It’s Always Darkest Before the Dawn

Author: Frank Holmes
Date Posted: April 9, 2020 Read time: 51 min

For the billions of observant Christians and Jews across the globe, Holy Week is the most religious time of the year. Whereas Christians observe and celebrate Christ's crucifixion and resurrection, Jews commemorate the Hebrews' exodus from enslavement in Egypt to the Promised Land.

U.S. Global Investors Announces Record Inflows into Its Airlines ETF, the U.S. Global Jets ETF (JETS)

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

It’s Always Darkest Before the Dawn

For the billions of observant Christians and Jews across the globe, Holy Week is the most religious time of the year. Whereas Christians observe and celebrate Christ’s crucifixion and resurrection, Jews commemorate the Hebrews’ exodus from enslavement in Egypt to the Promised Land.

In both cases, it’s a time of renewal and rebirth—something the U.S. and world need now more than at any other period in modern memory.

Even if they’re not among the 430,000 people in the U.S. who are confirmed to have contracted the coronavirus as of Thursday morning, a great number of Americans are hurting this Easter and Passover. Some 6.6 million additional workers filed for jobless claims this week, bringing the three-week total to nearly 16 million after last week’s figures were revised up to 6.9 million, an all-time record.

CNBC estimates that after factoring in the most recent tally, the U.S. has lost 10 percent of its workforce due to business closures.

However, it’s always darkest before the dawn, as they say, and there’s reason to keep hope alive that conditions will be improving sooner than expected.

The U.S. recorded its highest number of single-day deaths involving COVID-19 on Tuesday, but it’s important to remember that, as tragic as they are, deaths are a lagging indicator. The numbers to watch are new cases, and by most accounts, those are beginning to flatten. In New York City, the epicenter of the outbreak in the U.S., hospitalizations are slowing.

curve of coronavirus is beginning to flatten
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A World Without Hand-Shaking?

Dr. Anthony Fauci shaking hands with former President George W. Bush after receiving the Presidential Medal of Freedom in 2008

With the curve potentially beginning to flatten, a lot of people may be wondering when businesses can open again and life return to normal. A better question, I think, is what “normal” will look like in a post-COVID-9 world. As I discussed in an earlier post, businesses will undoubtedly need to rethink every part of operations, from marketing to global supply chains.

Dr. Anthony Fauci, the top U.S. scientist on infectious diseases, told the Wall Street Journal this week that Americans may need to stop shaking hands, even after social distancing measures are relaxed.

“When you gradually come back, you don’t jump into it with both feet,” Fauci said. “You say, what are the things you could still do and still approach normal? One of them is absolute compulsive hand-washing. The other is you don’t ever shake anybody’s hands.”

For many—especially those in business and politics—avoiding hand-shaking is likely a bridge too far.

Wuhan, China Reopens…To an Extent

Compared to what residents of Wuhan, China must do, keeping your hands to yourself may be preferable.

As you may have heard, Wuhan, the central Chinese city of 11 million where the novel coronavirus originated, officially ended its lockdown this week—but life there is still far from “normal.” To move freely in and out of the city, which was sealed off on January 23, residents must show authorities a government-sanctioned phone app that indicates their risk of infection based on a number of datapoints, including their home address, recent whereabouts and medical history.

Obviously such a solution wouldn’t be tolerated here in the U.S., as it raises a host of privacy and personal liberty issues. But whatever measures China is taking appear to be producing favorable results, if its daily reports are to be believed. On Tuesday, the country reported no deaths related to COVID-19 for the first time since January.

Evercore ISI analysts believe that the success of China’s “health code” app in slowing the spread of infection has given Beijing another reason to surveil and collect data on its citizens. The government “will want to track the footsteps of every citizen… so that preventive and control measures will be implemented more efficiently next time an epidemic hits,” writes Donald Straszheim, head of Evercore’s China research team. “The cause of big data is set to benefit, and ultimately public and commercial service sectors [may] become more efficient due to more data collected.”

Majority Believe Travel Will Normalize Next Year

Readers may also be wondering when air travel and hotels will return to a pre-COVID-19 “normal.” That’s precisely the question Evercore ISI analysts were given this week. More than 50 percent of respondents believe that hotels and leisure air travel will return to normal by year end 2021. To a lesser extent, analysts believe the same about corporate air travel.

S&P stock buybacks expected to halve this year on coronavirus slowdown
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Duane Pfennigwerth, airline equity researcher, explains that there’s a reason why leisure could bounce back faster than business: “Travel policies and a reluctance to host or travel to large group events may be a headwind to corporate travel for some time.”

