Make America Go Back to Work Again?

Author: Frank Holmes
Date Posted: April 17, 2020 Read time: 53 min

The world watches as a number of economies begin, or plan, to lift certain lockdown measures that were earlier put in place to slow the spread of the coronavirus.

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

Frank Holmes on Bloomberg March 2020

The world watches as a number of economies begin, or plan, to lift certain lockdown measures that were earlier put in place to slow the spread of the coronavirus.

China may have been the first to do so last week when it reopened Wuhan, the industrial city of 11 million that was ground zero for the novel virus, though life there is still far from normal.

This week, Italy began allowing small shops such as clothes retailers to reopen, with strict distancing guidelines still in effect, while Spain has allowed manufacturing and construction to resume operations. Germany is set to start gradually reopening its economy next week.

The government of Quebec added mining to its list of essential services, giving producers such as Agnico Eagle, Eldorado Gold, Glencore, IAMGOLD, Yamana Gold and others the go-ahead to restart operations.

As for the U.S.—which saw a record 4,591 coronavirus deaths in the 24-hour period ended Thursday night—President Donald Trump unveiled guidelines for “Opening Up America Again,” a three-phase approach to be executed by state and local officials. Some governors—among them Ron DeSantis of Florida, Tony Evers of Wisconsin and Brad Little of Idaho—have already expressed interest in easing restrictions sooner rather than later.

On Friday, Texas Governor Greg Abbott set a path to lift some restrictions on retail shopping, provided that customers order ahead of time and pick up purchases curbside. U.S. retail sales plunged 8.7 percent in March from the previous month, the biggest one-month drop since the Census Bureau began tracking the data in 1992.

Other governors and mayors, meanwhile, are tightening restrictions, even requiring face masks to be worn in public. Starting today, the rule applies to all 19.5 million residents of New York. On Monday, everyone in San Antonio—home to U.S. Global Investors—will need to wear a face mask while in public, or else face a possible $1,000 fine or up to six months in jail.

Over 30 Million Infections Globally Over the Next 12 to 18 Months, CLSA Predicts

This all comes as new daily COVID-19 cases are believed to be peaking worldwide, though I should add that it’s still too early to celebrate or to call an end to the Great Lockdown. Even if we somehow managed to get the number of new cases down to zero, it’s likely that the virus would return in additional waves.

Two additional waves, to be more exact. That’s the projection, at least, of quantitative analysts at CLSA, working in conjunction with professors at the University of Toronto. In a research report dated April 17, the group, led by Head of Quantitative Research Jon Barden, states that until a vaccine is developed, the coronavirus could continue to reseed itself in human populations, with the second wave to peak in late August and the third in early 2021.

CLSA estimates of global weekly new COVID-19 cases, in three waves
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That shouldn’t surprise anyone. After all, the common flu returns every year.

The most shocking part of CLSA’s forecast is that more than 30 million people could contract the virus over the next 12 to 18 months. CLSA believes this could be the case since “current reported new cases do not yet include nearly 80 percent of the world’s population.” As I write this, the total cumulative number of confirmed cases tops 2.2 million, but the actual number is undoubtedly much higher.

The biggest contributors to the global infection rate over the long-term, says CLSA, will be Brazil, India and the U.S.

In late March, Brazilian President Jair Bolsonaro suggested that people in his country are naturally immune to the virus—which probably came as news to the more-than 30,000 infected Brazilians.

Unlike Bolsonaro, Indian Prime Minister Narendra Modi appears to be taking the virus seriously, but the problem, as CLSA sees it, is that a large percentage of its people live in extremely dense and poor areas, making it difficult to implement controls quickly and broadly.

How Big Is the Monetary and Fiscal Stimulus?

Something I’ve been tracking with regard to the coronavirus is the unprecedented, synchronized monetary and fiscal response by global central banks and governments. Last month I predicted that the total amount of liquidity pumped into the world economy would be $10 trillion, but we’ve already surpassed that, with more on the way.

In a research piece this week, Morgan Stanley reports that the Federal Reserve’s balance sheet has expanded a staggering $1.9 trillion since February 26, just days after the S&P 500 peaked, while the U.S. government’s budget deficit, at 18 percent of GDP, is already the widest its been since 1940. If an additional $1.25 trillion relief package is authorized, to follow the $2.2 trillion package that was passed and signed last month, then the deficit would widen further to an estimated 24 percent—a full quarter of the U.S. economy.

U.S. fiscal balance already widest since 1940...And could widen further
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Additional liquidity will be needed regardless, as the small business emergency loan program has already blown through its entire $350 billion.

Domestic airlines were able to secure help from the Treasury Department this week to continue making payroll. The 10 biggest carriers, including America, Delta, United and Southwest, will share the $25 billion Payroll Support Program. Commercial aviation is responsible for some 10 million jobs in the U.S., both directly and indirectly, making it one of the most important economic engines today.

Excessive Money Printing Good for Gold

This is all on top of the $2.3 trillion the Fed is pumping into the economy. As I discussed with you last week, all this extra liquidity has to go somewhere, and often gold has been a beneficiary, as well as gold equities.

