentage points above Treasuries, as well as loans that trade for less than 80 cents on the dollar, have surged to $533 billion, reports Bloomberg. In another sign that things are trading where they shouldn’t be due to the liquidity crunch is that municipal bonds are twice Treasury yields. Tax-exempt municipal bonds typically return between 80 percent to 90 percent of Treasuries. As of Tuesday, muni bonds were at 1.72 percent.
  • Gold has been under pressure due to a higher U.S. dollar. The dollar has been propped up on concern that there will be a global recession and people want to get their hands on cash now. Silver has been hit especially hard as it is seen as more of an industrial metal, rather than used for jewelry. The white metal, also used in solar panels, is down 28 percent in the last eight trading sessions as of Tuesday, according to Bloomberg data. Norilsk Nickel’s partner on a palladium project in the Artic, Russia Platinum, said that it is ending talks on the joint venture due to its second-largest shareholder, Rusal, not approving the participation.
  • The State Department is halting most visa processing for Mexican guest workers due to the coronavirus pandemic, creating concerns from U.S. farmers who rely on their labor to harvest crops, reports Business Insider. The restriction could threaten farmers’ ability to put food on American tables if there are not enough workers to pick crops. The Bloomberg Mortgage REIT Index fell on Wednesday to the lowest since 1994 amid discussion of the government to aid borrowers and offer payment forgiveness on mortgages.


  • Wayne Gordon, executive director for commodities and foreign exchange at UBS Group AG’s wealth-management unit, told Bloomberg TV that now is the time to buy gold. “When I think about what would I buy in the right here and now, I would be buying gold.” Gordon says that gold prices should appreciate over the next three to six months. One positive for gold miners right now is lower oil prices. Morgan Stanley research shows that a 50 percent drop in the oil price could lower costs of production by 10 percent to 20 percent across commodities.
  • Contrarian investors are starting to smell the opportunity in gold, because its near-term outlook is improving, writes Mark Hulbert for MarketWatch. Eight Capital writes that volatility in the market has created compelling opportunities for gold stocks, particularly miners with strong balance sheets, greater free cash flow certainty and discretionary spending opportunities, reports Bloomberg.
  • An analysis from Baker Steel shows why gold has faltered in the face of the coronavirus and why a recovery is in order. “While the short-term outlook is certainly volatile, we believe gold and gold equities will be substantial beneficiaries of the economic conditions and post-crisis policies which we see beginning to be implemented currently.”


  • JPMorgan writes that market depth has virtually disappeared. Unwinding of risk parity trades was largely accomplished last week but some spillover continues. The trigger event for the unwinding, according to Wall Street strategist David Zervos , was the collapse in the 10- and 30-year yields earlier in the month. Effectively there was no yield on the Treasury curve to keep the risk parity trades alive. Zervos noted “Given that many risk parity folks also hold gold and TIPS as an inflation hedge, the weakness in these two assets can also be explained well by the unwind.” Calculations by Bloomberg show that bond futures positions equivalent to $150 billion in 10-year Treasuries were sold from Friday through Tuesday. Record high volatility has in turn prompted machines to pull liquidity, which triggered a vicious feedback loop of volatility, illiquidity and outflows. However, JPMorgan suggest that in the next 10 days there will be the month-end and quarter-end rebalancing period that should bring significant buying of equities.
  • The Fed is facing a threat that hasn’t been experienced before – a sudden collapse in corporate revenue and household income from a global pandemic. Equity markets are plunging, indicating fear of a global recession, and volatility in the bond market just hit the highest since the financial crisis. U.S. lawmakers are rushing to pass a fiscal package of as much as $1.3 trillion. The U.S. dollar continues to surge, raising speculation that there might be a coordinated effort to weaken the currency. However, currency strategists see little chance that such efforts would succeed, reports Bloomberg. The dollar isn’t surging for any fundamental reasons. It’s only surging due to the liquidity crisis driven by fear of a recession and the desire for cash. Corporate share buybacks will likely come to a halt. Last week, eight major banks stopped the practice and more are expected to follow suit as companies focus more on balance sheets and supporting clients.

