Airlines and Gold Cruising on Renewed Investor Confidence

Author: Frank Holmes
Date Posted: August 7, 2020 Read time: 52 min

Airlines and precious metals both had a great week, the former thanks to renewed stimulus talks, the latter thanks to plunging government bond yields. Wheels up, and go gold!

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

I Believe Gold and Silver Are Just Getting Started

Last week I flew commercial for the first time since early March, on a nonstop Delta flight between San Antonio and Salt Lake City. My destination was the beautiful ski resort town of Park City, Utah, to attend the Oxford Club’s 2020 Private Wealth Seminar, where I spoke on quant investing in the age of COVID-19. Among the other speakers were well-known Oxford strategists Alex Green and Marc Lichtenfeld, both pictured above.

record fed balance sheet

I’d like to talk a little about the actual flight to and from the seminar. Again, it was my first time on a place since March, when I flew to Toronto to attend the Prospectors & Developers Association of Canada (PDAC) Convention.

The experience was excellent, and the jet was spotless. Before every flight, the cabin is fogged with disinfectant before a cleaning crew comes in to spray and wipe every surface. Masks were required, as they are on all of the 25 leading global carriers (except for Australia’s Qantas), according to research by travel advisory firms CarTrawler and IdeaWorks.

I understand that many of you reading this may be hesitant to board a plane right now. But it’s important to keep in mind that it’s in carriers’ best interest to maintain a safe environment for passengers and crew alike.

summary of confidence building measures brelated to the pandemic
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Delta is using its clean cabins to help boost customers’ confidence as it seeks to reduce the cash it burns to zero by the end of 2020.

In a memo to employees this week, CEO Ed Bastian wrote that travelers are “switching their loyalty to Delta because of the safety practices we have in place, and the care we take to ensure cleanliness and comfort.”

Meanwhile, United Airlines announced that it would begin cleaning its flight desks using ultraviolent lights.

The global race to develop a reliable coronavirus vaccine is accelerating, with Russia potentially the first to administer one as soon as this October. In the meantime, people are cautiously returning to the skies.

The number of commercial air passengers on U.S. carriers rose to a post-pandemic high of just under 800,000 on August 2, according to the Transportation Security Administration (TSA). That’s a ninefold increase in passenger volume from the low set on April 14, when screenings totaled only 87,500. A year earlier, the number stood at 2.7 million passengers per day, so we still have a long way to go.

Another $25 Billion for Airlines?

That being the case, U.S. lawmakers, including 16 Republican senators, are increasingly in favor of deploying another $25 billion to prevent airlines from having to furlough thousands of workers. This would be the second such round of financial support devoted to protecting airline industry jobs, the other occurring in March as part of the CARES Act. Those funds are set to expire September 30.

President Donald Trump said he would support the proposal.

Airline stocks, as measured by the S&P Supercomposite Airlines Index, closed up 4.4 percent on Wednesday on the news. They rose another 1.9 percent the following session after the State Department lifted a health advisory put in place in mid-March advising Americans to avoid international travel during the pandemic.

For the week, airlines stocks increased 9 percent, its best weekly performance since early June. Wheels up!  

Gold-Backed ETFs Now Hold More Bullion Than Any Country Except the U.S.

Airlines aren’t the only industry that had a positive week. Spot gold rose 3 percent after crossing above $2,000 an ounce for the first time ever on Tuesday. This was the precious metal’s ninth straight week of gains, driven by historic money-printing, a falling U.S. dollar and negative real government bond yields.

Gold producers, as measured by the NYSE Arca Gold Miners Index, also ended the week up for the ninth consecutive week. The group has returned 107 percent since the pandemic low on March 20.

Retail investors who may have been on the sidelines are finally beginning to take notice. ETFs that are backed by physical gold had their eighth straight month of positive flows in July and stood at a record 3,785 metric tons, according to the World Gold Council (WGC).

To put that in perspective, that’s more gold than any country has in its official reserves, excluding only the U.S., which currently holds 8,133.5 tons.  

gold backed etfs now hold more gold than any other country except the us
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Investors are also increasing their exposure to silver, whose price has likewise turned up on economic uncertainty. The white metal had its best month ever in July, soaring 34 percent, and began the month of August above $24 an ounce. Today, it hit strong resistance at just under $30, a level we haven’t seen since February 2013.

The silver price has increased so rapidly in so little time, in fact, that the much-watched gold-to-silver ratio—which shows you how many ounces of silver it takes to buy one of gold—fell below its eight-year average of 74.3 after touching an all-time high of 128 just four and a half months earlier.

gold to silver ratio has fallen below its eight year average
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BofA: $3,000 Gold in 18 Months, $35 Silver in 2021

If you happened to catch my interview with Kitco News this week, you know that I’m maintaining my $4,000-an-ounce call on gold by the end of this particular cycle. Some may believe this to be unrealistic, while others are beginning to adjust their own projections as global central banks and finance ministers continue to flood their economies with easy money. On Tuesday, the amount of negative-yielding government debt around the world crossed back above $16 trillion for the first time since September 2019.