As such, whereas there’s the potential for a V-shaped recovery in the broader economy, Pfennigwerth believes we’re more likely to see a U-shaped recovery in air travel. What’s more, “domestic leisure will recover more quickly than long-haul international.” Those carriers include Allegiant, Spirit, Alaska, JetBlue and Southwest, with Southwest having entered with this crisis with the strongest balance sheet, according to Pfennigwerth.

Buybacks and Dividends to Be Reduced (Or Cut Altogether)

We can file this under “No Surprise,” but I’ll share it with you anyway. In a note to clients this week, Goldman Sachs says it expects stock buybacks by S&P 500 companies to be cut in half this year to some $371 billion from $730 billion in 2019. Since the start of March, as many as 51 firms have suspended their share repurchases to preserve capital. Companies that have prioritized buybacks have actually lagged so far this year, Goldman analysts say, with investors rewarding those in the process of reducing debt and improving their balance sheets.

S&P stock buybacks expected to halve this year on coronavirus slowdown
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As for dividends, an estimated 21 S&P 500 companies have announced they would be cutting or suspending payouts for the second quarter, including Royal Caribbean Gap, Kohl’s, Ross Stores, Starbucks and MGM Resorts. According to Bloomberg, companies are slashing dividends at the fastest pace since 2009 as they try to preserve capital. Consumer discretionary is expected to make the deepest cuts with a decrease of as much as 25 percent between the first and second quarters.

In light of this, our friends at Visual Capitalist have created a helpful infographic of dividend stocks that are still offering strong yields. I urge you to check it out!

Did you catch the latest news about our airlines ETF? If not, read the press release by clicking here!

I wish everyone a blessed Easter and Passover!

Gold Market

This week spot gold closed at $1,683.63, up $62.92 per ounce, or 3.88 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 14.43 percent. The S&P/TSX Venture Index came in up 9.91 percent. The U.S. Trade-Weighted Dollar fell 1.04 percent.

Date Event Survey Actual Prior
Apr-9 PPI Final Demand YoY 0.5% 0.7% 1.3%
Apr-9 Initial Jobless Claims 5000k 6606k 6867k
Apr-10 CPI YoY 1.6% 2.3%
Apr-16 Germany CPI YoY 1.4% 1.4%
Apr-16 Housing Starts 1313k 1599k
Apr-16 Initial Jobless Claims 6606k
Apr-16 China Retail Sales YoY -10.0%


  • The best performing precious metal for the holiday shortened week was silver, up 7.26 percent, likely on the waves of money printing that’s just getting started. Gold rose above $1,700 an ounce for the first time since 2012 on Tuesday after March’s panic selling to raise cash has subsided. ETFs backed by gold added 263,504 troy ounces on Wednesday, bringing net purchases for the year so far to 9.06 million ounces. According to Bloomberg data, this is the 13th straight day of growth.
  • European Union (EU) finance ministers failed to agree on a strategy to mitigate the economic impact of the coronavirus, sending sentiment in Europe down and aiding safe havens, reports Bloomberg. Gold has benefited from its status as a perceived safe haven asset. UBS strategist Joni Teves said in a note that gold’s uptrend remains intact. “Further deterioration in economic data, continued policy easing and the compression in real rates should make room for further gains in the weeks and months ahead.”
  • The current cycle of easing might not be over yet. The copper-to-gold ratio has a strong correlation with 2-year Treasury yields, and with the preference for gold over copper growing, it suggests that rates could fall even further, reports Bloomberg. The preference for one metal over the other gives an idea of expectations for future growth and policy decisions. Copper is often viewed as a pro-cyclical industrial output and gold is seen as a haven.

copper-to-gold ratio reflexts short-end rates expectations
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  • The worst performing precious metal for the holiday shortened week was palladium, up 0.03 percent. India’s biggest jeweler by market value, Titan Co., said in an exchange filing that revenue in March fell by 5 percent due to lost sales, but that in the first two months of the year revenue actually increased by 16.5 percent. The company said total revenue growth was impacted severely by India’s lockdown to contain the spread of the coronavirus. Last week it was reported that the country is bracing for the lowest gold sales in 25 years.
  • South Africa shut down its mining industry to contain the virus, which involved sending more than 450,000 workers home in 24 hours. Bloomberg reports that it will take much longer than a day to get its mines back up and running. Impala Platinum Holdings said that it could take three to four weeks for production at the deepest mines to resume as returning employees must be screened by the virus and have temperatures checked. It is positive, though, that operations will resume after South Africa’s 21-day national lockdown.
  • Gold prices diverged again this week. Bloomberg notes than an ounce of gold on the Comex was $50 more expensive than an ounce in London on Tuesday. The usual difference between the two should only be a few dollars. This instance is different than two weeks again – there’s no plenty of supply, but traders are staying away due to high risk.