Volatility in the U.S. bond market surged to the highest since financial crisis
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  • Are Modern Monetary Theory (MMT) supporters about to see it in practice? The idea is that countries with their own central banks don’t need to worry about budget deficits because they can just buy whatever debt the government issues. The U.S. deficit continues to skyrocket, especially after the $1.3 trillion (or more) stimulus package is released. This week the Trump administration floated the idea of a 50-year bond to finance the massive $1.3 trillion package.

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Index Summary

  • The major market indices finished sharply down this week. The Dow Jones Industrial Average lost 17.30 percent. The S&P 500 Stock Index fell 14.98 percent, while the Nasdaq Composite fell 12.64 percent. The Russell 2000 small capitalization index lost 16.16 percent this week.
  • The Hang Seng Composite lost 6.23 percent this week; while Taiwan was down 8.83 percent and the KOSPI fell 11.59 percent.
  • The 10-year Treasury bond yield fell 10 basis points to 0.863 percent.

Domestic Equity Market

SP 500 Economic Sectors weekly performance
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  • Consumer staples was the best performing sector of the week, decreasing by 11.36 percent versus an overall decrease of 14.27 percent for the S&P 500.
  • Amcor PLC was the best performing S&P 500 stock for the week, increasing 6.89 percent.
  • Hormel’s CEO Jim Snee said the company is seeing strength across all of its brands amid the coronavirus outbreak. It’s not just Hormel, Snee added, the entire U.S. food industry is stepping up production to meet demand and calm consumers’ fear of empty shelves.


  • Real estate was the worst performing sector for the week, decreasing by 23.03 percent versus an overall decrease of 14.27 percent for the S&P 500.
  • Discover Financial Services was the worst performing S&P 500 stock for the week, falling 51.24 percent.
  • Global airlines are quickly running out of cash after cutting capacity by 90 percent or even grounding entire fleets due to coronavirus-related travel restrictions. Airlines are hoping to see some relief from the government.


  • Tech mega-cap stocks are luring equity investors back into the stock market at a pace not seen in almost two decades on speculation they have a cash bulwark strong enough to withstand the looming recession. An exchange-traded fund that tracks the Nasdaq 100 Index, the Invesco QQQ Trust Series 1, has taken in $4.5 billion so far in March, according to data compiled by Bloomberg.
  • A.P Moller-Maersk A/S, the world’s biggest shipping line, said it’s committed to rewarding shareholders and reassured the public that its own operations were uninterrupted by the fallout of the coronavirus. Maersk, which controls about a fifth of the global container fleet, followed a string of other companies in suspending its outlook due to the uncertainty caused by the spread of the virus.
  • McDonald’s Corp. jumped, posting one of the top performances on the Dow Jones Industrial Average, after Goldman Sachs said the fast-food chain is better poised than some peers to deal with the coronavirus outbreak. The company’s shares rose as much as 8.1% to $161.54 on Friday, climbing for a second day. Goldman Sachs analyst Katherine Fogertey said McDonald’s, along with Domino’s Pizza Inc., Chipotle Mexican Grill Inc. and Wingstop Inc., could pick up market share once health restrictions ease.


  • Uber’s CFO said its ridership has dropped by as much as 50 percent in cities hit hard by the coronavirus, and new data shows that Lyft is suffering too. Uber’s CFO said he’s confident that demand for rides will bounce back quickly by watching the market come back to life in Hong Kong, which recently lifted its lockdown.
  • A banner on Apple’s site suggests it is bracing to keep all stores outside China shut longer than expected. The tech giant had previously said it would be closing its non-Chinese stores until March 27, as part of its efforts to contain the spread of the virus.
  • L Brands, the owner of Victoria’s Secret and Bath & Body Works, will shut its stores in the U.S. and Canada through March 29.

The Economy and Bond Market



  • An unprecedented 38 central banks have slashed interest rates since the start of this year – and many of them have gone further and activated the crisis playbook, buying bonds, intervening in currency markets and setting up emergency loan programs for banks and companies. They all have the goal of keeping markets functioning and facilitating a recovery when life returns to normal after the pandemic.
  • The Conference Board LEI for the U.S. increased slightly in February. Positive contributions from weekly manufacturing hours and average consumer expectations for business conditions offset declines in building permits and the ISM New Orders Index. In the six-month period ending February 2020, the leading economic index increased 0.3 percent (about a 0.5 percent annual rate). In February, the weaknesses and strengths among the leading indicators were balanced.
  • U.S. home builders started more projects in February compared to the same time last year. Privately-owned housing starts came in at about 1.6 million in February. While that is about 1.5 percent less than January’s revised figures, last month’s starts were up roughly 39 percent from 2019.