This week Bank of America (BofA) raised its gold price target to $3,000 an ounce within the next 18 months, which would put us at February 2022.

I think this is very achievable. Take a look below. It took gold a little over four and a half years to increase 95 percent, or $1,000, from it’s 10-year low of $1,057 in November 2015 to $2,058 today. To hit $3,000, the metal would need to rise only around 46 percent.

Bank of America projects $3,000 an ounce gold within the next 18 months
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As for silver, BofA said it’s “feasible” that it could hit $35 by next year. That could especially be the case if governments stimulate their economies with spending on alternative energy sources such as solar.

The investment bank’s top picks are Wheaton Precious Metals, Newmont and B2Gold.

HIVE Blockchain Has Been a Roller Coaster Investment

On a final note, HIVE Blockchain continues to be our strategy in getting exposure to the cryptocurrency space. Years ago we tried to create a crypto ETF, but the regulatory hurdles turned out to be too severe. HIVE was the result of those efforts, and in September 2017 it became the first publicly traded company involved in the mining of virgin digital currencies.

total returns for 12 month period of ethereum, silver, gold and bitcoin
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HIVE stock—which trades on the TSX Venture in Canada, over the counter (OTC) in the U.S. and on the Frankfurt Stock Exchange—has been a roller coaster investment, like highly-volatile crypto prices.

Like gold mining stocks, which correlate with the price of spot gold prices 90 percent of the time, shares of HIVE have traded in tandem with Ethereum, the second biggest digital currency by market cap.

hive blockchain has traded in tandem with the price of ethereum
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As I’ve mentioned before, the crypto space is still maturing, and prices will likely continue to be very volatile for some time.   

Virtual Investor Day


Tuesday, August 11, I will be one of the keynote speakers at the Virtual Investor Day Conference, which features nine resource-focused public companies. Reserve your spot today by clicking the banner below!

Frank holmes august 11 virtual investor day 2020

Gold Market

This week spot gold closed at $2,035.55, up $59.69 per ounce, or 3.02 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week slightly lower by 0.05 percent. The S&P/TSX Venture Index came in up 2.60 percent. The U.S. Trade-Weighted Dollar rose 0.07 percent.

Date Event Survey Actual Prior
Aug-2 Caixin China PMI Mfg 51.1 52.8 51.2
Aug-3 ISM Manufacturing 53.6 54.2 52.6
Aug-4 Durable Goods Orders 7.3% 7.6% 7.3%
Aug-5 ADP Employment Change 1200k 167k 4314k
Aug-6 Initial Jobless Claims 1400k 1186k 1435k
Aug-7 Change in Nonfarm Payrolls 1480k 1763k 4791k
Aug-11 Germany ZEW Survey Expectations 55.6 59.3
Aug-11 Germany ZEW Survey Current Situation -69.0 -80.9
Aug-11 PPI Final Demand YoY -0.7% -0.8%
Aug-12 CPI YoY 0.7% 0.6%
Aug-13 Germany CPI YoY -0.1% -0.1%
Aug-13 Initial Jobless Claims 1200k 1186k
Aug-13 China Retail Sales YoY 0.1% -1.8%


  • The best performing precious metal for the week was again silver, up 16.04 percent despite hedge fund managers cutting their net bullish positions to a six-week low; thus, the physical market is driving the price. ETFs added 126,842 troy ounces of gold to their holdings on Thursday, bringing 2020 purchases to 26 million ounces and marking the 30th straight day of inflows. Total gold held by ETFs rose 31 percent so far this year. Gold continued to climb above its $2,000 an ounce level set last week on growing economic and geopolitical uncertainty.

gold continues to rises on growing economic and geopolitical uncertainty
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  • The Perth Mint reported gold coin and minted bar sales of 56,104 ounces in July, up from 44,371 ounces in June. Silver sales remained flat at 1.57 million ounces. Gold imports in India rose 25 percent year-over-year in July to 25.5 tons. This is double the 13.2 tons bought in June, reports Bloomberg. This is sign of improvement after purchases fell 95 percent year-over-year in the second quarter.
  • Nigeria is introducing measures to stem illegal gold exports and regulate production by informal miners. As much as 18 tons of gold leaves the country annually and is mostly produced by artisanal miners. This move will help diversify Nigeria’s economy by reducing dependence on oil and allow it to stockpile the metal. It may open the stage for international mining companies to enter the country and perhaps start what would be the country’s first gold mine done with responsible environmental and social protocols.