Since the market’s peak on February 19, few industries have performed as well as gold mining, as investors are betting that higher precious metal prices will boost company earnings and cash flow. Senior producers, as measured by the NYSE Arca Gold Miners Index, were positive at 1.87 percent, as of April 16.

Gold miners have out performed during the "great lockdown"
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A number of mining companies have done very well during the Great Lockdown. Newmont leads the pack at more than 28 percent since February 19. In a recent note to investors, JPMorgan called the world’s biggest gold miner  “a rare find” in the mining industry, adding that it “should generate strong free cash flows at current gold prices and still fund its healthy dividend (2 percent yield).”

But it’s not just the seniors like Newmont, Barrick and AngloGold that have performed well. Several junior producers have also jumped lately on positive drilling results and guidance. Toronto-based Teranga Gold has increased close to 27 percent following its recent acquisition of Massawa, a high-grade gold mine in the West African country of Senegal. Roxgold rose 14.6 percent, fueled by the release of an “exceptional” preliminary economic assessment (PEA) of its Séguéla mine in the Ivory Coast of Africa.

Frank Talk Insight for Investors
April 14, 2020
Gold Sparkles as "The Great Lockdown" Hammers the Global Economy
April 13, 2020
It’s Always Darkest Before the Dawn
April 8, 2020
Excess Money Supply Has Been Like Miracle-Gro for Gold Prices
A Blog by Frank Holmes, C.E.O. and Chief Investment Officer

Gold Market

This week spot gold closed at $1,682.80 down $0.91 per ounce, or 0.05 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 5.48 percent. The S&P/TSX Venture Index came in up 5.43 percent, where the junior mining stocks are finally seeing some buying. The U.S. Trade-Weighted Dollar rose 0.19 percent.

Date Event Survey Actual Prior
Apr-16 Germany CPI YoY 1.4% 1.4% 1.4%
Apr-16 Housing Starts 1300k 1216k 1564k
Apr-16 Initial Jobless Claims 5500k 5245k 6615k
Apr-16 China CPI Core YoY -10.0% 15.8%
Apr-17 Eurozone CPI YoY 1.0% 1.0% 1.0%
Apr-21 Germany ZEW Survey Expectations -41.0 -49.5
Apr-21 Germany ZEW Current SItuation -75.0 -43.1
Apr-23 Initial Jobless Claims 4500k 5245k
Apr-23 New Homes Sales 650k 765k
Apr-24 Durable Goods Orders -11.8% 1.2%


  • The best performing metal this week was platinum, up 3.45 percent despite hedge funds cutting their net-long positions to an eight-month low. However, platinum mines in South Africa are to remain closed for time being. ETFs added 73,044 troy ounces of gold to their holdings in the trading session ended Thursday – marking the 19th straight day of inflows. Gold rose toward $1,800 an ounce this week, a level last seen in 2011, before ending the week lower. Joni Teves, strategist at UBS Group, said in a note that “gold’s journey has been quite bumpy so far, but given the macro backdrop we think the destination remains higher.” The index of South African gold producers surged as much as 12 percent Tuesday to its highest level on record. The price of gold in rand rose as much as 1.6 percent to the highest since Bloomberg began tracking in 1971. South African gold producers were up big for the day with AngloGold up around 6 percent and Gold Fields up 13 percent.
  • The logistics nightmare in the gold market should be easing, according to London Bullion Market Association (LBMA) CEO Ruth Crowell. In a Bloomberg Radio interview, Crowell said, “the gold market isn’t broken” and there have been no drops in trading volumes. Suppliers are turning to chartered flights and insurance companies are now covering those flights to carry the metal, helping ease disruptions in the market that have led to big spreads in the prices between New York and London futures. Crowell reiterated that London gold vault operators have an agreement to support each other if one were to go down.
  • India’s central bank announced that it will issue sovereign gold bonds with a tenor of eight years and the option to exit after the fifth year. The bonds will be sold through commercial banks, stock exchanges and post offices. Bloomberg reports that they will be issued in six tranches from April to September of this year.


  • The worst performing metal this week was silver, down 1.65 percent with hedge funds cutting their net-long position to a 10-month low and the gold-to-silver ratio exceeding 100-to-1, when a 60-to-1 RATIO is more in line with historic averages. Gold fell on Friday after reacting to news that the U.S. plans to slowly reopen the economy, along with many other countries. The disconnect between London and New York gold futures continued this week. Bloomberg reports that the premium for New York futures over the London spot price rose above $70 – the highest in 40 years.
  • India’s Malabar Gold & Diamonds said in a statement that the country’s gold jewelry industry is facing an impending liquidity collapse due to zero net sales and negative cash flows. Bloomberg notes that retail sales have collapsed due to the coronavirus lockdown cancelling weddings and postponing festive occasion buying – both usually big drivers of sales.
  • Prime Minister of Thailand Prayuth Chan-Ocha says that the country’s gold stores are running out of cash because so many people are selling ornaments, jewelry and bars amid an economic slowdown, reports Bloomberg. “I’m asking people to sell gradually, not in large amounts, as ships may face a cash crunch.” With gold prices high, people are trying to raise money by selling after massive job losses. The U.S. Mint announced on Wednesday that it is temporarily halting production at its West Point facility in New York due to risk of employees catching the coronavirus. This comes after the Mint reported in March it sold out of American Eagle silver coins.


