The Revolution Will Be Digitized: How AI and Bitcoin Are Transforming Our World

Artificial intelligence (AI) and Bitcoin were top of mind at Paris Blockchain Week, where I had the privilege of presenting to an enthusiastic crowd. The blockchain and digital assets event, held beneath the world-famous Louvre Museum, attracted close to 10,000 people, an impressive 25% increase over last year, as Bitcoin traded near its all-time high and AI dominated headlines.

To give you an idea of just how explosive AI has been in the public consciousness, especially since the launch of ChatGPT in November 2022, consider the chart below, which compares Google searches for “AI” and “Bitcoin.” Post-ChatGPT, people’s curiosity of AI has gone parabolic.

My presentation focused on the transformative potential of Bitcoin and AI through the lens of Complex Adaptive Systems (CAS) theory, highlighting how these nascent technologies are already reshaping our world in profound ways. By exploring some of the key features of CAS—including decentralization, network effects and nonlinear dynamics—I sought to show how Bitcoin and AI are prime examples of complex systems whose influence on our lives will only continue to grow.

Ultimately, my goal was to leave attendees with a renewed sense of excitement and optimism for AI and Bitcoin. I genuinely believe that, if done right, these technologies can help us build a future that’s more opportunistic, fair and sustainable.

Smart Contracts and Your Digital Afterlife

A good example of what I’m talking about are smart contracts. These self-executing applications, which are still in their infancy, have the potential to streamline complex transactions, increase efficiency and reduce costs.

Doug Levin, serial entrepreneur and Executive-in-Residence at Harvard Business School laid out the perfect use case for smart contracts in the oil industry. These contracts could incorporate different transactions occurring automatically at different prices, based on varying market conditions. This has the power to create a fairer, more efficient and transparent marketplace for both oil buyers and sellers.

The efficiency of blockchain transactions is already evident. A few years ago, everyone was astonished to learn that a $1 billion transaction between two anonymous Bitcoin wallets settled in under an hour with a fee of only $700. Meanwhile, moving money from a New York bank to a Paris bank can still take up to a week to fully settle.

Looking further into the future, Ryan Condron, creator of the Lumerin protocol, shared his thought-provoking vision of the world where everyone has their own personalized AI that knows everything about them, from childhood to, well, the very end. Theoretically, this AI could continue to make investment decisions and deploy capital on that person’s behalf, even after they were gone, based on their preferences and the AI’s deep understanding of who they were during their lifetime.

With AI, paired with Bitcoin, maybe you’ll be able to take it with you after all.

The Transformative Power of AI

In case you missed it, Elon Musk made a bold yet plausible prediction this week regarding AI, saying he believes the technology will become “smarter than the smartest human” by next year or 2026 at the latest. I don’t know who the smartest human currently living is, but if (and when) this happens, we may need to redefine what it means to be “smart.”

The Tesla chief’s forecast might not come as a surprise to anyone who’s been paying attention. For months now, AI has been able to pass a number of rigorous tests, including the Uniform Bar Exam (UBE). In February, a team of researchers reported that the most recent version of ChatGPT exhibits characteristics that are “statistically indistinguishable from a random human.” Way before that, in 1997, IBM’s Deep Blue beat world champion Garry Kasparov.

Another highly influential business leader, JPMorgan CEO Jamie Dimon, also weighed in on AI this week. In his annual letter to shareholders, Dimon speculated that the technology has the potential to be “as transformational as some of the major technological inventions of the past several hundred years,” citing examples such as the printing press and the internet.

I agree whole-heartedly with Dimon on this point, even if I don’t agree with his negative views on Bitcoin.

The world’s largest digital asset poses a serious challenge to his business, and it’s easy to imagine that Dimon, as CEO of the world’s largest bank, sees his role as protector of centralized finance, fiat currency and the traditional banking system.

Interestingly, Dimon raises a number of major risks in his letter—from record-high government debt to political polarization to escalating global tensions—that could also double as reasons to own an uncorrelated asset like Bitcoin.

As one Bitcoin-related X account quipped, “Jamie Dimon is a #Bitcoin salesman and doesn’t even know it.”

Jamie Dimon is a #Bitcoin salesman and doesn't even know it. pic.twitter.com/sbCa808Dbz

— Bitcoin News (@BitcoinNewsCom) April 8, 2024

Optimism in the Age of Bitcoin and AI

From smart contracts that streamline complex transactions to personalized AI assistants that can make decisions on our behalf, the possibilities of AI are endless. And with the added security and decentralization provided by Bitcoin, we may be on the cusp of a new era of financial freedom and innovation.