  • It’s still the beginning stages, but the coronavirus is already taking its toll on America’s unemployment lines. Filings for U.S. jobless benefits climbed by 70,000 last week to 281,000, the highest in more than two years, according to Labor Department figures Thursday. The total topped the median estimate in a Bloomberg survey of economists before the report and may be poised to surge next week as much of the economy shuts down to fight the pandemic.

Filings for U.S. unemployment benefits soar amid coronavirus
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  • Second-quarter annualized GDP contraction is now estimated to be 24 percent amid “a sudden stop for the U.S. economy,” according to Goldman Sachs economists led by Jan Hatzius. “A decline of this magnitude would be nearly two-and-a-half times the size of the largest quarterly decline in the history of the modern GDP statistics.” The firm’s prior second quarter estimate was a five percent contraction. “The early data points over the last week strengthen our confidence that a dramatic slowdown is indeed already underway.”
  • Sales at U.S. retailers fell in February in what’s likely to be a series of steep declines. Retail sales slumped 0.5 percent last month, suggesting that worries over the coronavirus began to take a bite out of the economy toward the end of the month.


  • The Federal Reserve said on Friday it had expanded its emergency program to provide liquidity to money market mutual funds, allowing the purchase of assets from single-state and other tax-exempt municipal money market funds. The program, administered by the Boston Fed, will provide risk-free loans to banks that will purchase a range of assets from prime money market funds, with the assets deposited with the Fed as collateral. By expanding the program to include short-term municipal bonds, it may ease the difficulty cities and states are having in raising funds.
  • Investors and companies are rushing into the U.S. dollar, the world’s reserve currency, for different reasons. Businesses are uncertain about their future revenues amid the pandemic and the lockdowns, scrambling to secure dollars to meet upcoming payments. On the financial side, funds that have experienced heavy losses in stocks lately need dollars to cover margin calls or hedge bets.
  • The preliminary Markit PMIs for March, due on Tuesday, are likely to capture market interest. Durable goods orders for February will follow on Wednesday, ahead of personal income and spending data alongside the core PCE price index for the same month, all on Friday.


  • Janet Yellen and Ben Bernanke have called on the Fed to avoid long-term economic damage from the coronavirus pandemic. ‘The economy may take a very long time to recover.’ The pair indicated that the Fed’s immediate reaction to coronavirus, a $700 billion package to buy U.S. Treasuries and mortgage-backed securities (MBS) and a 50-basis-point reduction to its short-term policy rate, might not be sufficient.
  • Coronavirus bailout requests have topped $1 trillion. The National Restaurant Association wants $455 billion in industry support, while hotel and travel executives discussed a $250 billion aid package with President Donald Trump this week. Further, America’s local governments are asking the federal government for massive amounts of aid as the fallout from the coronavirus pandemic threatens to leave them contending with significant budget shortfalls.
  • Credit markets flash red as coronavirus hits corporate America. The premium investors demanded to hold riskier, junk-rated credit rose to 904 basis points over safer Treasury securities on Wednesday, its highest level since 2011.

Energy and Natural Resources Market



  • The best performing major commodity for the week was coffee, which gained 12.13 percent amid fear global transport woes will limit new supply to the market. Bloomberg economists estimate that China’s back-to-work rate rose above 85 percent at the end of this week, slightly higher than the 80 to 85 percent estimate of last week. Copper had its biggest weekly slump in eight years, dropping 13.58, according to Bloomberg data.
  • BHP Group, Anglo American and Fortescue Metals Group have joined Hatch Ltd. to collaborate on the development of green hydrogen technologies for the resources sector and heavy industry, reports Bloomberg News. Hatch said in a statement that the companies plan to work jointly on research, supply chain development and pilot programs to accelerate the technology of producing hydrogen using electrolysis powered by renewable energy.
  • Goldman Sachs Group said in a note that investors with a 12-month long view have an opportunity to “buy some quality undervalued mining stocks over the next six months as earnings bottom.”  The note says that the mining sector is in a better position now than it was during the financial crisis and that companies now have higher-margin businesses and stronger balance sheets.