  • UBS raised its gold price forecast to $1,800 an ounce after the Fed announced that it will expanding existing credit support measures. “The two most important determinants of the gold price are real U.S. interest rates and expectations for the purchasing power of the U.S. dollar, both inverse relationships, and we reiterate our negative views on both at this point,” said analysts including Wayne Gordon and Giovanni Staunovo in a note dated April 13. Others are bullish that gold could rally to $1,900 an ounce this year, back to its high reached in 2011, if gold has already found its crisis-bottom.

gold futures trade at their highest level relative to spot prices since 1980
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  • Canadian Imperial Bank of Commerce foreign-exchange strategist Bipan Rai expects gold to benefit from an increase in diversification away from the largest developed currencies in the wake of the current crisis. “The increase in budget deficits and reduction in longer-dated yields will only increase its allure to central bank reserve managers,” Rai said in a note. Bloomberg writes that central banks have been steadily increasing gold reserves over the last few years.
  • Torex Gold Resources reported gold production of 108,530 ounces in the first quarter, a 39 percent increase year-over-year. Yamana Gold said that it will resume operations at its Canadian Malartic mine on Wednesday, following Quebec’s decision to authorize the resumption of mining. Barrick Gold purchased more than 800,000 antibody testing kits to screen its workers and the communities around its mine for COVID-19, reports the Financial Times.


  • On Thursday, President Trump unveiled a plan for states to reopen economies in three phases. Trump told governors that some could open by May 1 or earlier. The concern is that not enough testing has been done nor is available to get an accurate gauge of the virus’ spread in the U.S. Prematurely reopening businesses and easing social distancing measures could increase the number of cases and cause even more stress to health care systems.
  • Impala Platinum Holding’s head of operations in South Africa appeared in court on Friday for allegedly violating the country’s lockdown orders, reports Bloomberg. A company spokesman said the executive was released on 60,000 rand bail and the charges relate to the company asking staff to report for work before amendments allowed them to return. On Thursday, the government allowed mining companies to resume at half their normal capacity on the condition that they screen and test workers for COVID-19. The mining industry employs over 450,000 people in South Africa who are especially vulnerable to the virus due to cramped working conditions and overcrowded living conditions.
  • The number of negative-yielding bonds continues to surge amid the pandemic. Billionaire hedge fund manager Ray Dalio criticized this on a Bloomberg webcast this week. Dalio said investors are “crazy” to hold government bonds right now. “If you’re holding a bond that gives you no interest rate, or a negative interest rate, and they’re producing a lot of currency and you’re going to receive that, why would you hold that bond?”

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Index Summary

  • The major market indices finished mostly up this week. The Dow Jones Industrial Average gained 2.21 percent. The S&P 500 Stock Index rose 2.94 percent, while the Nasdaq Composite climbed 6.09 percent. The Russell 2000 small capitalization index lost 1.43 percent this week.
  • The Hang Seng Composite gained 1.15 percent this week; while Taiwan was up 6.01 percent and the KOSPI rose 4.27 percent.
  • The 10-year Treasury bond yield fell 7 basis points to 0.649 percent.

Domestic Equity Market

SP 500 Economic Sectors weekly performance
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  • Consumer discretionary was the best performing sector of the week, increasing by 7.86 percent versus an overall increase of 3.04 percent for the S&P 500.
  • Advanced Micro Devices was the best performing S&P 500 stock for the week, increasing 16.99 percent.
  • The S&P 500 just posted back-to-back weekly gains for the first time since early February, before either the pandemic or the crash took hold in America. The advance was small by recent standards, but it’s another milestone in 2020’s remarkable story.


  • Financials was the worst performing sector for the week, decreasing by 4.03 percent versus an overall increase of 3.04 percent for the S&P 500.
  • Simon Property Group was the worst performing S&P 500 stock for the week, falling 17.68 percent.
  • SoftBank warned its tech-focused Vision Fund will see a $17 billion annual operating loss. The Vision Fund has posted operating losses for three consecutive quarters, pushing the entire group into the red.


  • Gilead Sciences Inc. shares had their biggest intraday gain since 2012 on Friday after a report that a group of COVID-19 patients being treated in Chicago were “seeing rapid recoveries in fever and respiratory symptoms.” The report, from the medical news publication Stat, cited a video made by a researcher at the University of Chicago who is helping conduct a trial of Gilead’s drug remdesivir. It is one of the most-watched therapies being studied for treatment of COVID-19 patients.
  • Johnson & Johnson, the world’s largest health-care conglomerate, surged after posting stronger sales and boosting its quarterly dividend.
  • UnitedHealth’s first quarter profit fell 2.5 percent, but total revenue rose to $64.42 billion from $60.31 billion.       


