A Gold Correction Was Expected After Nine Straight Weeks of Gains

Author: Frank Holmes
Date Posted: August 14, 2020 Read time: 47 min

The price of gold had its first down week since early June, ending a spectacular nine-week rally, the likes of which we haven't seen since 2006. The yellow metal briefly fell below $1,900 an ounce on Wednesday as stocks neared their all-time closing high and the 10-year Treasury yield jumped on record supply. Wednesday's $38 billion auction of 10-year government bonds was the largest in U.S. history.

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

I Believe Gold and Silver Are Just Getting Started

The price of gold had its first down week since early June, ending a spectacular nine-week rally, the likes of which we haven’t seen since 2006. The yellow metal briefly fell below $1,900 an ounce on Wednesday as stocks neared their all-time closing high and the 10-year Treasury yield jumped on record supply. Wednesday’s $38 billion auction of 10-year government bonds was the largest in U.S. history.

As I shared with you last month, gold was looking overbought at more than two standard deviations, so a short-term correction was to be expected. 

It’s important to keep in mind, though, that the metal’s long-term drivers remain intact. We have unprecedented monetary and fiscal stimulus, with more potentially on the way. There’s still trillions of dollars’ worth of global government debt trading with a negative yield.

Despite the correction, gold continues to trade in a golden cross. That’s when the average price for the past 50 trading days is above the average price for the past 200 trading days, and it’s typically seen as a bullish signal. The current golden cross has been in place for more than 18 months now.

More than 18 months later, gold continues to trade in a golden cross
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To learn more about the golden cross, watch the video below. Be sure to wait until the very end of the video so you can subscribe to our channel. You can also go directly to our YouTube channel and subscribe by clicking here.

Where’s the Inflation?

I believe the one factor that’s missing from this bull run is inflation. Since the financial crisis, we really haven’t seen a significant change in consumer prices, if we’re using the Bureau of Labor Statistics’ (BLS) gauge.

We may be on the verge of a new inflationary period, however, based on the latest report by the BLS. On a month-over-month basis, core inflation—that’s inflation on all items excluding volatile food and energy prices—rose 0.6 percent in July. That may not sound like much, but it’s the biggest such increase since 1991.    

Core inflation jumps the most since 1991
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According to the bureau, the monthly change was led by a sharp rise in auto insurance prices. Other increases were seen in shelter, communication, medical care and used cars and trucks.

Historically, inflation has been constructive for the gold price. As the purchasing power of the dollar falls, savers and investors may seek other, more reliable stores of value, including the yellow metal.

Wheaton Precious Reports Record Revenue

If you remember, we accurately called the market bottom in a March YouTube video, using our own U.S. Global Sentiment Indicator, which tracks 126 commodities, emerging market equity indices and other assets. The indicator fell to an all-time low on March 18, flashing a strong buy signal. Interestingly, we shot the video on the last day we were in the office before making the decision to work from home.

In case you missed it, you can watch the video below.

Around the same time in mid-March, I also predicted that precious metal mining companies would see some very attractive revenue and cash flow generation in the coming months due to higher metal prices.

Not all explorers and producers in the investable universe have reported second-quarter earnings yet, but those that have are sharing strong results. Royalty firm Franco-Nevada reported $91.8 million in net income, an increase of 43 percent from the same quarter a year earlier, on revenue of $195.4 million. Franco received a Buy rating from Raymond James following the earnings report, with analyst Brian MacArthur writing that the company “has a strong balance sheet to finance potential future deals and support its dividend, which has increased every year.” The company continues to be debt-free.

Fellow royalty and streaming company Wheaton Precious Metals also had a blowout quarter. The company reported $105.8 million in net income, substantially beating Wall Street estimates of around $80 million. Revenue also beat for the quarter, and in fact, Wheaton generated record revenue for the first half of the year. Total revenue was more than $503 million, an increased of 21 percent over the same six-month period in 2019.

gold to silver ratio has fallen below its eight year average
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During the earnings call, Wheaton President and CEO Randy Smallwood expressed optimism in the company’s growth prospects, the pandemic notwithstanding.

“Given the bullish precious metals markets, the strength of our business model and our high-quality portfolio of assets, we remain confident that we can continue to create sustainable value for our stakeholders. Not only that, but we remain optimistic that we will be able to continue growing the company and add additional production from long-life assets producing in the lowest half of their respect cost curves,” Randy said.