  • The worst performing major commodity for the week was crude oil, which fell 26.28 percent. Crude oil fell 24 percent on Wednesday alone, its third worst day ever, and then it was up 23 percent on Thursday for its best day ever. Oil hits its lowest since 2003 to $25.08 a barrel. The fuel recovered after President Trump said that the U.S. might intervene in the Saudi Arabia-Russia price dispute that has added extra volatility to oil markets on top of the COVID-19 demand fears. Saudi Arabia said that it plans to boost oil exports to a record above 10 million barrels a day. Canada was the first to be hit from the price war, with the blend of crude produced from Canada’s oil sands falling to a record low of $7.47 a barrel on Wednesday. Bloomberg reports that every barrel of oil now produced in the country will come at a loss – quite a problem as oil sands generate 10 percent of Canada’s GDP.
  • Natural gas in the U.S. fell to a 25-year low on Wednesday – falling 14 percent in the previous three sessions. Gas was already suffering from a warm winter and overproduction from shale basins. Royal Dutch Shell Plc’s rating outlook was downgraded to negative from stable by the S&P. Halliburton, the world’s largest provider of fracking services, will furlough around 3,500 workers at its Houston headquarters. Vale is putting its Voisey’s Bay mining operation in Canada on care and maintenance for four weeks as a precaution to protect from the coronavirus.
  • Chile, a top mining country, was experiencing an economic contraction even before the coronavirus panic hit. The Chilean economy contracted by more than expected in the fourth quarter, with GDP falling 2.1 percent from a year earlier due to social unrest. The country is likely to experience an even greater slowdown due to the global pandemic as the number of cases in Latin America grows.


  • Russian gold miner Polymetal paid $20 million for a 9.1 percent stake in ThreeArc Mining, which owns 100 percent of the Tomtor niobium and rare-earth metals project. Polymetal CEO Vitaly Nesis said in a statement that the investment “provides us with a high-quality exposure to the EV revolution by establishing strategic beachhead in the niobium and rare earth elements market.”
  • Helen Mountford, vice president for climate and economics at the World Resources Institute, thinks that investments in clean technology and infrastructure could help pull economies out of the coronavirus meltdown, writes Bloomberg. “In the past, infrastructure investment meant building roads. Now we can do things like investing in natural infrastructure to mitigate climate change.” Mountford says that now is an opportunity for countries to accelerate the transition to green energy sources by supporting new projects.
  • The Federal Energy Regulatory Commission cleared the Pembina Pipeline Corp.’s plan to build an LNG terminal in Oregon – the first West Coast export terminal to be cleared. The project would include a 229-mile pipeline and is in a prime location to ship LNG to Asia – the biggest consuming region, according to Bloomberg News. The U.S. is in desperate need for more LNG infrastructure to export natural gas, as producers have had to burn the fuel into the air due to a lack of means to ship it away. The Pembina project has faced pushback from Oregon regulators due to environmental reasons.


  • Despite the sharp market selloff and extremely turbulent oil prices, Goldman Sachs said in a note that oil giants will likely not cut dividends given their resilient balance sheets. The analysts note than although expectations for dividends have been reduced over the past two weeks, their findings show major oil firms generally haven’t responded to challenging macro conditions through significant dividend cuts. On the contrary, JPMorgan says that cutting spending and share buybacks won’t be enough to keep oil majors from cutting dividends by at least half. The market is showing that it also doubts their ability to keep paying dividends as yields have surged. Shell’s dividend yield rose to 3.8 percent and BP’s rose to 12.7 percent.