  • Apple’s new budget-friendly iPhone is unlikely to make a splash in China where 5G is now commonplace because the phone does not have 5G. In a poll conducted on social media site Weibo, 60 percent of roughly 350,000 respondents said they would not buy the $399 model, the cheapest iPhone available.
  • Uber withdrew its 2020 guidance and warned of a $2.2 billion write down. The news comes just as Uber faces an employee backlash in California.
  • Legendary emerging markets investor Mark Mobius warned that stocks could see a ‘double bottom’ as the coronavirus lockdown tanks the U.S. economy. "I don’t think we’re at the absolute bottom yet because the implications of this shutdown are incredible," Mobius said.

The Economy and Bond Market



  • President Trump unveiled guidelines on reopening the economy that could allow states and employers to abandon within four weeks most social distancing practices to curb the coronavirus. The guidelines recommend that states document a “downward trajectory” in cases of coronavirus and flu-like illnesses for two weeks before beginning a three-phase process to return to near normal work and social life.
  • House Republican leader Kevin McCarthy said Friday he would support adding aid to hospitals as part of a deal to renew funds in a depleted program for small businesses, the first sign of a potential break in the stalemate over additional stimulus spending. Democrats have sought $100 billion for hospitals and $150 billion for state and local government in exchange for putting another $251 billion into the Small Business Administration’s Paycheck Protection Program, which ran out of money on Thursday.
  • The latest round of Fed measures expanded the central bank’s lending capacity to $2.3 trillion in loans to support various non-financial businesses and state and local governments. As massive as it is, the Fed has only used roughly half of the funds allocated to the Treasury by the Coronavirus Aid, Relief, and Economic Security Act (CARES).


  • The International Monetary Fund (IMF) predicts the “Great Lockdown” recession will be the steepest in almost a century and warned the world economy’s contraction and recovery would be worse than anticipated if the coronavirus lingers or returns. The IMF estimated global GDP will fall 3 percent in 2020. That compares to a January projection of 3.3% expansion and would likely mark the deepest dive since the Great Depression.

$600 Billion of troubled debt spread among 10 sectors
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  • The value of overall retail sales fell 8.7 percent from the prior month, the biggest decline in records dating back to 1992, according to the Commerce Department. Federal Reserve figures showed U.S. factory output dropped in March by the most since 1946, just after World War II ended.
  • Public pensions suffered a double blow from the coronavirus pandemic. Funding levels will be under stress because of the losses in the financial markets, and at the same time, governments may struggle to make up the difference as the economic shutdown to stem the outbreak slashes their income.


  • The Fed is breaking precedent by lending states and municipalities $500 billion to help them weather the coronavirus storm. The eligible borrowers are restricted to states, the District of Columbia and cities with a population exceeding one million and counties larger than 2 million.
  • The idea of insuring municipal bonds has been around for some 50 years and was once a booming business, covering 57 percent of new issues. It has faded since the 2008 recession and now only about 5 percent of issuers have insurance. Writing in the Municipal Market Analytics weekly outlook, Matt Fabian noted that in a post-coronavirus America, where an issuer’s credit once again counts, both Build America Mutual and Assured Guaranty, the two remaining insurers, “are likely to pursue new primary business aggressively and could post their best production statistics in years.”
  • Federal Reserve Bank of Atlanta President Raphael Bostic says he is hopeful that funds earmarked for municipalities will reach all the places they were intended for. “The states are able to allocate funds to cities within. So I am hopeful we will see some diversion of funds and resources to those parts of states that have deeper needs.”


  • Without an effective therapy or a vaccine for the novel coronavirus, the U.S. economy could face 18 months of rolling shutdowns as the outbreak recedes and flares up again, Federal Reserve Bank of Minneapolis President Neel Kashkari said. “We’re looking around the world. As they relax the economic controls, the virus flares back up again,” Kashkari said Sunday on CBS.
  • Illinois had the outlook on its credit rating lowered to negative by Moody’s, signaling an increasing risk that the economic fallout of the coronavirus could make it the first U.S. state to have its bonds cut to junk.
  • Federal Reserve Bank of Atlanta President Raphael Bostic said many businesses will struggle as early as next month to survive amid coronavirus-related shutdowns and urged both governments and banks to provide relief quickly to help prevent widespread failures. “What we are hearing from our contacts is that May is going to loom as a large month, in terms of the transition of concern from this being a liquidity issue — one where we are really talking about cash flows — to this perhaps translating and transferring into a solvency issue, and whether companies can exist at all.”