  • The worst performing precious metal for the week was gold, still up 3.02 percent. Gold prices pulled back on Friday on stronger-than-expected U.S. unemployment data. Payrolls increased by 1.76 million in July, beating estimates for a 1.48 million gain. Some investors think the V-shaped recovery is reinforced by the strong job gains over the last three months, but Deutsche Bank economist Brett Ryan noted that the easy gains from people going back to work in the service sectors is now done and further improvements in the labor market may be slower.
  • Silver consumption in India could fall by 50 percent this year from 6,000 tons in 2019. Metals Focus reports that imports were down by half in the first six months of this year to just 1,735 tons. Consumers are skipping purchases due to higher prices and a weak economy. Bloomberg notes that silver prices have rallied more than 60 percent in India so far this year.
  • The Bank of Nova Scotia dropped out of the daily gold and silver auctions that set benchmark prices for the metals and Citigroup has joined in its place. Bloomberg reports that Scotiabank is winding down activity in the sector. The auctions set metal prices and were introduced in 2014 and 2015 to replace “fixing”, where traders at banks negotiated benchmark prices over the phone.


  • Michael Cuggino, CEO of Permanent Portfolio Family of Funds, says that gold is still relatively cheap and could move higher. Cuggino said in an interview that it would “not be an unreasonable move” for bullion to breach $4,000 an ounce. VanEck CEO Jan van Eck said in a note this week that gold could reach $3,400 an ounce as the level of stimulus and system risk resembles that during the financial crisis.
  • Bank of America’s global commodity research team said it is “feasible” for silver to hit $35 per ounce in 2021. Bloomberg notes that the analyst said silver benefits from low interest rates and demand for green technologies.
  • Money managers are increasingly moving bond positions into gold as real yields are at record lows and monetary dangers could be ahead. Some investors are rethinking the traditional 60/40 portfolio where 60 percent of a portfolio is in stocks and 40 percent in bonds, which are considered a safer investment. Plurimi Wealth LLP’s CIO Patrick Armstrong said he had cut back on his bond positions and now hold a 7.5 percent weighting in gold. “The reason I want to hold gold is because the future just going to be a continue of what’s happening now: more money printing.”


  • According to Kitco’s weekly polls, sentiment in the gold space remains bullish, but bearish calls are gaining popularity. Many are betting that gold is looking at an overdue correction next week after hitting multiple record highs above $2,000 an ounce this week. SIA Wealth Management chief market strategist Colin Cieszynski said, “technically gold has been rising on falling volumes, and is extremely overbought on the RSI indicator.”
  • Mark Hulbert of MarketWatch cited research by Duke University professor Campbell Harvey that the gold price is as high as it’s ever been in inflation adjusted terms. Their research suggests that when the inflation adjusted price is high, gold’s subsequent performance tends to be low and vice versa five-years later. They caveat their abstract noting that massive buying of physical bullion by the ETFs may still push prices higher.
  • Despite stronger than expected jobs data this week, the economic turmoil in the U.S. could be worsening. According to the Census Bureau, an estimated 27 percent of adults missed their rent or mortgage payment for July. The federal moratorium on evictions expired on July 31, as did the end of the $600 per week boost to unemployment benefits.

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Index Summary

  • The major market indices finished up this week. The Dow Jones Industrial Average gained 4.26 percent. The S&P 500 Stock Index rose 3.14 percent, while the Nasdaq Composite climbed 4.00 percent. The Russell 2000 small capitalization index gained 4.73 percent this week.
  • The Hang Seng Composite gained 1.19 percent this week; while Taiwan was up 0.83 percent and the KOSPI rose 3.73 percent.
  • The 10-year Treasury bond yield rose 2 basis points to 0.565 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 4.76 percent versus an overall increase of 2.45 percent for the S&P 500.
  • The Mosaic Co was the best performing S&P 500 stock for the week, increasing 27.62 percent.
  • Berkshire Hathaway rallied to a five-month high. Warren Buffett’s company made a $10 billion acquisition, repurchased more than $5 billion of its own stock and shelled out close to $2.1 billion on Bank of America stock in 12 days.


  • Real estate was the worst performing sector for the week, increasing by 0.67 percent versus an overall increase of 2.45 percent for the S&P 500.
  • Evergy was the worst performing S&P 500 stock for the week, falling 14.92 percent.
  • Shale giant EOG plunged after its biggest earnings miss in a decade. The stock dropped 11 percent after marketing losses and commodity price realizations pulled down results.  


  • Disney stock jumped after Disney Plus hit 60 million subscribers. The stock climbed as much as 6.4 percent in pre-market trading on Wednesday as investors shrugged off the brutal impact of the coronavirus pandemic on other parts of its business.
  • T-Mobile launched its standalone 5G network – the first major phone carrier to do so.
  • Warren Buffett plowed another $337 million into Bank of America, boosting his stake to nearly 12 percent.


  • HSBC’s profits fell 67 percent in the second quarter as Covid-19 and U.S.-China geopolitical trade risk hit the lender.
  • Yelp dropped as much as 15 percent after second quarter revenue plunged due to Covid-19-related restrictions weighing on business advertising.
  • Uber and Lyft were hit with another lawsuit in California over claims the companies are skirting the state’s gig worker law. The suit alleges that Uber and Lyft have failed to pay drivers minimum wage, sick pay, unemployment and other benefits guaranteed to employees under state law.   

The Economy and Bond Market



  • The U.S. labor market recovery looks to still be on track. Employers added 1.76 million jobs in July — beating the median forecast in a Bloomberg survey of economists — bringing the total number on payrolls to 139.6 million, according to Labor Department figures released Friday.