Improved China PMI Lifts Oil

Crude oil hit a post-pandemic high this week, rising to nearly $43 a barrel on Wednesday as domestic crude supply fell for a third straight week. Consumption has also improved in China, where manufacturing activity continues to expand following countrywide lockdowns. The official China manufacturing purchasing manager’s index (PMI) ticked up to 51.1 in July, representing the fifth straight month the gauge has been above the 50.0-line separating expansion from contraction. The private Caixin/Markit PMI, meanwhile, came in even higher at 52.8.

Oil price steadily recovering on Chinese factory expansion
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As I’ve pointed out many times before, PMI is a forward-looking indicator that can help investors get a sense of where commodity prices might be headed one to six months down the road. That’s because one of the things PMI looks at is new orders. If factories are receiving a wave of new orders for, say, automobiles, you can reasonably expect that they will need to consume more energy to run their operations, not to mention use more metals and other raw materials.

All of this activity is supportive of commodity prices—oil’s especially, based on China’s PMI data above.

Our own research has found that when the JPMorgan Global Manufacturing PMI crossed above its three-month moving average, materials, energy, copper and crude oil prices were higher on average three months later.

I explain the relationship between PMI and commodity prices further in the following YouTube video.


Ethereum and HIVE Continue to Trade in Tandem

On a final note, cryptocurrencies have been on fire the past 30 days. Ethereum, the world’s second-largest digital coin after bitcoin, has skyrocketed 83.5 percent since July 14 and 304.4 percent since its 52-week low on March 16. Today it was trading safely above $400 for the first time in two years.

This has sent Ethereum transaction fees to an all-time high. The average fee to send and receive the digital currency stood at around $6.45 on August 13, well above the 12-month average of $0.38.

Ethereum transaction fee surges to an all-time high on rising coin price
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Shares of HIVE Blockchain Technologies, the world’s first publicly traded crypto miner, traded up on Friday and were on track to notch its second straight month of positive gains, after rising 51 percent in July. As I shared with you last week, HIVE and Ethereum have historically traded in tandem. For the two-year period, the two have a moderately strong correlation coefficient of 0.56. A coefficient of 1 means two assets invariably trade in the same direction at the same time while a coefficient of -1 means that they have a negative relationship and trade in opposite directions at the same time.

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Gold Market

This week spot gold closed at $1,945.12, down $90.43 per ounce, or 4.44 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week lower by 5.90 percent. The S&P/TSX Venture Index came in off just 0.31 percent. The U.S. Trade-Weighted Dollar fell 0.37 percent.

Date Event Survey Actual Prior
Aug-11 Germany ZEW Survey Expectations 55.8 71.5 59.3
Aug-11 Germany ZEW Survey Current Situation -69.5 -81.3 -80.9
Aug-11 PPI Final Demand YoY -0.7% -0.4% -0.8%
Aug-12 CPI YoY 0.7% 1.0% 0.6%
Aug-13 Germany CPI YoY -0.1% -0.1% -0.1%
Aug-13 Initial Jobless Claims 1100k 963k 1191k
Aug-13 China Retail Sales YoY 0.1% -1.1% -1.8%
Aug-18 Housing Starts 1237k 1186k
Aug-19 Eurozone CPI Core YoY 1.2% 1.2%
Aug-20 Initial Jobless Claims 925k 963k


  • The best performing precious metal for the week was platinum, but still down 2.30 percent as hedge funds boosted their net long positions. Although a rocky week for gold, it rose as much as 2.6 percent on Thursday after the U.S. dollar weakened as stimulus negotiation stalled. Ray Dalio’s Bridgewater Associates invested more than $400 million in gold in the second quarter, according to a regulatory filing. The firm piled into the iShares Gold Trust and the SPDR Gold Trust – two of the largest gold-backed ETFs.
  • Barrick Gold boosted its quarterly cash dividend by 14 percent to 8 cents per share. The company said in its second quarter earnings statement that “the dividend increase is sustainable and reflects the ongoing robust performance of our operations.” In afterhours trading on Friday, Barrick Gold was up 5 percent as Warren Buffett’s Berkshire Hathaway disclosed in a 13F filing that it had accumulated 20.9 million shares in the recent quarter. Newcrest Mining reported a 34 percent rise in full-year profit. CEO Sandeep Biswas said the miner is well-placed to consider further acquisitions due to its strong balance sheet and rising gold prices.
  • The S&P 500-to-New York Gold Futures ratio could be telling us something about where gold is headed. As you can see in the chart below, there have been several multi-year cycles where gold and stocks trade leadership positions. The ratio is now falling after rising from 2010 to 2019, leaving the door open for a possible big gold run where it beats stocks.