  • In company-specific news this week, JPMorgan initiated coverage of Newmont Corp. with a recommendation of overweight. GFG Resources saw its shares double after the company announced on Monday that exploration results from a northern Ontario project showed very high-grade gold mineralization. B2Gold Corp. was up Thursday morning after it reported record total gold production of 262,632 ounces in the first quarter and that revenue was up 44 percent from the year prior. Kirkland Lake Gold said it saw a 43 percent yearly increase in gold output in the first quarter of 330,864 ounces.
  • Silver could outperform gold once the world’s manufacturing returns to full speed. Silver is more of an industrial metal than gold, being used widely in solar panels. Bloomberg’s Eddie van der Walt writes that when the world’s engines start turning again, silver should see a pickup in demand. Van der Walt also cites the high gold/silver ratio as a driver. It now takes more than 100 ounces of silver to buy one ounce of gold – meaning silver is oversold.
  • Joe Foster, gold portfolio manager at Van Eck, told Kitco News in an interview this week that gold could top $2,000 an ounce soon and that miners are in good shape to weather the coronavirus storm. “Balance sheets are healthy pretty much across the board. Debt ratios… are at a fraction of the average for the S&P 500. Financially, they’re in very good shape.” Foster adds that gold was already in an uptrend before the pandemic began.


  • Peter Kraus, former CEO of AllianceBernstein, said in a Bloomberg TV interview this week that he expects the rout in credit markets to get worse and that prices for goods will eventually start to rise amid government stimulus. Kraus said that, over the long-term, he thinks “this significant amount of fiscal stimulus that we’re having in the world will create an inflationary cycle.” He also criticized the growing trend of passive fund management strategy.
  • Jobless claims totaled 6.6 million for the latest period – above expectations for 5 million to 6 million. This was the third straight week that new claims topped 3 million. Although gold rallied on the news, this is a big negative for many Americans and a clear sign that the coronavirus is having a massive impact on the economy. The International Monetary Fund (IMF) director said this week that the pandemic could trigger the worst recession since the Great Depression.
  • Oil prices showed some signs of recovery this week but still finished down. Miners had been enjoying the lower fuel costs, as it can be one of the largest operating costs at projects. However, oil prices still remain very low on a historical basis.

happy birthday Frank Talk

Index Summary

  • The major market indices finished up this week. The Dow Jones Industrial Average gained 10.77 percent. The S&P 500 Stock Index rose 10.40 percent, while the Nasdaq Composite gained 8.90 percent. The Russell 2000 small capitalization index rose 14.82 percent this week.
  • The Hang Seng Composite rose 4.35 percent this week; while Taiwan was up 4.24 percent and the KOSPI rose 6.46 percent.
  • The 10-year Treasury bond yield rose 12 basis points to 0.721 percent.

Domestic Equity Market

SP 500 Economic Sectors weekly performance
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  • Real estate was the best performing sector of the week, increasing by 21.22 percent versus an overall increase of 11.97 percent for the S&P 500.
  • Kohls Corp was the best performing S&P 500 stock for the week, increasing 72.98 percent.
  • U.S. stocks posted their biggest weekly gain since 1974 as investors looked past staggering jobless numbers when the Federal Reserve released new measures to cushion the fallout from the coronavirus.


  • Consumer staples was the worst relative performing sector for the week, increasing by 4.93 percent versus an overall increase of 11.97 percent for the S&P 500.
  • Carrier Global Corp was the worst performing S&P 500 stock for the week, falling 12.65 percent.
  • Moody’s changed the rating outlook for SunCoke Energy to negative. “The change in the outlook to negative reflects a significant deterioration in the North American steel industry conditions and the uncertainty around the company’s cokemaking take-or-pay contracts expiring in 2020 and 2021,” said Botir Sharipov, lead analyst for SunCoke Energy Inc.