US economy added a better than expected 1.76 million workers in july
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  • Weekly jobless claims hit their lowest level of the pandemic era, totaling 1.186 million last week, well below Wall Street expectations. Economists surveyed by Dow Jones had been looking for 1.42 million.
  • U.S. factory orders rose 6.2 percent in June to mark the second increase in a row, writes MarketWatch, pointing to a steady rebound after widespread shutdowns in the early stages of the pandemic. Economists polled by MarketWatch had predicted a 4.6 percent increase.


  • The costs to the economy from keeping schools closed are “substantial,” according to Goldman Sachs economists, who found that education-sector shutdowns directly subtracted about 2.2 percentage points from annualized real gross domestic product growth in the second quarter. That was a “sizable contribution to the overall decline,” David Choi and Joseph Briggs, led by Jan Hatzius, wrote in a note dated August 2.
  • Colorado and South Carolina have pulled back from making additional payments to their underfunded pensions, writes Bloomberg, moves that may play out in other states that are struggling to balance budgets as the coronavirus ravages tax revenue.
  • White House negotiators and the two top congressional Democrats hit an impasse again Friday afternoon after the round of negotiations on a virus-relief package broke up without any progress. Pelosi and Schumer said the Trump administration officials rejected the offer to cut $1 trillion from the Democrats’ $3.5 trillion proposal if Republicans would raise the top-line number of their plan by $1 trillion.


  • Mortgage rates have found another record low, reports Bloomberg, potentially boosting a housing market that has been a bright spot for a shaky U.S. economy. The average for a 30-year fixed loan fell to 2.88 percent, the lowest in nearly 50 years of record keeping by Freddie Mac.
  • The surging U.S. savings rate means the country can afford to support Americans laid off due to the coronavirus pandemic, while a “hard” lockdown could deliver a faster economic recovery, a senior Federal Reserve official said on Sunday. Federal Reserve Bank of Minneapolis President Neel Kashkari told CBS’s “Face the Nation” that Americans are saving more because they aren’t going out as much during the pandemic, reports, and as a result there would be less need to borrow from abroad to finance additional fiscal aid.
  • Record-low interest rates have helped revive the U.S. markets for housing and autos — standouts in an economy in desperate need of traction, reports Bloomberg. Sales of new homes in June ran at their fastest pace in nearly 13 years, leaving builders and the construction workers they employ with bigger backlogs.


  • U.S. July retail sales will be announced next week, but reopening have thus far not brought shoppers back to anything like pre-pandemic levels, and economists forecast smaller gains.
  • As many as 231,000 of the nation’s roughly 660,000 eateries will likely shut down this year, according to an estimate from restaurant consultancy Aaron Allen & Associates provided to Bloomberg News. This will bring the industry’s steady growth to a halt and mark the first time in two decades that U.S. restaurant counts don’t climb.
  • Bloomberg Quint reports that America’s public colleges and universities are facing one of their toughest financial challenges ever as the economic collapse hammers state tax collections and tens of thousands of students opt to wait out the pandemic or study online. Public college administrators say they expect enrollment to plummet this fall.

Energy and Natural Resources Market



  • The best performing major commodity for the week was natural gas, up 24.46 percent. Natural gas futures surged nearly 17 percent on Monday as hotter temperatures and a recovery in exports drove speculation that the worst of the demand shock from the pandemic is over, reports Bloomberg. Goldman Sachs now have a “bullish outlook” for gas, according to a new report.
  • China, the top commodity consumer, purchased record amounts of iron ore and copper in July, reflecting strength in its economy. Inbound iron shipments rose 11.8 percent from a year earlier. Citigroup reports that China ramped up infrastructure activity with spending on road construction rising 29 percent in the second quarter. Manufacturing PMI rose to 52.8 in July.
  • Fertilizer companies rallied after Mosaic reported second quarter profit that beat the highest estimates. Mosaic rose as much as 16 percent on the news and released a positive outlook for the sector. Iron ore futures surged above $110 a ton on Monday on expectations that strong demand in China and lower supplies will leave the market in deficit this year.


  • The worst performing major commodity for the week was wheat, down 6.64 percent on fears that Canadian and Russian harvests will leave the market in surplus. Australia & New Zealand Banking Group said in a note that copper looks overvalued. The bank sees global demand falling 4 percent this year. Despite strength in Chinese demand, it will fail to offset the weakness in the rest of the world. The copper market could move into a surplus of 565,000 tons in later 2020, the largest glut since 2012.
  • Exxon Mobile Corp warned that low energy prices could wipe out one-fifth of its oil and natural gas reserves from the books, reports Bloomberg. Exxon said in a regulatory filing that “certain quantities of crude oil, bitumen and natural gas will not qualify as proved reserves at year-end 2020.” The pain continues for shale producers. Range Resources Corp. sold its Louisiana shale fields for just one-tenth of what it paid for them four years ago, reports Bloomberg.
  • U.S. crude oil production is expected to fall by 600,000 barrels per day in 2020 to 11.63 million, according to the U.S. Energy Information Administration. Baker Hughes worldwide rig count dropped by 43 to 1,030 in July. Bloomberg notes that the international rig count fell to 743 in July – the lowest since 2003.