There’s a lot of doom and gloom surrounding Bitcoin and AI, but I choose to approach them with a sense of optimism, and I hope you choose to do so as well.

Index Summary

• The major market indices finished down this week. The Dow Jones Industrial Average lost 2.37%. The S&P 500 Stock Index fell 1.56%, while the Nasdaq Composite fell 0.45%. The Russell 2000 small capitalization index lost 2.92% this week.
• The Hang Seng Composite gained 0.39% this week; while Taiwan was up 2.04% and the KOSPI fell 1.19%.
• The 10-year Treasury bond yield rose 11 basis points to 4.519%.

Airlines and Shipping

Strengths

• The best performing airline stock for the week was Qantas, up 5.3%. According to Goldman, Classic Plus reward seats will provide Qantas travelers with an additional 20 million reward points for redemption by the end of calendar year 2024. Classic Plus reward seats can be booked on international flights departing Australia for travel starting in July and will be rolled out across the rest of the airline’s international and domestic network on Qantas-operated flights by the end of this year.
• There has been some level of improvement in the Panama Canal, with increasing transits up to 27 per day, along with rain in the forecast. However, given the extreme impact of last year, the Panama Canal Authority is not expecting a resumption of normal activity until the end of the year, according to Stifel.
• Delta Air Lines’ first quarter results beat expectations this week. The carrier earned $0.45 per share, ahead of the $0.36 consensus, on better non-fuel unit cost, lower non-operating expense, and slightly lower fuel. The second-quarter guidance is ahead of ISI’s recently reduced estimates, in large part due to better non-fuel unit cost outlook.

Weaknesses

• The worst performing airline stock for the week was Azul, down -14.2%. Boeing reported 29 aircraft deliveries for March and 83 deliveries for the first quarter of 2024. With the 29 deliveries made in March, the company reported 24 for the 737 MAX and five 787s, reports RBC.
• RBC believes that a surge in imports in Vancouver, and according to a customer notice from Hapag-Lloyd, a shortage of rail cars, are both contributing to the congestion in Vancouver. Key, however, is that during its tour two weeks ago, the rails were operating well, and the group therefore expects Vancouver to bounce back quickly as the weather improves.
• British Airways is under pressure to improve its operational performance, after only 60% of its flights at London’s Heathrow airport were on time last year. The carrier said it had made significant changes to its ground operations at Heathrow in response, including hiring 350 more staff, upgrading equipment such as baggage loading machines and buses, and revising its notoriously unreliable IT systems, according to the Financial Times.

Opportunities

• Qantas’s update now paves the way for the stock buyback to complete, as uncertainties regarding the frequent flier program are resolved. Management has suggested a commitment to complete the A$448 million buyback by the end of June. If this is completed, it equates to buyback levels normally completed over a six-month period compressed into only two-and-a-half months – and is likely to provide significant share price support, in Goldman’s view.
• According to Freightwaves, UPS plans to hire an additional 300+ pilots to account for the expected increase in air cargo volume it will receive from its new contract with USPS.
• Spirit announced that it has reached an agreement with Airbus to defer all aircraft on order that are scheduled to be delivered in the second quarter of 2025 to the fourth quarter of 2026, to 2030-2031, (albeit still taking delivery of two direct leases planned for 2Q25-3Q25). Raymond James estimates this reduces available seats. This deferral is expected to improve Spirit’s liquidity position by $340 million, while it expects the planned furlough of 260 pilots effective September 1 to help with right-sizing the fixed cost structure to the lower capacity set up.

Threats

• Spirit Airlines lowered June and July capacity by 280 basis points (bps) and 320bps, respectively, after raising capacity last week. Cuts were systemwide, with domestic lower by around 300bps in both months while Latin American cuts begin in April and increase in size each month through July, according to Bank of America.
• Over the weekend, Stifel indicated there were three more ships attacked in Yemen. Thankfully, none of the ships were hit, but with attacks ongoing, there is very little chance of most ships moving back through that region.
• Airbus reported March 2024 deliveries and orders, in which it recorded first quarter deliveries of 116 A320s, ahead of Boeing’s 66 737 MAX deliveries. RBC views a rate break below 38/month on a MAX as being bearish, especially as the FAA continues its review of Boeing’s manufacturing processes.