  • Amazon is to release its first original, big-budget video games in May. The video game industry has long been in Amazon’s sights, with the tech giant also reported to be developing a cloud-based gaming service codenamed "Project Tempo."
  • Piper Sandler analyst Rob Owens raised the recommendation on CyberArk Software Ltd. to overweight from neutral and gave it a price target of $110.
  • The gap between volatility gauges for stocks and Treasuries has climbed to a level that may portend gains in U.S. equities, according to The Leuthold Group. While the Cboe Volatility Index and the ICE BofA MOVE Index have surged as the hit to growth from the coronavirus pandemic weighs on sentiment, only the Treasuries gauge has significantly dropped since. The VIX remains around its 99th percentile and the MOVE index has collapsed to around its 16th percentile, according to analysis going back to 1990 from Jim Paulsen, the firm’s chief investment strategist.


  • Collapsing revenues led 16 companies in the S&P 500 Index to say they won’t be paying dividends in the coming quarter. Bloomberg’s dividend forecasts show another 10 are likely to follow.
  • Evercore ISI has thrown in the towel on four life science companies and cut another to neutral as the firm’s analysts consider how long it will take for the economy and stalled medical procedures to pick back up.
  • Align Technology briefly fell as much as 1.4 percent after short seller Spruce Point said it sees 40 percent to 55 percent downside risk as large dental players slash aligner prices in response to industry shifts and “only a matter of time” until the Invisalign maker is “forced to follow suit.” The fund says FDA-approved aligners “of similar quality to Invisalign” are being printed at scale by commodity 3D printing labs, and are being priced at “less than half the cost of Align’s.”

The Economy and Bond Market



  • At his daily briefing on Friday, New York Governor Andrew Cuomo reported only 200 net new hospitalizations over 24 hours, the lowest number since the COVID-19 outbreak began in the city. That number had been as high as 1,400. Cuomo is still urging people to keep social distancing practices in place and work to flatten the curve.
  • Most creation comes from the small business sector. The new facilities enacted by the Federal Reserve expand the aid to small and medium sized businesses by up to $600 billion.
  • The new Municipal Lending Facility enacted by the Fed will assist state and local governments. The facility will purchase as much as $500 billion of short-term notes directly from states, as well as eligible counties and cities.


  • Sentiment among small businesses collapsed in March by the most on record and owners’ outlooks deteriorated swiftly amid the economic disruptions caused by the global health crisis. The National Federation of Independent Business optimism index slumped 8.1 points to 96.4, the biggest drop going back to 1986. Nine of its 10 components declined, including the largest-ever decrease in sales expectations.

collapse in small business optimism
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  • The latest round of coronavirus-induced layoffs and furloughs soared by another 6.6 million in the first week of April, bringing total job losses in less than a month to 16.8 million. Initial jobless claims, a rough proxy for job losses, have now posted increases of 6.6 million, 6.8 million and 3.3 million in the last three weekly readings since the middle of March. “To put these mind-boggling numbers in perspective, before the March 21 surge, the highest single weekly reading ever recorded was 695,000 in 1982,” said chief economist Joshua Shapiro of MFR Inc.
  • Millions of coronavirus-related job losses and the shutdown of large parts of the economy have battered consumers and dragged confidence down to a nine-year low. The preliminary reading of the consumer sentiment survey sank to 71 in early April from 89.1, marking the biggest-ever one-month decline and putting the index at its lowest level since 2011, the University of Michigan said Thursday.


  • Anthony Fauci, one of President Donald Trump’s top medical advisers, slashed projections for U.S. coronavirus deaths on Thursday, saying that about 60,000 people may die — almost half as many as the White House estimated a week ago.
  • Japan declared a state of emergency and is planning a $1 trillion stimulus to combat the coronavirus downturn. The package, equal to 20 percent of national GDP, is meant to help families and businesses suffering from the pandemic.
  • The $14.8 billion iShares iBoxx High Yield Corporate Bond ETF surged about 7.5 percent — the most since January 2009 — after the Fed said on Thursday that it will expand its corporate bond buying program to include debt from companies that recently lost their investment-grade rating.


  • The International Monetary Fund (IMF) sees the world economy suffering its worst recession since the Great Depression this year, with emerging markets and low-income nations in Africa, Latin America and Asia at particularly high risk. The IMF’s baseline outlook is for a partial recovery in the global economy in 2021 if the pandemic fades in the second half of this year to allow a gradual lifting of containment measures.
  • Next Friday’s Leading Index reading for March is expected to contract 7 percent versus the prior month’s growth of 0.1 percent. As a forward-looking indicator, this outlook sends a pretty grim message about future economic contraction.
  • Next Wednesday’s retail sales advance for March portends a collapse in consumer spending. The measure is expected to contract 7 percent.