gold continues to rises on growing economic and geopolitical uncertainty
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  • The worst performing precious metal for the week was silver, down 6.55 percent as investors redeemed money from silver bullion ETFs for the past five days. Gold bullion had its first weekly loss since June. Gold fell more than $100 on Tuesday and dove below $1,900 an ounce briefly on Wednesday. Bullion took a sharp downward turn after a sudden rise in U.S. bond yields. Gold dropped as much as 5.7 percent on Tuesday – it’s biggest one-day loss in seven years.
  • Investors trimmed gold positions after gold soared above $2,000 an ounce. The SPDR Gold Shares ETF saw $382 million in outflows last Friday as investors weighed a mixed economic outlook.
  • Goldman Sachs closed its long silver trade after a 50 percent monthly surge. Analysts said in a note that “with gold currently still below $2,000 an ounce, the increase in silver was much faster than we anticipated, and we think that the near-term risk return trade-off for silver has diminished.” Bloomberg notes that the bank is still bullish on precious metals in the medium term.


  • Lu Jun, founder of private fund firm Shanghai Congrong Investment Management, whose macro fund has beaten 96 percent of its peers this year, said he is avoiding aggressive equity bets and will focus on gold-related assets. In a Bloomberg interview, Lu said there is still huge upside potential for gold prices and they “might hit $5,000 per ounce on a five-year horizon.” Due to rapid money printing, Lu is bullish on gold and said gold-related assets account for the biggest weight in his portfolio.
  • Many argue that gold prices are influenced by real rates, but CrossBorder Capital argues that gold is driven by liquidity. The advisory firm said in a note that “the relationship between liquidity and gold is statistically robust and simply states that a 10 percent rise in U.S. dollar liquidity leads to a 12 percent change in the level of gold prices, some three months later.” Central banks continue to print money, which is increasing liquidity at a rapid rate. Bloomberg notes that CrossBorder estimates gold could add a further 15 percent and test $3,000 an ounce by later 2021.
  • Silver’s turbulent week drove the biggest discount since 2008 to the iShares Silver Trust ETF – the world’s biggest ETF tracking the metal. The fund fell 14 percent on Tuesday along with silver spot prices, but the ETF actually tracks the LBMA silver price, which is calculated once a day at an auction. Bloomberg notes that the result was an 11 percent discount between the fund and its underlying holdings, with the fund selling off more quickly. According to Mizuho International, this demonstrates that ETFs can provide a better sense of price than the less-liquid precious metals they track.


  • Gold’s rapid drop this week could turn some investors off. Edward Meir, analyst at ED&F Man Capital Markets, told Bloomberg in an interview “the extent of this selloff was so severe that I think it’s caused jitteriness about longs getting back in so quickly.” This week’s price action is a reminder for investors about gold’s volatility.
  • U.S. retail sales in July increased less than expected. Sales rose 1.2 percent, below forecasts of 1.9 percent, and far less than the 8.4 percent advance in June. Kitco News notes that coronavirus infections continue to spread across the country, forcing new lockdowns or pausing reopenings. Although new jobless claims hit the lowest since the pandemic began, there are still at least 31.1 million people on unemployment.
  • The resilience of the consumer is to be tested with certain Covid-19 government relief programs not being renewed for the unemployed yet.

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Index Summary

  • The major market indices finished mostly up this week. The Dow Jones Industrial Average gained 1.99 percent. The S&P 500 Stock Index rose 0.66 percent, while the Nasdaq Composite fell 0.80 percent. The Russell 2000 small capitalization index gained 2.03 percent this week.
  • The Hang Seng Composite lost 0.58 percent this week; while Taiwan was down 0.91 percent and the KOSPI rose 2.77 percent.
  • The 10-year Treasury bond yield rose 17 basis points to 0.71 percent.

Domestic Equity Market

SP 500 Economic Sectors weekly performance
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  • Industrials was the best performing sector of the week, increasing by 3.10 percent versus an overall increase of 0.40 percent for the S&P 500.
  • Royal Caribbean Cruises was the best performing S&P 500 stock for the week, increasing 16.12 percent.
  • Tesla was upgraded by Morgan Stanley analyst Adam Jonas on Thursday and by BofA analyst John Murphy on Friday, sending its shares as much as 3 percent higher to $1,668. The stock, which has gained 295 percent this year, received its most recent boost earlier this week, when Tesla announced its plan to split its shares in a 5-for-1 exchange.