Energy and Natural Resources Market



  • The best performing commodity this week was uranium, which gained 6.22 percent. Uranium prices are seeing support as Cameco announced a continued production shutdown at its Cigar Lake mine. Several uranium stocks outperformed on Tuesday after the news came out. BMO’s Alexander Pearce says the news is a clear “indication that one of the world’s largest uranium mines is unlikely to return to production anytime soon,” and “could provide more support to the uranium price near term.” Bloomberg notes that uranium is up about 20 percent year-to-date – the highest since March 2016.
  • As China is slowly getting back to work, copper inventories are declining. Inventories of the red metal shrank for a fourth week and are 16 percent lower than the near-record peak in March. However, the supply and demand balance is unknown. The Stoxx 600 Basic Resources Index gained as much as 4.8 percent Friday morning after Rio Tinto announced strong iron ore production in the first quarter. U.S. natural gas futures had a second weekly gain on speculation that easing lockdowns will boost demand for the fuel and cooler than expected temperatures.
  • According to Wall Street analysts, the recent surge in pantry stocking and food delivery should give a boost to beverage can and paper box producers this earnings season. RBC analyst Arun Viswanathan says Crown Holdings, Ball Corp, Silgan Holdings and Ardagh Group SA are his top picks as alcohol consumption is up at home. Morgan Stanley reports that North American beverage can shipments increased 8.3 percent in the first quarter, up from 5 percent in the fourth quarter last year. On the other hand, glass bottle makers could suffer due to closed restaurants and cancelled sporting events, as bottled beverages consumed on-premise is a higher percentage of consumption than canned beverages.


  • The worst performing commodity this week was again crude oil, which fell 20.25 percent. Over the weekend, OPEC+ announced an agreement to cut oil production by 9.7 million barrels a day, ending the Saudi Arabia-Russia feud. However, that did little to help oil. Futures in New York dropped by more than 10 percent on Tuesday alone on warnings that the world is running out of places to store excess crude. The International Energy Association (IEA) said that oil demand will drop by over 9 million barrels a day this year, wiping out 10 years of consumption growth. Crude took another big tumble for the week and even fell below $20 a barrel. According to a survey by the Kansas City Fed, almost 40 percent of oil and natural gas producers face insolvency within the year if crude prices remain near $30 a barrel. The U.S. has not made any formal production cuts and President Trump seems to be relying on market forces to cut production by 2 million barrels a day by year end.

brent crude costs far more in a year's time
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  • Schlumberger reduced its dividend for the first time in more than 40 years. Baker Hughes announced that it will take a $1.8 billion charge due to weaker oil prices and will cut spending by more than 20 percent this year. The IEA said in its monthly report that oil and gas upstream spending is expected to fall 32 percent year-over-year to $335 billion in 2020, down from previous guidance of $490 billion. American explorers and producers are expected to cut spending by as much as 40 percent.
  • China’s overseas energy purchases shrank in March due to the coronavirus. Bloomberg reports that customs data released Tuesday show China’s crude oil imports fell by 9.72 million barrels a day and that coal imports fell to 27.8 million for the month.


  • The largest actively-managed oil-focused ETFs boosted their net holdings of crude by more than 400 percent over the last month – a bet that oil’s drop may be coming to an end, writes Bloomberg’s Matthew Revell. Holdings in oil ETFs are the highest in this five-year period. Bloomberg notes that the last time holdings spiked in 2015 and early 2016, oil rallied more than 200 percent to late 2018.
  • Russia and Saudi Arabia hinted in a joint statement on Friday that they may be open to further output cuts as crude continues to spiral downward. Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA, said in an interview with Bloomberg that “the Saudis and Russians are being proactive in providing forward policy guidance in an effort to reassure markets that they mean business when it comes to reducing their output.”
  • Bloomberg Green writes that a slowdown in Europe’s power use could be stabilizing now that coronavirus infection rates are slowing in some nations and leaders are making plans to ease lockdown measures. In France, power demand was 1.6 percent lower on Wednesday compared with a week earlier, which indicates that the situation isn’t worsening based on last year’s numbers. In the U.K., consumption only fell 3.8 percent this week, versus 21 percent lower last week.


  • On Thursday, the Environmental Protection Agency (EPA) announced weakened regulations on the release of mercury and other toxic metals from oil and coal-fired power plants. The New York Times writes that the new method of calculating the costs and benefits of curbing mercury pollution would fundamentally undermine the legal underpinnings of controls on mercury and many other pollutants. This comes after coal-fired plants across the nation have already spent millions to meet the Obama-era standards on pollution control on mercury which is highly toxic if released into the environment.
  • The U.S. could be facing longer blackouts caused by storms due to virus slowdowns. Under normal circumstances, crews are deployed immediately to restore power after a storm knocks it out. But now, due to the coronavirus, it will likely take workers longer to get to the scene. The Electricity Subsector Coordinating Council is developing guidelines for organizing restoration efforts that use crew from multiples companies. Bloomberg writes that their goal is to maximize available manpower while limiting situations that could transmit the virus during the upcoming hurricane season.
  • Zambia has threatened to strip Glencore of its copper mines after the company said it needs to close shafts at Mopani Copper Mines due to falling metal prices, disrupted logistics and travel restrictions due to the pandemic, reports Bloomberg. The nation’s Mines Ministry announced that Glencore has seven days to show why their license should not be canceled or revoked. Zambia is Africa’s largest copper producer and has a history of following through with threats to miners.