Energy and Natural Resources Market



  • The best performing commodity for the week was lumber, up 22 percent, for the holiday shortened week, on a strong rebound from prices which fell limit down for several days at the start of the month. Prices are now rebounding with production cuts recently announced by Canfor helping sentiment. OPEC and its allies met via video conference on Thursday morning and outlined a deal to cut oil production by 10 million barrels a day. Saudi Arabia and Russia were locked in a price war for a few weeks as both oil superpowers refused to curb production to support prices that coincided with a pandemic-induced demand drop. Bloomberg reports that OPEC will ask for cuts of as much as 5 million barrels a day from Group of 20 countries, which are set to meet Friday. The U.S. cut its 2020 oil production forecast by more than 1 million barrels a day to average 11.76 million barrels a day.
  • Rio Tinto Chairman Simon Thompson announced on Wednesday that the company is committed to paying its $3.7 billion dividend, saying that demand for iron ore is strong enough to justify the payments. Bloomberg notes that rivals such as Glencore have held back previously planned shareholder payments to protect against the risks from COVID-19. Thompson said, “We took this decision because Rio Tinto has a strong balance sheet, our operations are running safely and our order book for iron ore is full.”
  • The International Renewable Energy Agency said in a report that electricity generated from renewable sources made up 72 percent of all new power capacity added in 2019. The report notes that wind and solar power made up 90 percent of the new capacity and more than half of it was added in Asia. Rystad Energy AS said that natural gas flaring in the Permian Basin fell in the first quarter to the lowest level since the third quarter of 2018. This is one “silver lining” of the pandemic forced shutdowns – less pollution from burning off excess natural gas.


  • The worst performing commodity for the week was crude oil, down 18 percent, for the holiday shortened week. Lower oil prices continue to hurt the most in Canada. Western Canadian Select fell to its weakest level since 2009 – to below $4 per barrel – and Alberta’s premiere warned that the country could see negative oil prices. Bloomberg notes that crude in Bakken was trading beneath $10 on Wednesday and Alaska crude was at a discount to WTI for the first time since June 2016. According to analysts at Citigroup, at least half of all frack work will likely drop off the map by the end of June due to cratering demand and crude prices. The falloff could end up being one of the worst ever for the industry. The number of fracking crews deployed across the U.S. dropped by 19 percent in the first quarter, similar to the decline seen in the fourth quarter last year.

more than a quarter of all frack crews lost work in 2020
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  • Energy Information Administration (EIA) economist Tyler Hodges says that more than a third of new electricity generation expected to come online over the next six months could face challenges as the coronavirus weakens power consumption and disrupts supply chains. Hodge added that wind, solar and natural gas projects will be affected relatively evenly and states with the largest slated additions during the period are Texas, California and Pennsylvania.
  • Copper and zinc stockpiles tracked by the London Metal Exchange both rose by around 20 percent on Wednesday as concerns about demand mount. Bloomberg reports that all metals fell on the day except for nickel. COVID-19 has curbed manufacturing activity in many parts of the world, resulting in weaker demand for raw metals. BloombergNEF estimates that around 10 percent of global nickel mine capacity has been disrupted due to the pandemic. Steel output in Japan could fall 26 percent in the second quarter.


  • Sweden’s largest wind farm, operated by Vasa Vind AB’s Askalen, began production at the beginning of this month and nuclear reactors are feeling the heat, reports Bloomberg. The 288-megawatt facility will boost the country’s output after a 50 percent jump in the first quarter from a year earlier. Two units at a nuclear plant north of Stockholm curbed output by 50 percent and two reactors at another plant are halted due to lower power prices. There has been a supply glut of energy in the Nordic region, sending prices plummeting.
  • Freeport-McMoRan was upgraded to neutral from underperform at Credit Suisse. The firm wrote that there would “clearly be significant opportunity for alpha generation coming out of this pandemic drive recession” and predicts a recovery in the second half of this year. Bloomberg reports that Freeport shares had lost nearly 50 percent of their value from a January peak, but rose 5 percent on Tuesday at the end of the day.
  • India is reportedly boosting its purchases of Middle East crude oil for its strategic reserves. This is a positive signal of solidarity for the campaign to stabilize global oil markets, reports Bloomberg. India is the world’s third largest oil consumer, but its storage capacity is relatively small. China announced earlier this month that it would begin oil purchases for its emergency reserves.