  • Utilities was the worst performing sector for the week, decreasing by 2.08 percent versus an overall increase of 0.40 percent for the S&P 500.
  • Cisco Systems was the worst performing S&P 500 stock for the week, falling 10.39 percent.
  • Cisco Systems Inc. shares tumbled on Thursday after it gave a sales forecast that was seen as weak and pointed to lackluster enterprise spending in the recession. Shares fell as much as 11.6 percent for their biggest intraday percentage loss since March.


  • Apple is readying a series of bundles that will let customers subscribe to several of the company’s digital services at a lower monthly price. Bloomberg reported that the bundles, potentially called "Apple One," could launch as early as October alongside the next iPhone.
  • American Express is in advanced talks to buy SoftBank-backed lender Kabbage. The all-cash deal could value the lender at as much as $850 million, including retention payments, Bloomberg reported.
  • The unannounced Xbox Series S has been leaked by Microsoft’s own controller boxes, and a holiday 2020 release is rumored


  • Lyft reported a 61 percent revenue slowdown, but still managed to beat Wall Street expectations. Unlike Uber, Lyft has no food delivery or international businesses to rely on for revenue as the pandemic continues to hurt demand.
  • Airbnb’s revenue fell 67 percent in the second quarter. The steep drop-off reflects the impact of COVID-19, which has restricted travel globally.
  • Facebook subsidiary Instagram could face up to $500 billion in fines in a class-action lawsuit alleging it illegally harvested biometric data. A new lawsuit accuses Instagram of collecting people’s biometric data without their consent.

The Economy and Bond Market



  • After being above 1 million for 20 straight weeks, the number of Americans applying for jobless benefits dropped below, suggesting the economic recovery is taking hold. Initial unemployment claims totaled 963,000 in the week ended August 8. Continuing claims, which lag initial and measure the overall pool of recipients in state programs, also declined more than forecast to 15.5 million.

Unemployment filings fall to lowest level since March
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  • Americans kept shopping in July, with retail sales rising 1.2 percent from June, reflecting a rare bright spot in the battered economy. The jump in sales reported on Friday by the Commerce Department, though smaller than the increases in the previous two months, showed that the bounce back in spending to pre-pandemic levels was not a fluke.
  • U.S. industrial production increased for a third straight month in July, indicating manufacturing is gradually emerging from a deep demand slump. Total output at factories, mines and utilities rose 3 percent from the prior month after a revised 5.7 percent gain in June.


  • America’s small business owners reported a 14 percent month-over-month drop in their expectations that the economy will improve, even as many firms reported faring slightly better amid loosened coronavirus restrictions. Overall, there was a decrease of seven points in the NFIB Uncertainty Index and a decrease of 1.8 points in the NFIB Optimism Index.
  • As talks over a new round of economic stimulus veered toward collapse in Washington, the Labor Department’s monthly job figures underscored the case for extending aid to states and cities whose tax collections have been hammered by the coronavirus pandemic. While the number of workers on state and local government payrolls edged up in July as some 245,000 were called back for school reopenings, about 1.1 million jobs have still been lost since March.
  • State tax revenues declined 12.8 percent in June from a year earlier, according to the Urban Institute. Personal income taxes declined 17.9 percent and corporate income taxes declined 37.2 percent.


  • Goldman Sachs lifted its 2021 U.S. GDP forecast to 6.2 percent and predicts a COVID-19 vaccine will be ‘widely distributed’ by mid-2021. The bank now projects the U.S. unemployment rate will decline to 6.5 percent by the end of 2021, down from a previous 7 percent forecast.
  • The housing market remains one of the bright spots of the economic recovery, fueled by ultra-low borrowing costs. Next Tuesday, housing starts are expected to have continued their rebound in July, and applications to build are forecast to have increased as well.
  • The key release next week will be the minutes of the latest FOMC meeting on Wednesday. The Fed took no action in July but noted that high-frequency indicators suggest the recovery lost some steam, thanks to the spike in infections. The message was that if this persists, more action might be necessary.


  • The Fed’s Neel Kashkari warns that unless a stricter lockdown is imposed, the last few months could feel just like a ‘warm-up to a greater catastrophe’. "If we aren’t willing to take this action, millions more cases with many more deaths are likely before a vaccine might be available,” Kashkari said this week.
  • S&P Global Ratings warned it may slash 99 ratings on U.S. airports and airport-related debt, affecting 63 different obligors, as the coronavirus upends travel and puts airports in “uncharted territory,” according to a report released Friday.
  • The largest underwriter in the municipal bond market says the rally is about to face a crucial hurdle. Bank of America Corp. analysts Yingchen Li and Ian Rogow said they’re watching to see what happens if 10-year benchmark yields hit 0.5 percent — a threshold that may mark a test of whether investors continue stampeding into the market.