Big oil's dividened yields continue upward trend
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  • Standard Chartered analysts are very bearish on oil. Analysts wrote in a report that the low for Brent crude in the second quarter will “likely be well below $20 per barrel”, with average oil demand to fall 3.4 million barrels per day year-over-year in 2020, reports Bloomberg. “A surplus as large as 12.9 million barrels per day requires extremely low prices.” Steve Sawyer, director of refining at Facts Global Energy, told Bloomberg that “demand is going to stay weak at a time when crude oil is just being pumped like mad out of the ground. Anything to do with petrol, diesel, just fuel, obviously, is going to struggle.” Some analysts have even floated the idea of negative oil prices, just as natural gas went negative for a short time.
  • Global trade and shipping is likely to take a hit as shipping containers and vessels are in short supply. Bloomberg reports that unloading holdups in China and the delay on the return of ships when the outbreak was limited to Asia at the beginning of the year has left shippers waiting for hundreds of thousands of containers to move their products. Imports to Los Angeles and Long Beach fell as much as 13 percent in the first two months of this year. Container throughput in the port of Shanghai fell 19.5 percent in February from a year earlier.

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Emerging Europe



  • Poland was the best performing country this week, gaining 6.5 percent. Utilities outperformed among stocks trading on the Warsaw exchange. Shares of Polska Grupa Energetyczna (PGE SA), an integrated electric company, gained more than 40 percent in the past five days. The price of carbon permits dropped this week and global carbon emissions may fall as the virus spreads to energy markets.
  • The Turkish lira was the best relative performing currency this week, losing 3.5 percent. The lira was not under pressure as much as other emerging market currencies because Turkey benefited from the drop in oil prices. Turkey is a net importer of oil and will save $1 billion per month on energy with the current oil price, according to Wood & Company.
  • Communication services was the best performing sector among eastern European markets this week.


  • Turkey was the worst performing country this week, losing 10.3 percent. The country announced its first coronavirus case last week and since then the number of cases has grown to 359 as of Friday morning, with four deaths. Car makers and distributors and domestic airline Pegasus were among the weakest stocks trading on the Istanbul exchange.
  • The Russian ruble was the worst performing currency in the region this week, losing 9.3 percent. Continued weakness in the oil price put pressure on the Russian currency. Brent crude oil closed at $27.40 per barrel this week, losing 18.3 percent in the past five days after losing 13 percent the prior week.
  • Industrial was the worst performing sector among eastern European markets this week.


  • It can be difficult to look for buying opportunities during this panic mood among investors, but as always, there are losers and gainers. With more countries introducing curfews and nationwide lockdowns, game makers and distributors may benefit from people staying home. In Poland, shares of CD Projekt are the best performing among the 20 large stocks trading on the Warsaw Exchange (WIG20 Index) losing only 5.3 percent since the end of January, while the WIG20 index lost almost 30 percent. Shares of Ten Square Games, a Polish mobile game provider, rose by 11 percent during the same period.
  • Central banks and governments around the world are stepping up their actions to support troubled economies. In central emerging Europe, Poland pledged stimulus of $52 billion, worth 9 percent of GDP, and cut rates by 50 basis points. The Czech Republic cut its rates by 50 basis points as well, and pledged $40 billion stimulus, or 18 percent of GDP. Hungary suspended repayments on all corporate and personal loans. The European Central Bank (ECB) announced another bond-buying program.
  • Sistema-Biotech, owned by AFK Sistema, has developed an express test for coronavirus infections, according to Vedomosti and as reported by the managing partner of AFK Sistema Artem Sirazutdinov. This test will let the person know if they are sick or not in two hours. If approved, production may begin in the near future.


  • Austria, Hungary, the Czech Republic, Denmark, Poland, Lithuania, Germany, Estonia, Portugal and Spain as well as non-EU states Switzerland and Norway reintroduced border controls in order to better manage the spread of the coronavirus. Europe is in a lockdown not seen since War World II. The freeze in freedom of movement will disrupt the 3 trillion euros ($3.3 trillion) of annual trade between EU members.

European Union nations reintroduce border checks to contain virus
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  • Moneta Bank officially suspended dividends this year and plans to retain 2019 profits. Other banks might follow in those footsteps. Europe’s economy was recovering at the beginning of this year, but with the freeze of activities around the whole continent due to coronavirus, banks will have a hard time making money. Most analysts predict GDP contraction in the second and third quarters.
  • Citigroup said that emerging markets already offer value after the sharp sell-off year-to-date, but recommends to hold cash and buy later when there is a clean case for markets to stabilize. On a positive note, the U.S. dollar spiked after investors moved to buy dollar assets and emerging currencies are the cheapest in a generation. As the dollar weakens, it will benefit commodities and emerging market currencies.

Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performing for the week ended March 20 was Electrum Dark, up 2,918.89 percent.
  • Tyler and Cameron Winklevoss, the twin crypto entrepreneurs, are launching a marketplace for “nifties” – the tradable digital art. The brothers bought Nifty Gateway last year, which is releasing a website next week where consumers will be able to buy and sell digital collectibles.
  • Stablecoins have lived up to their name of “stable”. Throughout this month’s global market selloff, stablecoins have lost less than 0.25 percent, looking at the top five U.S. dollar-backed coins. The Dow Jones Industrial Average, by comparison, has fallen 30 percent and both it and the S&P 500 are now in bear markets.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week ended March 20 was PlayCoin, down 73.13 percent.
  • The Chicago Mercantile Exchange (CME) told CoinDesk that it traded just three Bitcoin options contracts on Tuesday – the lowest daily volume for Bitcoin options on record. The contracts went live on January 13 and traded a total of $2.2 million in notional value on the first day, with just $80,000 traded on March 17.
  • Bitcoin fell as much as 18 percent on Monday alone as risk aversion was a strong theme across most asset classes due to the pandemic. Naeem Aslam, chief market analyst at AvaTrade, told Bloomberg that “despite the massive sell-off, Bitcoin’s price has still failed to attract investors. This is because the price is likely to drop even more.” Bitcoin’s price did recover somewhat at the end of the week, briefly hitting $7,000 on Friday morning.

Bitcoin continues losing streak, recovers slightly
click to enlarge


  • Digital asset manager Wave Financial announced on Wednesday that it had finalized a deal with Kentucky-based Wilderness Trail Distillery to tokenize between 10,000 and 20,000 barrels of bourbon whiskey worth up to $20 million. The Wave Kentucky Whiskey 2020 Digital Fund will give investors the ability to purchase asset-backed tokens linked to the inventory of barrels, writes CoinDesk. The U.S. whiskey market is making a comeback, becoming the most exported domestic spirit in 2018.
  • Hawaii’s Department of Commerce, Division of Financial Institutions and the Hawaii Technology Development Corporation have launched a “Digital Currency Innovation Lab” to give “selected” firms a two-year break from the state’s money transmitter license requirement, according to a press release and as reported by CoinDesk. The state has some of the most restrictive crypto licensing regulations, and this move is a positive signal that those rules might eventually be repealed.
  • According to a job posting, PayPal is looking for a director of anti-money laundering and blockchain strategy. This position would evaluate blockchain use cases and assess risks related to the companies in PayPal’s blockchain-related portfolio. This is a sign that the payment giant is moving further into the blockchain space.


  • According to analysts from Chainalysis, large professional and institutional traders were among the biggest sellers of cryptocurrencies during the rout that saw Bitcoin fall 40 percent this month. Bloomberg reports that the data showed transfers of between 10 and 1,000 Bitcoins accounted for 70 percent of all coins moving through crypto exchanges. This underscores the idea that institutional investors entering the crypto space would be positive for its adoption and prices.
  • A report from CB Insights found that in 2019 there were 15 fewer venture capital deals in the crypto space than there were the prior year. Deal volume fell by 34 percent to $2.8 billion, down from $4.2 billion in 2018.
  • The future of India’s crypto sector still faces regulatory challenges as the parliament is yet to rule on the “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill” from 2019. This week, a member of parliament submitted questions to the Minister of State for Finance and Corporate Affairs about the growing number of reports alleging cheating and fraudulent practices by bitcoin companies.

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Leaders and Laggards

Weekly Performance
Index Close Weekly
10-Yr Treasury Bond 0.86 -0.10 -10.48%
Oil Futures 22.43 -9.30 -29.31%
Hang Seng Composite Index 3,116.97 -206.99 -6.23%
S&P Basic Materials 254.16 -36.62 -12.59%
Korean KOSPI Index 1,566.15 -205.29 -11.59%
S&P Energy 193.93 -47.36 -19.63%
Nasdaq 6,879.52 -995.36 -12.64%
DJIA 19,173.98 -4,011.64 -17.30%
Russell 2000 1,014.05 -195.41 -16.16%
S&P 500 2,304.92 -406.10 -14.98%
Gold Futures 1,492.20 -27.30 -1.80%
XAU 70.12 -0.14 -0.20%
S&P/TSX VENTURE COMP IDX 356.54 -34.58 -8.84%
S&P/TSX Global Gold Index 213.72 +11.52 +5.70%
Natural Gas Futures 1.58 -0.29 -15.46%