  • Exxon Mobil Corp. announced that it will reduce 2020 spending by 30 percent to $23 billion – the second largest budget cut in the oil giant’s modern history. The company will focus reductions on drilling and fracking in the Permian Basin and New Mexico. The reduction to $23 billion in spending is below expectations from Goldman of $29 million.
  • The already-troubled Eskom Holdings is expecting a $156.3 million hit to its revenue due to COVID-19 shutdowns. The state-owned South African energy giant says the drop in demand will be severe due to the country’s 21-day lockdown period ending April 16.
  • The coronavirus continues to spread globally. As some countries report a peak in cases, others continue to see cases grow exponentially. Global infections hit 1.5 million on Tuesday, less than a week after surpassing the 1 million mark. The threat remains that virus shutdowns will continue for months and send the global economy into a recession.

Frank Talk Insight for Investors
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April 6, 2020
Record Unemployment Claims and Oil’s Best Day Ever
April 1, 2020
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A Blog by Frank Holmes, C.E.O. and Chief Investment Officer

Emerging Europe



  • Greece was the best performing country this week, gaining 12 percent. The European Central Bank (ECB) reinstalled the waiver of the minimum credit quality requirement for marketable debt instruments issued by the Hellenic Republic for acceptance as collateral in Eurosystem credit operations. This should be positive for Greek banks as they will now be able to utilize Greek Government Bonds as collateral for ECB funding.
  • The Hungarian forint was the best performing currency this week, gaining 5.1 percent. Central banks around the world are cutting rates to stimulate the economy while the Hungarian central bank hiked its overnight rate from 90 basis points to 185 basis points. The bank also announced that it is ready to hike again in order to defend its currency.
  • Consumer discretionary was the best performing sector among eastern European markets this week.


  • Hungary was the worst relative performing country this week, gaining 4.6 percent. Central Emerging European markets recorded strong gains this week, however, stocks trading on the Budapest Exchanged underperformed. OTB Bank was the worst performing equity, losing 2.3 percent in the past five days as the Hungarian government is planning to increase taxes on banks.
  • The Turkish lira was the worst relative performing currency in the region this week, gaining 90 basis points. The lira underperformed its peers as the number of coronavirus cases are growing rapidly in Turkey. However, on Thursday the currency gained after news emerged that Turkey may be willing to agree to financial assistance from the International Monetary Fund (IMF).
  • Energy was the worst performing sector among eastern European markets this week.


  • Coronavirus-related fatalities have stabilized in Spain, and Italy is likely to start trending lower soon, according to Thin Winn from BBH Currency Strategy. The number of deaths and hospitalization rates in the U.S., especially in New York, has been well below the central case forecasted by the most closely watched models. Italy will start relaxing its lockdown on May 4.
  • The Financial Times reported that Europe is watching the Czech Republic, Austria and Denmark in the coming weeks as they loosen restrictions on daily life and businesses. Their exits will be watched carefully to see if they can revive economic activity without damaging public health. Analysts say that their small size relative to other EU states whose health systems have been flooded by the virus, and quick reaction to its emergence, worked in their favor.
  • Major oil producers agreed to cut oil output by 10 million barrels per day for two months. Saudia Arabia agreed to decrease production by 4 million barrels a day from its April production level, while Russia has agreed to cut 2 million barrels a day. This deal should boost the oil price, which recently fell to an 18-year low. A higher oil price will have a positive effect on Russia, one of the main global exporters of the commodity.


  • Restrictions due to the coronavirus in Russia have been extended until the end of April. President Vladimir Putin in his TV address noted that the situation with COVID-19 remains difficult, especially in Moscow. While Moscow and Moscow region borders are still open, some regions have introduced full restrictions for outside travel, curfew hours and control over citizens’ movements. The recent surge in the number of reported cases in Russia is likely attributable to more testing.

outbreak model for moscow and moscow region forecasts peak on april 21
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  • During the 2008-2009 global financial crisis, Russia spent a tenth of GDP to counter the collapse. But this time, despite having more than $550 in reserves, the country is not willing to start spending. ING Bank estimates that so far President Putin’s support measures amount to only 2 percent of GDP. The Russian government may be reluctant to spend due to low oil prices, but insufficient stimulus may lead to deep economic contractions.

russian virus stimulus is small compared to others
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  • The Euro-area still cannot agree on a stimulus package. Germany’s Olaf Scholz hopes a deal can be reached by Easter, which is this Sunday. If the countries cannot agree on an aggressive crisis plan, the peripheral countries are likely to come under more pressure.