Energy and Natural Resources Market



  • The best performing commodity for the week was lumber, up 12.11 percent, marking its longest rally in 17 years and setting a new price record. In Calgary, and likely other places in North America, soaring lumber and wood panel prices are adding roughly $8,000 to $10,000 per new home construction. With low interest rates housing demand has been strong, coupled with remodeling projects started with the onset of Covid-19 lockdowns, and supply has been somewhat restrained. Adding to costs are 20 percent tariffs on Canadian lumber imports which the National Association of Homebuilders recently penned a letter to President Trump asking for help on increasing the supply of lumber.
  • The London Metal Exchange (LME) plans to create a spot market for low-carbon aluminum and other products that play a growing role in the green energy transition, reports Bloomberg. It will operate as an accredited marketplace for producers of green and recycled aluminum and could expand into other sectors. The LME expects to launch the trading system in the first half of 2021.
  • Chevron’s answer to climate change is to keep drilling for oil. CEO Mike Wirth spoke to the Texas Oil & Gas Association last month and said the transition to clean energy doesn’t mean the end of oil and gas, reports Bloomberg. “We’ll find ways to make oil and gas more efficient, more environmentally benign. And it will be part of the mix, just as biomass and coal are still enormous parts of the mix today.” Although oil drilling seems counterintuitive to the renewable movement, Wirth’s statements present the argument that the oil industry could become greener rather than disappearing altogether.


  • The worst performing commodity for the week was coal, down 3.33 percent, as measured by the Powder River Basin mines in Wyoming and Montana. Thermal coal demand has fallen almost 20 percent in India, the world’s second biggest importer after China whose imports are estimated to fall about 2.2 percent this year based on work by Bloomberg Intelligence. Norilsk Nickel, the world’s largest nickel producer, said the metal will be oversupplied this year by 150,000 tons. The company said pandemic disruptions led to the surplus growing in the first half of this year.
  • The U.S. oilfield-services sector shed 9,344 jobs in July – a 43 percent increase from June’s losses. The data from the Petroleum Equipment and Services Association shows that total job casualties since the pandemic began has risen to 99,253. Saudi Aramco plans to cut capital expenditure to $25 billion or less in 2021 – about half of what it was originally planning to spend. The oil giant is cutting back exploration and production in order to pay shareholders a $75 billion dividend this year.
  • Oil rose in tandem with equities on Monday as signs showed a slowing of Covid-19 cases in the U.S. Brent futures in London rose above $45 a barrel. However, prices fell back from 5-month highs later in the week after the IEA cut its demand forecast for the next 18 months. Crude still saw a small weekly gain following a decline in U.S. stockpiles.

Eurozone PMIs have recovered
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  • Equinor ASA’s new CEO Anders Opedal, who will begin in November, said he will speed up the company’s shift from oil to renewables, reports Bloomberg. “I think we can do more. I am willing to reallocate capital to make it happen,” Opedal said at a press conference. Equinor has pledged to increase renewable efforts tenfold by 2026. The National Employment Trust, with nine million members, in the UK has decided to divest from fossil fuels, however companies like Equinor mentioned above that is shifting from oil to renewables would still be an eligible investment.
  • Phillips 66, America’s biggest fuel maker by market value, plans to convert a California refinery into a renewable fuels plant, reports Bloomberg. The company statement said the project would produce 680 million gallons a year of renewable diesel, gasoline and sustainable jet fuel.
  • AGL Energy hopes to locate a giant lithium-ion battery array on the site of a retiring coal-fired plant. The Australian company plans for a cleaner grid based on renewables, reports Bloomberg. AGL has outlines plans for an 850-megawatt system by 2024 on the 50-year-old power station that will begin a phased retirement from 2022.


  • The International Energy Agency (IEA) reduced its forecast for global oil demand as air travel suffers from the pandemic more than previously expected. The organization cut estimates for almost every quarter through the end of 2021. “The outlook for jet fuel demand has worsened in recent weeks as the coronavirus has spread more widely,” the IEA said in its July report.
  • The Trump administration is ending an Obama-era regulation on methane leaks from oil and gas wells, even as some drillers supported it. Bloomberg writes that this could be an effort to appeal to swing state, and gas-rich, Pennsylvania. Methane is the chief component of natural gas, but it is also a powerful pollutant.
  • Tensions are heating up between India and China after the deadly border dispute weeks ago. India’s state-owned oil majors have halted hiring Chinese tankers to ship their products. Chinese vessels have been barred from bidding on tenders for chartering tankers to import crude into India or export products out of the country. Bloomberg notes that this move is unlikely to impact trade flows, but it does heighten the dispute.