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Emerging Europe



  • Poland was the best performing country this week, gaining 1.9 percent. The government announced new liquidity measures for businesses, injecting 100 billion zloty of subsidies to companies hit economically by the coronavirus. Poland also announced the gradual easing of lockdown measures. Shares of CCC SA, a shoe retailer, gained 31 percent in the past five days on the news that some shopping malls may reopen soon.
  • The Polish zloty was the best performing currency this week, gaining 6 basis points.
  • Communication services was the best performing sector among eastern European markets this week.


  • Russia was the worst performing country this week, losing 5.4 percent. The number of confirmed coronavirus cases doubled in just a week, with more than 32,000 infected and 273 deaths. Cases may peak in two to three weeks from now, according to Russian authorities. Moreover, the weaker oil price put further pressure on Russian equites. The price of Brent crude declined by 10 percent. Tatneft, an oil and gas producer, was the weakest stock trading on the Moscow Stock Exchange, losing 14 percent in the past five days.
  • The Turkish lira was the worst performing currency in the region this week, losing 3.4 percent. The lira continued to weaken despite the government announcing additional measures against the pandemic impact. The central bank in Ankara predicts 2020 GDP to contract by 0.6 percent, down from growth of 3.3 percent in a previous survey.
  • Energy was the worst performing sector among eastern European markets this week.


  • Some countries in Europe are slowly reopening their economies. On Tuesday, Italy, the epicenter of Europe’s crisis, reopened some bookshops and children’s clothing stores. Spain allowed workers to return to factories and construction sites. Austria allowed thousands of hardware and home improvement stores to reopen, on the condition that workers and customers wear masks. In Denmark, elementary school teachers readied classrooms for young children to return to school on Wednesday. The Czech Republic announced reopening of sports centers and some shops. Poland is preparing to open some shopping malls. Lastly, in Germany smaller shops will be reopened next week.
  • Moody’s placed the banking systems of Norway, Finland, Portugal, Hungary and Slovakia on a negative outlook. However, the rating agency left Czech Republic, Poland, Austria and Ireland unchanged at a stable outlook. Czech and Polish banks are well capitalized and the most resilient in the current situation.
  • European equities rose in their longest rally since November, entering a technical bull market and gaining more than 20 percent since mid-March. If Europe reopens soon for business and the number of infections continue to slow, equites will have plenty of more room to recover year-to-date losses.

Czech Republic has biggest war chest in europe for emerging market sell-off
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  • Europe will probably experience a more severe recession than the rest of the world and might not show proper signs of a recovery until next year, European Central Bank (ECB) Vice President Luis de Guindos told La Vanguardia. "In any case, 2021 will not be able to make up for all of the downturn in 2020”, he said.
  • Russian President Vladimir Putin announced a new stimulus package, but only a small fraction of the 13.5 billion stimulus program will be in the form of cash assistance. The majority of the money will be provided to companies in the form of loan guarantees, which don’t require immediate spending by the government and also have a less immediate economic impact. Russia is slow in providing large aid to people and does not want to spend from the wealth fund. It may lead to a bigger contraction in its economy and increased dissatisfaction with the government.
  • According to Bloomberg, Poland has the lowest real rate in the world now, after the central bank unexpectedly cut its main rate twice within a month. The country’s base rate was cut from 1.5 percent to 50 basis points, while inflation spiked to 4.6 percent in March. The gap between the central bank’s rate and inflation is at 4.1 percent, the most negative among countries tracked by Bloomberg.

China Region



  • India was the best performing country in the region this week, gaining 14.6 percent. The government pledged to do whatever it takes to support the economy and equities moved higher. However, India’s economy may be heading for its first full-year contraction in four decades after the national lockdown was extended to 40 days. Indusind Bank was the best performing equity trading on the Mumbai Stock Exchange, gaining 19 percent in the past five days.
  • The Indonesian rupiah was the best performing currency this week, gaining 2 percent. The rupiah benefited the most after U.S. President Donald Trump announced guidelines on re-opening the economy that implores states to drop most social distancing measures within four weeks.
  • Financials was the best performing sector in the HSCI Index this week.


  • China was the worst relative performing country in the region this week, gaining 3 percent. China revised up its total death toll to 4,632 after adding 1,290 from Wuhan, the original epicenter of the virus. Gross domestic product (GDP) contracted in first quarter by 6.8 percent, versus expectations of 6 percent, and retail sales dropped by 19 percent year-over-year. Nanjing, a textile import and export company, was the worst performing equity trading on the Shanghai Stock Exchange, losing 18.4 percent in the past five days.
  • The Malaysian ringgit was the worst performing currency this week, losing 1.4 percent. The currency recorded its biggest weekly drop in a month as another correction in crude prices and a stronger U.S. dollar kept foreign investors away from local assets.
  • Healthcare was the worst performing sector in the HSCI Index this week.