China Region



  • India was the best performing country in the region this week, gaining 13 percent. Indian stocks jumped on optimism that government action will help contain the coronavirus outbreak and the stimulus package of $22 billion will ease the economic damage. The Sensex Index gained 20 percent from its most recent low reached on March 23.
  • The Indonesian rupiah was the best performing currency in the region this week, gaining 5 percent. The rupiah gained after Indonesia’s successful global bond sale and news of a $60 billion credit line from the New York Federal Reserve. On Thursday, the rupiah rose 2.4 percent against the U.S. dollar, its biggest gain since October 2015.
  • Consumer discretionary was the best performing sector in Hong Kong’s HSCI Index this week.


  • Indonesia was the worst relative performing country in the region this week, gaining 55 basis points. Coronavirus deaths in Indonesia are the highest in Asia after China. Jakarta announced the closure of offices and a ban on gatherings of more than five people. Jakarta is the epicenter of the country’s virus outbreak with the city of about 10.5 million people accounting for almost half of confirmed cases.
  • The Pakistani rupee was the worst performing currency in the region this week, losing 50 basis points. Over the past six weeks, foreign investors have pulled more than $1.593 billion from Pakistan’s capital markets on coronavirus concerns. The rupee continued to underperform despite confirmation from the International Monetary Fund (IMF) that $1.4 billion will be released to the country in emergency financing.
  • Telecommunication was the worst performing sector in Hong Kong’s HSCI Index this week.


  • China ended its 10-week lockdown on Wuhan – the original epicenter of COVID-19. In Wuhan alone there were a reported 67,803 reported cases of the virus and at least 3,212 deaths. A major city of 11 million people, lifting the lockdown is a positive sign that other cities around the world can eventually reopen after suffering a big hit from the virus. Residents are also returning to stores. According to the China Automobile Dealers Association, about 99 percent of China’s auto showrooms were back in business as of April with consumer traffic around 66 percent of average levels.
  • The Hong Kong government is expected to announce another round of stimulus measures to boost the virus-stricken economy. According to the South China Morning Post, the aid package will largely be dedicated to subsidizing wages in sectors hit by closures and restrictions in place to curb COVD-19. The package could exceed $12.9 billion.
  • India is reportedly boosting its purchases of Middle East crude oil for its strategic reserves. This is a positive signal of solidarity for the campaign to stabilize global oil markets, reports Bloomberg.India is the world’s third largest oil consumer, but its storage capacity is relatively small. China announced earlier this month that it would begin oil purchases for its emergency reserves.


  • On Thursday, the European Union imposed tariffs on flat-rolled stainless steel from China, Taiwan and Indonesia to help curb competition for EU-based producers who are struggling from COVID-19 disruptions. The duties as high as 18.9 percent punish the Asian nations for a practice known as dumping, where they sell products below cost to beat competition. Bloomberg reports that EU imports of steel sheets and coils were worth nearly $977 million in 2018.
  • Japan announced a record $992 billion stimulus package, nearly 20 percent of the country’s annual economic output, as it braces for massive economic damage due to the coronavirus and postponed Olympics. The country only recently declared a state of emergency, which could cost the economy an estimated 5 trillion yen per month in lost output. Citigroup estimates show that some analysts are predicting Japan’s economy to shrink by 20 percent in the second quarter, after an estimated 4 percent drop in the first three months of this year.

analysts estimate japan economy to shrink in lockdown
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  • Indian companies are struggling for offshore loans, which raises the risk of default for local firms, reports Bloomberg. Borrowers secured the least amount of money from foreign-currency loans in a decade in March. For those who do obtain loans, the average margin over the London interbank offered rate jumped to the highest since 2018 in the first quarter. India has one of the world’s worst bad-loan ratios.

Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performing for the week ended April 9 was CyberVein, up 183.7 percent.
  • Bitcoin broke above $7,000 this week amid investor optimism that the coronavirus spread will soon peak. The popular cryptocurrency rose as much as 6.4 percent Monday and had its biggest one-day gain in two weeks, reports Bloomberg News. Denis Vinokorurov, head of research at Bequant, said “Bitcoin’s attempt to break above $7,000 was much more resolute.” The surge correlated to a surge in equity markets globally at the beginning of this week.