Eurozone PMIs have recovered
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  • BP released specific goals on how it plans to transform into a net-zero emissions company by 2050. The company aims to develop 50 gigawatts of renewable energy by 2030, up from just 2.5 gigawatts today. BP plans to have hydrogen be a 10 percent market share in certain markets. Additionally, the company seeks to build 70,000 electric vehicle charging points.
  • The U.K. will invest 1.3 billion pounds in building projects and provide 2 billion pounds in energy efficiency grants to help create jobs and rally the pandemic-hit economy, reports Bloomberg.
  • Codelco, the world’s largest copper producer based in Chile, is taking a cautious approach to resuming development projects that it halted to protect workers from the pandemic, reports Bloomberg. Some projects will resume as early as next week, and the full workforce will return by January. This cautious approach should help stem the spread of the virus and prevent further shutdowns.


  • The Tuesday explosion in Lebanon’s capital Beiruit tore through major grain stocks, stoking fears of shortages in the country that imports nearly all its food, reports Bloomberg. Video footage from the blast shows grain spilling from silos that have a capacity of 120,000 tons. Lebanon was already in an economic crisis before the Covid-19 pandemic.
  • Rio Tinto Group destroyed Aboriginal Australian heritage sites dating back more than 46,000 years in order to access 8 million tons of high-value iron ore. Bloomberg notes that the world’s second-largest miner rejected three other options that would have avoided damaging some of the sites. CEO Jean-Sebastien said that the move delivered $135 million in extra value to its iron ore division and the unit overall saw $4.6 billion in profits in the first six months of this year.
  • A new threat to the global supply chain is weary ship crews. Due to the pandemic, seafarers have been stuck offshore for months and crews have demanded to be repatriated, according to the International Transport Workers’ Federation. Several vessels are idled in Australian ports after workers demanded a break. “The Covid-19 pandemic has made crew changes extremely difficult, and we’re starting to see fleet inefficiencies emerge,” Braemar ACM Shipbroking said in a report this week. About 250,000 seafarers are stuck at sea and have an increasing risk of physical and mental exhaustion.

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A Blog by Frank Holmes, C.E.O. and Chief Investment Officer

Emerging Europe



  • Hungary was the best performing country this week, gaining 3.6 percent. Stocks were supported by strong economic releases. Manufacturing PMI in July was reported at 50.8, crossing above the 50 level that separates growth from contraction. Industrial production increased by 17.1 percent on a month-over-month basis versus expectations for an increase of only 10 percent. Holding company Opus Global (OPUS) was the best performing equity trading on the Budapest Stock Exchange, gaining 10 percent in the past five days.
  • The Russian ruble was the best performing currency this week, gaining 63 basis points, supported by strong oil prices. Brent crude gained 3 percent in the past five days.
  • Consumer discretionary was the best performing sector among eastern European markets.


  • Turkey was the worst performing country this week, losing 5.8 percent. A weak lira triggered equity selling. Gozde Girisim Sermayesi Yatirim Ortakligi AS, an investment firm, was the worst performer among stocks trading on the Istanbul Stock Exchange, losing 16 percent in the past five days.
  • The Turkish lira was the worst performing currency in the region this week, losing 4.3 percent. On Thursday, the lira hit a record low despite the central bank’s continued efforts to prevent it from falling. On Friday, Turkey stopped funding local lenders from its one-week repurchase rate, forcing the banks to borrow from a more expensive overnight window, which is equivalent to a 1.5 percent rate hike.
  • Industrial was the worst performing sector among eastern European markets.


  • The IHS Markit Eurozone Manufacturing PMI was revised higher to 51.8 in July 2020, up from a preliminary estimate of 51.1 and June’s final reading of 47.4. That latest PMI points to the first month of expansion in the bloc’s manufacturing sector since February 2019. Service PMI crossed above the 50 level as well, pointing to continued recovery.

potential EU recovery fund allocation as a proportion of GDP
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  • With countries around the world pledging more monetary easing to stimulate their economies, record government spending and resilient inflation may allow the Czech central bank to raise borrowing costs as early as next year, Bloomberg reports. While eurozone inflation recently dropped further from an already very low level, the Czech Republic is facing a rare spike in price growth. Despite a 10.7 percent drop in GDP in the second quarter, unemployment is stable due to government support.
  • Hungary’s industrial contraction slowed to 12.2 percent year-over-year in June from a revised negative 27.8 percent in May, beating analyst estimates as factories reopened from a coronavirus lockdown. The Czech Republic also reported an improvement in industrial activity, with a contraction of 7 percent in June from negative 29.4 percent in May.