  • More nations continue to cut interest rates in a bid to protect from the economic impact of the coronavirus. The Philippine central bank cut its key rate by 50 basis points to 2.75 percent – the lowest since 2016. Pakistan cut its key target rate by 200 basis points to 9 percent. The bank made a bold move after predicting that economic growth will contract 1.5 percent for the year, which would be the first drop in 68 years.
  • South Korean President Moon Jae-in’s ruling coalition won the biggest parliamentary election victory in more than 30 years this week. Bloomberg reports that voter turnout was 66 percent – the highest in 28 years and a strong sign of support for Moon’s handling of the nation’s coronavirus response. The majority win will allow the Democratic Party of Korea to push through legislation without opposition votes.
  • One of Goldman Sach’s funds is boosting its bet on Asia’s biggest technology stocks, reports Bloomberg. The Goldman Sachs Emerging Markets Equity Fund increased its holdings in tech giants Tencent Holdings, Alibaba Group Holding, Samsung Electronics and Taiwan Semiconductor Manufacturing, which make up 25 percent of the portfolio – up from 23 percent at the end of 2019. These stocks have been hit by the coronavirus rout, but some have rebounded due to a surge in Internet usages from lockdowns forcing people at home. China is the fund’s top country weighting at over one-third of the fund.


  • India’s crude steel output fell 2.2 percent from a year earlier through March – the first decline in at least six years. Demand grew only 1.3 percent to 100 million tons due to the impact from the coronavirus. India’s biggest steel producers had to scale down operations after a 3-week lockdown was announced and just extended. “Demand would be a washout in the first quarter of this fiscal, given the pan-India lockdown that would hurt construction,” said Crisil Ltd. In a report.
  • China’s economy contracted for the first time on record in the first quarter of this year. GDP fell 6.8 percent year-over-year, slightly worse than expected at 6.5 percent, and a sharp turnaround from 6 percent growth in the fourth quarter of 2019. China was the first country to implement a lockdown to help contain the spread of COVID-19 and its GDP numbers are a grim warning for the rest of the world.
  • China’s exports fell 6.6. percent in dollar terms in March from a year earlier, while imports fell 0.9 percent, reports Bloomberg. Although a big drop, it is less than economists had forecast. However, the full impact of the shutdowns across the global economy might not be felt yet and second quarter numbers could be far worse.

annual GDP growth estimates plummet after COVID-19 outbreak
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Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performing for the week ended April 17 was PIBBLE, up 897.38 percent.
  • The Grayscale Bitcoin Trust, the world’s largest such fund, saw over $1 billion invested in the last 12 months, with over half a billion dollars of inflows in the first quarter of this year alone. The fund allows accredited investors to buy bitcoin and other major cryptocurrencies. This is a strong sign of interest in the crypto market during troubled times for equities.
  • The total value transferred on the Ethereum network now matches that of the Bitcoin network, according to data from Messari presented by analyst Ryan Watkins. Stablecoins just had their best quarter to date with issuance ballooning over $8 billion. Watkins noted that stablecoins added almost as much market capitalization in the first quarter as for all of last year.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week ended April 17 was Bitcion Free Cash, down 77.59 percent. Bitcoin was trading back below $7,000 early this week after rising above the key level last week. Then in surprise move, the coin rose back above to $7,100 Thursday night.

bitcoin and u.s. stock futures are moving in concern with one another
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  • The Libra project announced on Thursday that it is pulling back from its original vision of a global digital currency backed by a basket of national currencies in a major concession to governments and central banks. Coindesk reports that the Facebook-led project now plans to develop a handful of stablecoins that will each represent a different fiat currency. Libra will still issue a multi-currency stablecoin, but it will be backed by its new stablecoins, rather than fiatn currencies held in a bank.
  • Harry Denley, director of security at MyCrypto, identified fake wallet extensions for Google Chrome that tricks victims into disclosing sensitive information. Coindesk reports that Google has removed 49 extentions claiming to be well-known crypto wallets.


  • Canadian asset manager 3iQ launched a closed-end fund on the Toronto Stock Exchange – The Bitcoin Fund (QBTC). The fund has a market cap of $16.3 million and will hold custody and other long-term investments in Bitcoin. Tyler Winklevoss tweeted that the fund is available to trade in the U.S. via Fidelity.
  • KuCoin, a global crypto exchange, announced the launch of its Enterprise Currency Desk (ECD), a solution for enterprise-grade adopters to acquire digital assets and support blockchain use-cases. The company announced that its ECD will be able to procure digital assets, source tokens for wallet authentication, allow seamless operation across integrated software platforms and more.
  • Cointelegraph reports that BIK, the largest credit bureau in Central and Eastern Europe, has enabled Polish banks to send notifications of commissions and fee changes on blockchain via its new document management product. According to a statement by Billon, a Polish-British fintech firm, the purpose of the project is to eliminate paper-based client notifications by digitizing the data and recording it on blockchain for enhanced security.