Monthly Performance
Index Close Monthly
Korean KOSPI Index 1,566.15 -644.19 -29.14%
10-Yr Treasury Bond 0.86 -0.71 -44.96%
Gold Futures 1,492.20 -125.30 -7.75%
S&P Basic Materials 254.16 -125.76 -33.10%
S&P 500 2,304.92 -1,081.23 -31.93%
DJIA 19,173.98 -10,174.05 -34.67%
Nasdaq 6,879.52 -2,937.66 -29.92%
Oil Futures 22.43 -30.86 -57.91%
Hang Seng Composite Index 3,116.97 -688.24 -18.09%
S&P/TSX Global Gold Index 213.72 -60.36 -22.02%
XAU 70.12 -37.62 -34.92%
Russell 2000 1,014.05 -678.52 -40.09%
S&P Energy 193.93 -217.86 -52.91%
S&P/TSX VENTURE COMP IDX 356.54 -225.15 -38.71%
Natural Gas Futures 1.58 -0.38 -19.18%


Quarterly Performance
Index Close Quarterly
XAU 70.12 -29.28 -29.46%
S&P/TSX Global Gold Index 213.72 -33.76 -13.64%
Gold Futures 1,492.20 -3.30 -0.22%
DJIA 19,173.98 -9,202.98 -32.43%
S&P 500 2,304.92 -900.45 -28.09%
Nasdaq 6,879.52 -2,007.70 -22.59%
Korean KOSPI Index 1,566.15 -630.41 -28.70%
Natural Gas Futures 1.58 -0.69 -30.49%
S&P Basic Materials 254.16 -126.20 -33.18%
Russell 2000 1,014.05 -653.04 -39.17%
Oil Futures 22.43 -38.79 -63.36%
Hang Seng Composite Index 3,116.97 -661.90 -17.52%
S&P/TSX VENTURE COMP IDX 356.54 -188.10 -34.54%
S&P Energy 193.93 -254.62 -56.77%
10-Yr Treasury Bond 0.86 -1.06 -55.08%


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Moneta Money Bank AS
CD Projekt SA
Pegasus Hava Tasimaciligi AS
BHP Group Ltd
Anglo American PLC
Fortescue Metals Group Ltd
Royal Dutch Shell Plc
Halliburton Co
Polymetal International PLC
AFK Sistema
Cardinal Resources

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index. The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months. The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks. The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500. The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period. The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500. The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500. The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500. The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500. The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500. The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500. The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

The Merrill Lynch Option Volatility Estimate (MOVE) Index is a measure of U.S. interest rate volatility that tracks the movement in U.S. Treasury yield volatility implied by current prices of one-month over-the-counter options on 2-year, 5-year, 10-year and 30-year Treasuries. The WIG20 index is a modified capitalization-weighted index of 20 Polish stocks which are listed on the main market. The index is the underlying instrument for futures transactions listed on the Warsaw Stock Exchange. The Conference Board Leading Economic Index is an American economic leading indicator intended to forecast future economic activity. It is calculated by The Conference Board, a non-governmental organization, which determines the value of the index from the values of ten key variables. These variables have historically turned downward before a recession and upward before an expansion. The core PCE price index is defined as personal consumption expenditures (PCE) prices excluding food and energy prices. The index measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices to reveal underlying inflation trends. The Bloomberg Dollar Spot Index (BBDXY) tracks the performance of a basket of 10 leading global currencies versus the U.S. Dollar. Each currency in the basket and their weight is determined annually based on their share of international trade and FX liquidity. Created by the Chicago Board Options Exchange (CBOE), the Volatility Index, or VIX, is a real-time market index that represents the market’s expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors’ sentiments. The Bloomberg/Washington Post REITS Index is a price-weighted index designed to measure the performance of real estate investment trusts that are based or have a significant presence in the Washington DC area. The index was developed with a base value of 100 as of August 17, 2007.