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Emerging Europe



  • Russia was the best performing country this week, gaining 3 percent. Russian equites were supported by strong economic data, a stable oil recovery and the news of an approved COVID-19 vaccine. According to Bloomberg News, Russia’s elite were given the experimental vaccine as early as April. Evraz PLC, steel maker, was the best performing equity trading in the VanEck Russia ETF (RSX), gaining 11.5 percent in the past five days.
  • The Czech koruna was the best performing currency this week, gaining 1.3 percent. Inflation spiked to 3.4 percent in July versus expectations of 3.1 percent. The reading is above the central bank’s tolerance bend and rate hikes may start taking place next year.
  • Financials was the best performing sector among eastern European markets this week.


  • The Czech Republic was the worst relative performing country this week, gaining 64 basis points. All Czech equites listed on the Prague Stock Exchange gained market share, however the relative weakness in Czech performance came from Avast, a British cyber-security software company.   
  • The Turkish lira was the worst performing currency in the region this week, losing 1.4 percent. The lira extended its weakness against the U.S. dollar despite the central bank increasing the average cost of funding to 9.06 percent last Thursday.
  • Information technology was the worst performing sector among eastern European markets this week.


  • Russia’s GDP fell 8.5 percent in the second quarter from a year ago, the Federal Statistics Service said, beating analyst expectations for a 9.4 percent contraction. Russia was able to escape some economic pain because its service sector accounts for a smaller percent of output than in more developed countries.

potential EU recovery fund allocation as a proportion of GDP
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  • On Tuesday, Russian President Vladimir Putin announced that Russia had become the first country in the world to register a vaccine against COVID-19. The vaccine was developed jointly by the Gamaleya Research Institute and the Russian Defense Ministry and based on clinical trials launched on June 18, all 38 volunteers developed immunity to the virus. Some exports are concerned with Russia’s quick approval of the vaccine as not all final trials have been completed.
  • U.S. and EU trade tensions may be improving. The Trump administration said it made “modest” changes to the list of tariffed goods from the EU and did not widen the list to increase the $7.5 billion total as threatened. The U.S. also maintained the overall tariff rates of 15 percent on Airbus aircraft and 25 percent on goods, rather than increasing them to 100 percent as threatened. 


  • A protestor died in Belarus in police custody, the second death since clashes with police erupted last Sunday over a disputed presidential election. According to election officials, Alexander Lukashenko won 80 percent of votes on Sunday, securing another presidential term after 26 years in power, but there are widespread allegations of voting errors.
  • Europe has noticed a surge in coronavirus infections. The United Kingdom added France to its quarantine list, along with arrivals from the Netherlands, Monaco, Turks, Caicos and Aruba. Those returning from the countries will have to self-isolate for 14 days. France indicated it would retaliate by ordering a voluntary quarantine regime for Britons arriving in France.
  • Eurozone consumer confidence data will be released next week, and Bloomberg economists predict a negative reading of 15 in August.

China Region



  • The Philippines was the best performing country this week, gaining 4 percent. Gross international reserves rose to $98 billion in July, the equivalent of 8.9 months of imports and 4.9 times the country’s short-term debt. Global funds were net buyers of local Philippine equites. Vista Land & Lifescapes, Inc., a real estate company, was the best performing equity among the stocks trading in the iShares MSCI Philippine ETF (EPHE), gaining 9.6 percent in the past five days.
  • The Philippine peso was the best performing currency this week, gaining 83 basis points. Most emerging Asian currencies rose after data showed China’s economic recovery was intact in July. China’s industrial output rose 4.8 percent from a year earlier, the same as in June.
  • Telecommunication was the best performing sector among stocks trading on the Hong Kong Stock Exchange.


  • Malaysia was the worst performing market this week, losing 80 basis points. The country’s GDP contracted 17.1 percent year-on-year in the second quarter following growth of 0.7 percent in the first quarter. Hartalega Holdings BHD, a gloves maker, was the worst performing equity among the stocks trading in the iShares MSCI Malaysia ETF (EWM), losing 16.3 percent in the past five days.
  • The Indonesia rupiah as the worst performing currency this week, losing 1.3 percent. The Indonesia government announced record state spending for 2021 of $185.2 billion. The budget deficit is expected to reach at 5.5 percent of GDP. 
  • Materials was the worst performing sector among stocks trading on the Hong Kong Stock Exchange.