  • Hut 8 Mining Group, a publicly-traded cryptocurrency mining company, says that it is concerned about COVID-19-related delays of new machine deliveries. On an earnings call last week, CEO Andrew Kiguel said the firm was struggling with vague delivery timelines of machines to support its farms as supply chains globally are disrupted by coronavirus shutdowns and worker shortages.
  • A class action lawsuit has been filed by MakerDAO users against the Maker Foundation following a protocol failure on March 12, or what is known as “Black Thursday,” reports Coindesk. The suit alleges that the Maker Foundation intentionally misrepresented the risks of owning CDP resulting in the loss of $8.325 million of investors’ funds on Black Thursday.
  • Economist John Vaz told Cointelegraph that he believes Bitcoin still faces tough competition from Facebook’s Libra project. Although the Libra project has been facing difficulties, Vaz notes that Bitcoin has scaling challenges in terms of payments and was used disproportionately as speculation. Libra has been specifically built to scale as a payments network, and for this reason could make it a big competitor to Bitcoin.

In the News
April 6, 2020
U.S. Global Investors Announces Record Inflows into Its Airlines ETF, the U.S. Global Jets ETF (JETS)
March 23, 2020
U.S. Global Investors Continues GROW Dividends
March 16, 2020
Central Bank Pandemic Moves Could Boost Gold

Leaders and Laggards

Weekly Performance
Index Close Weekly
10-Yr Treasury Bond 0.65 -0.07 -9.99%
Oil Futures 18.13 -4.63 -20.34%
Hang Seng Composite Index 3,398.99 +38.61 +1.15%
S&P Basic Materials 316.31 -6.88 -2.13%
Korean KOSPI Index 1,914.53 +78.32 +4.27%
S&P Energy 260.17 +0.54 +0.21%
Nasdaq 8,650.14 +496.57 +6.09%
DJIA 24,242.49 +523.12 +2.21%
Russell 2000 1,228.91 -17.82 -1.43%
S&P 500 2,871.90 +82.08 +2.94%
Gold Futures 1,695.70 -57.10 -3.26%
XAU 104.28 +6.06 +6.17%
S&P/TSX VENTURE COMP IDX 445.33 +23.36 +5.54%
S&P/TSX Global Gold Index 306.10 +17.46 +6.05%
Natural Gas Futures 1.76 +0.02 +1.33%


Monthly Performance
Index Close Monthly
Korean KOSPI Index 1,914.53 +323.33 +20.32%
10-Yr Treasury Bond 0.65 -0.55 -45.69%
Gold Futures 1,695.70 +215.10 +14.53%
S&P Basic Materials 316.31 +58.57 +22.72%
S&P 500 2,871.90 +473.80 +19.76%
DJIA 24,242.49 +4,343.57 +21.83%
Nasdaq 8,650.14 +1,660.30 +23.75%
Oil Futures 18.13 -2.24 -11.00%
Hang Seng Composite Index 3,398.99 +366.22 +12.08%
S&P/TSX Global Gold Index 306.10 +85.33 +38.65%
XAU 104.28 +30.83 +41.97%
Russell 2000 1,228.91 +237.75 +23.99%
S&P Energy 260.17 +80.23 +44.59%
S&P/TSX VENTURE COMP IDX 445.33 +106.53 +31.44%
Natural Gas Futures 1.76 +0.15 +9.48%


Quarterly Performance
Index Close Quarterly
XAU 104.28 +1.46 +1.42%
S&P/TSX Global Gold Index 306.10 +49.39 +19.24%
Gold Futures 1,695.70 +133.50 +8.55%
DJIA 24,242.49 -5,055.15 -17.25%
S&P 500 2,871.90 -444.91 -13.41%
Nasdaq 8,650.14 -706.99 -7.56%
Korean KOSPI Index 1,914.53 -333.52 -14.84%
Natural Gas Futures 1.76 -0.32 -15.45%
S&P Basic Materials 316.31 -65.81 -17.22%
Russell 2000 1,228.91 -476.30 -27.93%
Oil Futures 18.13 -40.39 -69.02%
Hang Seng Composite Index 3,398.99 -555.04 -14.04%
S&P/TSX VENTURE COMP IDX 445.33 -137.78 -23.63%
S&P Energy 260.17 -191.57 -42.41%
10-Yr Treasury Bond 0.65 -1.16 -64.10%


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This commentary should not be considered a solicitation or offering of any investment product.

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 (03/31/2020):

CCC SA, Tatneft PJSC, AngloGold Ashanti Ltd, Gold Fields Ltd, Torex Gold Resources Inc, Yamana Gold Inc, Impala Platinum Holdings Ltd, Ball Corp, Alibaba, UnitedHealth Group Inc, Newmont Corp., Teranga Gold Corp., Barrick Gold Corp., Roxgold Inc., Agnico Eagle Mines Ltd., Evolution Mining Ltd., Wheaton Precious Metals Corp., Calibre Mining Corp., Alamos Gold Inc., Eldorado Gold Corp, IAMGOLD Corp, American Airlines Group Inc, Delta Air Lines Inc, United Airlines Holdings Inc, Southwest Airlines Co.

*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 STOXX Europe 600 Basic Resources Index is a market capitalization weighted index tracking companies in Europe with a primary source of revenue from basic resources. The JSE Gold Index consists of five precious metal mining companies listed on South Africa’s Johannesburg Stock Exchange.