  • Many European countries are reporting a rise in new Covid-19 infections. Germany is already contending with a second wave of the virus and scientists in France believe they will soon have a second wave too. Poland will impose new restrictions this Saturday to prevent the spread of the virus. Another lockdown would likely slow the economic recovery.
  • Charlie Robertson from Renaissance Capital pointed out this week that the situation in Turkey now looks very similar to 2018 when the lira depreciated against the dollar sharply, except for two main differences. First, the current account balance is not going to get better because of the coronavirus hit to tourism. Foreign investors are lightly positioned in Turkey, owning less than 4 percent of Turkish lira bonds. The lira may continue its downtrend against the dollar for months to come, Robertson wrote.
  • Bloomberg Economists predict that eurozone growth will contract by 12.1 percent in the second quarter after a drop of 3.6 percent in first quarter. The EU’s GDP data will be released next Friday.

China Region



  • Vietnam was the best performing country this week, gaining 4.4 percent. Despite the recent increase in number of coronavirus cases, Vietnam reported only 747 infections as of August 6, by far the lowest in Southeast Asia. Synopex, a maker of wireless device components, was the best performing equity among stocks trading in the VanEck Vietnam ETF (VNM), gaining 39.8 percent over the past five days.
  • The Malaysian ringgit was the best performing currency this week, gaining 1.2 percent. Dollar weakness and rising oil prices helped the currency.
  • Material stocks were the best performers among the stocks trading on the Hong Kong Stock Exchange.


  • Malaysia was the worst performing market this week, losing 1.6 percent. Malaysia’s former Finance Minister Lim Guan End was charged with corruption over an undersea tunnel project in northern Penang state. Lim was finance minister under the Pakistan Harapan administration that collapsed in February and remains as leader of one of the biggest opposition parties. IJM Corporation Berhad, an investment holding company that provides construction services, was the worst performing equity among stocks trading in the iShares MSCI Malaysia ETF (EWM), losing 10 percent over the past five days.
  • The Pakistani rupee was the worst performing currency this week, losing 80 basis points. The country registered a spike in new COVID-19 infections while heavy rains batter parts of Sindh. At least four people died in Karachi due to heavy monsoon rains.
  • Utility stocks were the worst performers among stocks trading on the Hong Kong Stock Exchange.


  • The Caixin China Manufacturing PMI hit a nine-year high in July of 52.8, up from 51.2 in June. This is the highest level since January 2011 and a sign of a strong rebound from the fallout of the COVID-19 pandemic.

caixin china manufacturing pmi hits over nine year high in july
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  • A People’s Bank of China video conference on its goals for the second half of this year noted that it will push forward the opening-up of China’s financial industry. The bank said it will pursue a more flexible, appropriate, and targeted monetary policy to effectively implement policies aimed at helping businesses weather COVID-19 related difficulties.
  • Alibaba’s fintech affiliate Ant Group is seeking to raise a record $30 billion in its IPO on a valuation of $200 billion. The company plans to sell 10 percent of shares in Shanghai and 5 percent in Hong Kong in a dual listing.


  • President Trump issued an executive order on Thursday that would ban Tik Tok and WeChat from operating in the U.S. in 45 days if they are not sold by their Chinese-owned parent companies. This escalates tensions between the U.S. and China over the popular social media app. The order says Tik Tok’s capturing of information from users such as location data and browsing histories “threatens to allow the Chinese Communist Part access to Americans’ personal and proprietary information.” China is likely to retaliate.
  • Bloomberg reports that U.S. Health and Human Services Secretary Alex Azar will lead a delegation to Taiwan in the coming days to discuss the global response to COVID-19. This is the highest-level visit by a U.S. cabinet official to Taiwan in more than 40 years when the U.S. cut ties. Washington signaling support for Taiwan is another escalation of tensions with Beijing.
  • A survey of Chinese consumers indicates that only 13 percent plan to begin travelling internationally within two months of travel restrictions being eased. 82 percent of respondents said they expect that in 2021 they will do less international travel than they did in 2019. Chinese tourists are important to the global retail and hospitality industry. This data suggests an immediate bounce back in outbound travelers after the pandemic is misplaced, writes CLSA.

Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performing for the week ended August 7 was MineBee, up 3,244.29 percent. The price of bitcoin rose higher in one day this week than stocks have gained all year, reports CoinDesk. Amid calls for more government stimulus, bitcoin prices surged 5 percent on Wednesday, outpacing stocks and gold.

bitcoin surpasses gold and stocks this week
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  • Square, the San Francisco-based payments company, said its bitcoin business is continuing its rapid growth, reports CoinDesk, with second quarter revenue up 600 percent year-on-year. Revenue made from selling bitcoin to its Cash App customers came to a total of $875 million.
  • The price of bitcoin is heading closer to $12,000 as the week comes to a close. Daily gains top 2.2 percent as of Thursday, reports CoinTelegraph, with the popular digital currency erasing the effect of its weekend plunge. Not only that, bitcoin “copying” gold to hit surprise price highs now has factual evidence as the realized correlation between the two assets reaches all-time highs.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week ended August 7 was Medalte, down 76.07 percent.
  • Ethereum Classic has suffered its second 51 percent attack in a week after more than 4,000 blocks were reorganized Thursday morning, writes CoinDesk. Bitfly and Binance reported the reorganization, announcing that all Ethereum Classic payouts, withdrawals and deposits had been suspended due to the attack.
  • North Korea-based cybercriminals are suspected to be using untraceable alternative cryptocurrencies, or altcoins, to convert stolen funds into cash, writes CoinTelegraph. Hackers have stolen approximately $1.5 billion in cryptocurrencies and they were converting a portion of that amount to cash.