  • People’s Bank of China Governor Yi Gang said that China will continue to implement its part of the phase one trade deal with the U.S. of financial opening. Yi said Beijing will allow Wall Street’s trading houses to have exclusively owned brokerage and fund-management operations in China.
  • According to the latest annual Facebook Inc. and Bain & Co. report, Southeast Asia will have 310 million digital consumers by the end of 2020, surpassing the number previously forecast for 2025. Social distancing measures imposed during the pandemic accelerated the shift toward online spending. Average online spending per person is projected to triple from 2019 to $429 in 2025.
  • Taiwanese President Tsai Ing-wen said she wishes to begin talks on a free-trade pact with the U.S. as part of a broad effort to deepen their partnership and resist pressure from China, the Wall Street Journal reports.


  • China’s Foreign Ministry announced sanctions on 11 Americans, including senators Marco Rubio and Ted Cruz, in retaliation for similar measures imposed by the U.S. on Friday, reports Bloomberg. This is just the latest tit-for-tat action between the two superpowers.
  • The Philippines surpassed Indonesia to become the region’s biggest coronavirus outbreak. There are now 120,000 cases in the Philippines. The country re-imposed a second lockdown on the capital and its economy contracted 16.5 percent in the second quarter, the deepest contraction on record, according to Bloomberg.
  • China is behind its target for purchasing U.S. goods as part of the phase one trade deal that went into effect in February. Through June, China’s year-to-date imports of covered products were $40.2 billion, far behind the year-to-date target of $86.3 billion.

U.S. and China phase one tracker: China's purchases of U.S. goods
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Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performing for the week ended August 14 was DLSA Protocol, up 769.72 percent.

bitcoin surpasses gold and stocks this week
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  • According to ICO Analytics, web traffic on global cryptocurrency exchanges surged 13 percent in July as prices gained momentum. Since December 2019, centralized crypto exchanges added 26 percent in web traffic. As reported by CoinTelegraph, Coinbase – the largest exchange and wallet service in the U.S. – recorded 22.5 million visits in July, with traffic seeing an 18 percent increase.
  • The total value of Grayscale’s flagship Bitcoin Trust (GBTC) increase over $1.6 billion in the first six months of the year, reports CoinDesk.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week ended August 14 was 3X Short Algorland Token, down 91.95 percent.
  • Revolut, a crypto-friendly trading app and one of the biggest fintechs in Europe, has reportedly tripled its losses in 2019 despite growth in revenue and new customers, reports CoinTelegraph. Revolut reportedly posted a total loss of more than 106 million British pounds, up from 33 million pounds in 2018. Founder and CEO Nik Storonsky says the main reasons for the mounting losses were aggressive investment in global expansion and new product offerings.
  • Two-day-old DeFi project YAM has seen its market cap evaporate in under an hour, writes CoinDesk, as a desperate last-minute attempt to fix a bug in the code ultimately failed. Total value of YAM fell from around $60 million at 7:40 UTC to $0 by 8:15 – merely 35 minutes later. YAM launched Tuesday and the code hadn’t been properly audited – meaning a bug was soon discovered.


  • The metals and minerals subsidiary of Mitsubishi has launched a blockchain platform called ECO to digitize metal trades, writes CoinTelegraph. The official announcement says ECO will ease metal trades between counterparties by generating, managing and executing invoices and trade confirmations.
  • Micro Strategy, a Nasdaq-listed software firm, purchased bitcoin this week, effectively pouring all $250 million of its planned inflation-hedging funds into the digital currency, reports CoinDesk. “This investment reflects our belief that bitcoin, as the world’s most widely adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash,” said CEO Michael Saylor.
  • After the Supreme Court of India lifted banking restrictions for exchanges in March, India’s crypto trade volumes have soared, reports CoinDesk. In fact, India’s bitcoin peer-to-peer trade volume reached an all-time high in July.