bitcoin could see further gains crossing back above $7,000
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  • Most people use cryptocurrencies to purchase everyday items such as food and clothes, a recent study discovered. Visual Objects, a portfolio website, surveyed nearly 1,000 people and found that crypto-owners use digital money to purchase food (38 percent of respondents), clothing (34 percent) and stocks (29 percent). This news comes despite the prevailing opinion that cryptocurrencies are used primarily for illegal activities.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week ended April 9 was Molecular Future, down 13.4 percent.
  • Bitcoin Cash, the blockchain that spun off Bitcoin in 2017, underwent its halving event this week and reduced its block rewards by half. As a result of this, many miners saw gross margins drop to almost zero. CoinDesk reports that Bitcoin Cash is the world’s fifth largest crypto network by market capitalization achieved a block height of 630,000 on Wednesday. This triggered the halving event where the mining reward fell from 12.5 Bitcoin Cash per block to just 6.25.
  • A group of investors sued four cryptocurrency exchanges (Binance, Bibox, BitMEX and KuCoin) and seven issuers claiming that they sold billions of dollars of unregistered digital tokens and other securities in violation of U.S. securities laws, reports Bloomberg News. The suits, filed in Manhattan late last Friday, allege that the exchanges profited from transactions and cash payments exceeding $1 million.


  • HIVE Blockchain Technologies announced this week that it has completed its previously announced acquisition of a dedicated cryptocurrency operation with access to 30 megawatts of low cost green power at a facility in Quebec from Cryptologic, reads a company press release. Interim Executive Chairman Frank Holmes said that “multiple factors make Quebec a very attractive location for us including geographic diversification and competitive costs for green energy, skilled labor and taxes.”
  • Lusko, a distributed computer network founded by two veterans of Ethereum, is seeking to bring more women into the fold of the crypto and blockchain space. Founder Marjorie Hernandez says that “the whole space is being designed by guys for guys, so I thought this was a great way to reach the other half of the world’s population.” Lusko will run digital applications focused on fashion, art, music and other creative fields, reports Bloomberg News.
  • The number of crypto-frauds has risen during the global COVID-19. However, some governments are using blockchain to fight fraud and misinformation. ANSA, an Italian news agency, launched a news tracking system based on blockchain to create trust between the company and its readers, reports CoinTelegraph. According to an ANSA report, the new system is based on Ernst & Young’s EY Ops Chain Traceability solutions, which is based on the Ethereum blockchain.


  • A report from PricewaterhouseCoopers (PwC) shows that crypto-related mergers and acquisitions fell 76 percent last year to $451 million. Bloomberg writes that the report also showed a drop of 40 percent in the amount of funds raised. As more mainstream institutional money entered the crypto space, investors hoped that it would end the “crypto winter.”
  • The same PwC report also showed that institutional investment in the crypto space dried up dramatically in 2019, indicating that big money is still not convinced of the nascent asset class’s merits.
  • A hacker stole more than $250,000 worth of cryptocurrency from users on decentralized exchange Bisq. The exchange allows users to trade crypto anonymously and abruptly halted trading late Tuesday night after discovering the breach, reports CoinDesk. A Bisq statement says “an attacker was able to exploit a flaw in the Bisq trade protocol” and stole approximately three Bitcoin and 4,000 XMR from seven users.

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Weekly Performance

bitcoin could see further gains crossing back above $7,000

Monthly Performance

bitcoin could see further gains crossing back above $7,000

Quarterly Performance

bitcoin could see further gains crossing back above $7,000


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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 (12/31/2019):

OTP Bank Nyrt
Impala Platinum Holdings Ltd
Newmont Corp
GFG Resources Inc
B2Gold Corp
Kirkland Lake Gold Ltd
Freeport-McMoRan Inc
Allegiant Travel Co
Spirit Airlines Inc
Alaska Air Group Inc
JetBlue Airways Corp
Southwest Airlines Co
Starbucks 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. Sensex, otherwise known as the S &P BSE Sensex index, is the benchmark index of the Bombay Stock Exchange (BSE) in India. Sensex comprises 30 of the largest and most actively-traded stocks on the BSE, providing an accurate gauge of India’s economy. The small business optimism index is compiled from a survey that is conducted each month by the National Federation of Independent Business (NFIB) of its members. The University of Michigan Consumer Sentiment Index is a consumer confidence index published monthly by the University of Michigan. The Conference Board Leading Economic Index is an American economic leading indicator intended to forecast future economic activity. It is calculated by The Conference Board, a non-governmental organization, which determines the value of the index from the values of ten key variables. Created by the Chicago Board Options Exchange (CBOE), the Volatility Index, or VIX, is a real-time market index that represents the market’s expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors’ sentiments. The Bank of America Merrill Lynch Option Volatility Estimate Index (MOVE) is the bond market’s equivalent of the Chicago Board of Options Exchange Volatility Index (VIX).