  • A group of state-run commercial banks in China are reportedly conducting a large-scale internal testing of a digital wallet designed for China’s national digital currency the digital yuan, writes CoinTelegraph. Reuters reported on August 5 that the banks are testing the wallet application to transfer money and make payments in China’s central bank digital currency, or CBDC.
  • According to JPMorgan Chase & Co., the behavior of retail investors during the pandemic varies significantly across age groups. Investors generally are interested in alternative assets but older ones are buying gold while younger ones like bitcoin, reports Bloomberg.
  • As reported by CoinTelegraph, the People’s Bank of China is purportedly planning to use its digital currency electronic system (DCEP) to target the dominance of technology giants like Alibaba and Tencent in the digital payments sector. As of now, Alibaba’s financial subsidiary Alipay and Tencent’s WeChat Pay control a majority of the digital payments across China while banks are left far behind in the competition, the article explains.


  • The same kinds of cryptocurrency scams that plague Twitter are running rampant on Instagram this year, reports CoinDesk. There are more than 1.3 million Instagram accounts using #coinbase, for example, an overwhelming number of which display inauthentic behavior.
  • Right now should be the best time of the year for China’s bitcoin miners. The monsoon season, typically from June through October, brings excessive rain and thus cheap hydroelectricity, reports CoinDesk. “But this year is different, proving to be harder than ever for China’s bitcoin miners and mining farm operators,” the article continues. Mining difficulty has now almost doubled compared to the monsoon season last year, while block rewards were halved, “meaning it is more difficult to mine, with less rewards.”
  • In its August crypto outlook, Bloomberg remained unimpressed with Ethereum, calling its rally “speculative.” The report goes on to say that Ethereum faces “plenty of competition from similar crypto platforms and about 6,000 tradable coins.”

Explore the world's 10 busiest airports

Airline Sector



  • Chinese airlines were the winners among the Bloomberg World Airlines Index in the month of July. China Southern Airlines was up 5.28 percent while Air China was up 4.75 percent. China has seen a rebound in domestic travel as the world’s most populous country contained the outbreak of Covid-19.
  • United announced it will boost flights in September as it resumes service on 25 international routes. Although the September schedule will amount to just 37 percent of that in 2019, it is a modest increase from the August schedule, representing an increase in leisure travel.
  • Southwest Airlines CEO Gary Kelly said in a Bloomberg TV interview that it is safe to travel on commercial airlines now and that passengers should not worry about air quality. Airlines are taking extensive measures to protect travelers, including mandatory face masks, thorough cabin cleaning and middle seat booking bans.


  • Airlines began reporting second quarter earnings in July. Singapore Airlines reported its biggest quarterly loss ever, with a loss of $815 million. Cathway Pacific Airways warns of a $1.3 billion first half loss.
  • Collapsed travel demand has hurt the already-troubled Boeing. Customers have cancelled 373 orders for the Boeing Max so far in 2020, with 60 in the month of June. Airlines are cutting back on new orders as demand shows no sign of a speedy recovery.
  • Travel restrictions and strict quarantine rules remain in place globally. Many countries require that travelers from other countries quarantine for 14 days. In the U.S., New York State is mandating that travelers from a growing list of other states quarantine for two weeks. These restrictions are believed to hamper global travel and deter visitors.


  • Richard Branson helped save his own Virgin Atlantic. The company announced a 1.2 billion pound ($1.5 billion) package that includes 170 million pounds from U.S. hedge fund Davidson Kempner Capital Management and 200 million pounds that Branson raised from diluting his stake in Virgin Galactic. Back in March, the U.K. government rejected an airline industry bailout. The carrier will adapt to the post-pandemic world by cutting more than 3,000 employees and focusing on long haul routes such as Europe to Israel and Europe to the Caribbean, reports Bloomberg.
  • The pandemic woes for Airbus and Boeing could present an opportunity for state-owned Chinese aerospace company Comac. On July 10, an Air China flight used a Comac plane – the first time a major carrier has used one of its jets. As tensions rise between China and the West, Comac can supply jets to national airlines and reduce dependence on majors Airbus and Boeing. Comac delivered its ARJ21 jet to Air China, China Eastern Airlines and China Southern airlines in June and will deliver a total of 105 by 2024.
  • Ryanair CEO Michael O’Leary is hopeful that the reopening of school in Europe in September will boost business travel. “To the extent they successfully manage the return to schools, we think there will be some return to some level of normality of business travel.”