  • The bitcoin rally slowed down at the start of the week, possibly taking cues from its yellow metal counterpart. Gold fell below $2,000 an ounce Tuesday and in turn bitcoin’s recent price rally shifted to a sideways meander, writes CoinDesk. Both assets have recently developed a relatively strong positive correlation.
  • Andrew Hamilton, a lawyer with a background in computer science, is spearheading a class-action lawsuit accusing the social media and search giants Google, Facebook, Twitter and YouTube for cartel-like behavior “intended to kill off the burgeoning cryptocurrency sector,” writes CoinTelegraph. The suit accuses the firms of launching a coordinated attack designed to crush competition emerging from the virtual currency sector in 2018, specifically noting sweeping bans against the promotion of crypto assets and initial coin offerings.
  • A self-proclaimed creator of bitcoin, Craig Wright, is reportedly ignoring a court ruling requiring him to pay legal fees for a libel suit against Twitter crypto persona Hodlonaut, writes CoinTelegraph. Hodlonaut says a court in Norway ruled that Wright should pay $60,000 in legal costs for the failed libel suit in early June 2020. Apparently, the fees should have been paid out by Wright within two weeks after the judgement on June 8, but he has “not paid a cent” in more than two months after the judgement.

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Leaders and Laggards

Weekly Performance
Index Close Weekly
10-Yr Treasury Bond 0.71 +0.17 +32.22%
Oil Futures 42.16 +0.21 +0.50%
Hang Seng Composite Index 3,813.72 -22.06 -0.58%
S&P Basic Materials 393.93 +7.36 +1.90%
Korean KOSPI Index 2,407.49 +64.88 +2.77%
S&P Energy 286.99 +6.54 +2.33%
Nasdaq 11,019.30 -88.77 -0.80%
DJIA 27,931.02 +544.04 +1.99%
Russell 2000 1,576.02 +31.40 +2.03%
S&P 500 3,371.24 +22.08 +0.66%
Gold Futures 1,952.10 -117.30 -5.67%
XAU 145.96 -13.64 -8.55%
S&P/TSX VENTURE COMP IDX 735.97 -6.14 -0.83%
S&P/TSX Global Gold Index 368.28 -35.26 -8.74%
Natural Gas Futures 2.35 +0.18 +8.45%


Monthly Performance
Index Close Monthly
Korean KOSPI Index 2,407.49 +205.61 +9.34%
10-Yr Treasury Bond 0.71 +0.08 +12.52%
Gold Futures 1,952.10 +110.50 +6.00%
S&P Basic Materials 393.93 +13.60 +3.58%
S&P 500 3,371.24 +144.68 +4.48%
DJIA 27,931.02 +1,060.92 +3.95%
Nasdaq 11,019.30 +468.81 +4.44%
Oil Futures 42.16 +0.96 +2.33%
Hang Seng Composite Index 3,813.72 -10.13 -0.26%
S&P/TSX Global Gold Index 368.28 +8.32 +2.31%
XAU 145.96 +8.03 +5.82%
Russell 2000 1,576.02 +97.75 +6.61%
S&P Energy 286.99 +2.97 +1.05%
S&P/TSX VENTURE COMP IDX 735.97 +68.58 +10.28%
Natural Gas Futures 2.35 +0.57 +32.06%


Quarterly Performance
Index Close Quarterly
XAU 145.96 +24.71 +20.38%
S&P/TSX Global Gold Index 368.28 +11.63 +3.26%
Gold Futures 1,952.10 +190.10 +10.79%
DJIA 27,931.02 +4,305.68 +18.22%
S&P 500 3,371.24 +518.74 +18.19%
Nasdaq 11,019.30 +2,075.58 +23.21%
Korean KOSPI Index 2,407.49 +482.53 +25.07%
Natural Gas Futures 2.35 +0.67 +39.68%
S&P Basic Materials 393.93 +76.84 +24.23%
Russell 2000 1,576.02 +338.47 +27.35%
Oil Futures 42.16 +14.60 +52.98%
Hang Seng Composite Index 3,813.72 +414.31 +12.19%
S&P/TSX VENTURE COMP IDX 735.97 +237.71 +47.71%
S&P Energy 286.99 +13.92 +5.10%
10-Yr Treasury Bond 0.71 +0.09 +13.96%


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Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (06/30/2020):

Evraz PLC
SPDR Gold Shares
Barrick Gold Corp
MMC Norilsk Nickel PJSC
Phillips 66, AGL Energy Ltd
Facebook Inc
Franco-Nevada Corp.
Wheaton Precious Metals Corp.
Tesla Inc
Microsoft Corp.

*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.

Frank Holmes has been appointed non-executive chairman of the Board of Directors of HIVE Blockchain Technologies. Both Mr. Holmes and U.S. Global Investors own shares of HIVE. Effective 8/31/2018, Frank Holmes serves as the interim executive chairman of HIVE. The National Federation of Independent Business’s (NFIB) Index of business optimism is based on responses from 1221 member firms.