  • Moody’s Investors Service estimates that global airline passenger demand won’t recover to pre-coronavirus levels until the end of 2023, and only if an effective vaccine is available, reports Bloomberg. Air travel demand plummeted by more than 90 percent just weeks into the pandemic. A vaccine will likely not be available before mid-2021. The International Air Transport Association (IATA) updated its forecast and said the industry is unlikely to fully recover before 2024.

pandemic has cut more than 70 percent of global airline capacity
click to enlarge

  • What was once a dire pilot shortage has turned rapidly into a pilot surplus. Thousands of pilot jobs are at risk as airlines offer far fewer flights. United’s outlook said a third of pilot jobs are threatened. Delta has cut pilot hours by 15 percent to try and avoid layoffs, but that might not last long. Asiana Airlines is even flying empty Airbus A380s just to keep pilots certified by having enough fly time.
  • Airline carrier jobs are at risk in the U.S. when restrictions tied to payroll aid expire at the end of September, reports Bloomberg. American Airlines said it will notify 25,000 employees, or about 29 percent of its U.S. workforce, that they are at risk of losing employment when the aid expires.

Leaders and Laggards

Weekly Performance
Index Close Weekly
10-Yr Treasury Bond 0.57 +0.02 +3.10%
Oil Futures 41.53 +1.61 +4.03%
Hang Seng Composite Index 3,776.71 +44.33 +1.19%
S&P Basic Materials 388.01 +8.67 +2.29%
Korean KOSPI Index 2,351.67 +84.66 +3.73%
S&P Energy 280.59 +6.60 +2.41%
Nasdaq 11,010.98 +423.17 +4.00%
DJIA 27,433.48 +1,119.83 +4.26%
Russell 2000 1,565.84 +70.74 +4.73%
S&P 500 3,348.09 +101.87 +3.14%
Gold Futures 2,041.10 +74.30 +3.78%
XAU 154.14 +3.88 +2.58%
S&P/TSX VENTURE COMP IDX 739.09 +33.35 +4.73%
S&P/TSX Global Gold Index 395.34 +8.68 +2.24%
Natural Gas Futures 2.25 +0.42 +23.07%


Monthly Performance
Index Close Monthly
Korean KOSPI Index 2,351.67 +192.79 +8.93%
10-Yr Treasury Bond 0.57 -0.10 -15.04%
Gold Futures 2,041.10 +190.50 +10.29%
S&P Basic Materials 388.01 +26.02 +7.19%
S&P 500 3,348.09 +178.15 +5.62%
DJIA 27,433.48 +1,366.20 +5.24%
Nasdaq 11,010.98 +518.48 +4.94%
Oil Futures 41.53 +0.63 +1.54%
Hang Seng Composite Index 3,776.71 -114.51 -2.94%
S&P/TSX Global Gold Index 395.34 +33.03 +9.12%
XAU 154.14 +17.56 +12.86%
Russell 2000 1,565.84 +138.44 +9.70%
S&P Energy 280.59 +5.42 +1.97%
S&P/TSX VENTURE COMP IDX 739.09 +74.29 +11.17%
Natural Gas Futures 2.25 +0.43 +23.41%


Quarterly Performance
Index Close Quarterly
XAU 154.14 +31.84 +26.03%
S&P/TSX Global Gold Index 395.34 +40.64 +11.46%
Gold Futures 2,041.10 +297.40 +17.06%
DJIA 27,433.48 +3,557.59 +14.90%
S&P 500 3,348.09 +466.90 +16.21%
Nasdaq 11,010.98 +2,031.32 +22.62%
Korean KOSPI Index 2,351.67 +423.06 +21.94%
Natural Gas Futures 2.25 +0.36 +18.85%
S&P Basic Materials 388.01 +65.42 +20.28%
Russell 2000 1,565.84 +282.92 +22.05%
Oil Futures 41.53 +17.98 +76.35%
Hang Seng Composite Index 3,776.71 +399.01 +11.81%
S&P/TSX VENTURE COMP IDX 739.09 +250.87 +51.38%
S&P Energy 280.59 -1.90 -0.67%
10-Yr Treasury Bond 0.57 -0.08 -11.99%


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Certain materials in this commentary may contain dated information. The information provided was current at the time of publication.

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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):

American Airlines Group Inc
Delta Air Lines Inc
United Airlines Holdings Inc
Southwest Airlines Co
Ryanair Holdings PLC
Air China Ltd
China Southern Airlines Co Ltd
Singapore Airlines Ltd
Alibaba Group Holding Ltd
Mosaic Co/The
Qantas Airways Ltd
Air Canada
Alaska Air Group Inc
JetBlue Airways Corp
Spirit Airlines Inc
Wheaton Precious Metals Corp
Newmont Corp
B2Gold 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.

The Bloomberg U.S. Airlines Index is a capitalization-weighted index comprised of the airlines in the Americas that have a market capitalization greater than $250 million. The S&P Supercomposite Airlines Index is a capitalization- weighted index. The index was developed with a base value of 100 as of December 30, 1994. 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.