Luxury Goods and International Markets

Strengths

• During a widespread global market sell-off this week, Apple shares gained ground. The company is in the process of revamping its entire Mac lineup with its in-house M4 chips, aiming to integrate AI processing capabilities. The updated computers are slated for release later this year and in early 2025. Apple is anticipated to reveal its artificial intelligence strategy at the Worldwide Development Conference scheduled for June 10-14.
• The price of gold has reached a record high and Costco is benefiting from the yellow metal’s price surge. According to a Wells Fargo report, the bank’s analysts believe that this warehouse retail giant is selling between $100 million to $200 million in gold per month.
• SJM Holdings, a casino operator in Macau, was the best performing S&P Global Luxury stock, gaining 12.53% in the past five days. Casino operators in Macau, in general, gained after a report was released stating that the city received over 1 million visitors during the Easter and Qingming festival.

Weaknesses

• China released weaker economic data this week. The consumer price index (CPI) shrank more than expected in March, declining by 1% month-on-month, while a drop of 0.5% was projected. On a year-over-year basis, inflation grew only by 0.10%, below the expected 0.4%, and slowed substantially from 0.7% in February. In addition, at the end of the week, China reported weaker exports and import data.
• Fitch ratings downgraded China’s outlook from “stable” to “negative”, citing increasing risks to the country’s public finance prospects. China may have to issue more debt while lower nominal growth brings more challenges to managing high leverage. 
• Salvatore Ferragamo was the worst performing S&P Global Luxury stock, losing 13.9% in the past five days. Barclays released a warning report on the company, expecting the brand to remain under pressure, with sales declining by 18% in the first quarter, driven by weaker demand in China.

Opportunities

• CLSA, a brokerage firm in the Asia region, foresees a continued recovery in consumer confidence for March. Newly released data suggests that both lower and higher earners, as well as residents in lower-tier cities, are experiencing improved confidence. Analysis of the upcoming May Labor Day holiday indicates that sentiment is similar to last year but with more people planning outbound trips.
• According to the Morgan Stanley luxury research team, the sector will experience steady growth over the upcoming year. The broker predicts that the personal luxury goods market capitalization will increase from 362 billion euros in 2023 to 560 billion euros in 2030.

• Bloomberg reported that Gucci appointed a new deputy chief executive on Thursday. Stefano Canito will join the company at the beginning of May and will try to implement a strategy that will help to turn Gucci around. The brand was under pressure due to weaker demand in China.

Threats

• The United States reported stronger-than-expected inflation data for the month of March. On a year-over-year basis, inflation increased by 3.5%, exceeding the expected 3.4% and surpassing February’s 3.2%. Month-over-month CPI remained unchanged at 0.4%, exceeding expectations of 0.3%. With persistent inflation, the Federal Reserve in the United States may not be inclined to cut rates. Consequently, the dollar spiked and foreign currencies weakened.
•  At the beginning of the week, Bloomberg reported that the luxury sector is preparing for a decline in sales due to a weaker-than-expected post-COVID recovery in China. Last month, Kering already issued a sales warning, predicting a 10% drop in sales in the first quarter. A slew of luxury companies will start reporting their quarterly results next week. Louis Vuitton will provide earnings updates on April 16, followed by Kering, Prada, and Hermes the following week. The first-quarter reporting season could be a bumpy ride for luxury names, with notable performance differences between losers and winners.
• JPMorgan posted first-quarter earnings that surpassed expectations, yet its shares dipped on Friday following Jamie Dimon’s cautionary remarks about global challenges. During the earnings call, Dimon highlighted various concerns, including conflicts, geopolitical tensions, inflationary pressures, and quantitative tightening attributing these factors to the bank’s vigilance.

Energy and Natural Resources

Strengths

• The best performing commodity for the week was iron ore, rising 7.89%, for its best weekly gain in two years on positive speculation that China’s economy may have found a bottom to its woes. This comes after its factory activity and exports accelerated more than expected, as reported by Bloomberg. Copper jumped to its highest price in more than 14 months as the bellwether industrial metal faces rising supply risks and hopes for a global recovery in demand. Prices climbed on the London Metal Exchange, Bloomberg commented.

• Zinc paused near a one-year high as metals markets looked past delays to U.S. monetary easing to focus on looming risks to supply, reports Bloomberg. Prices traded in a narrow band after rallying more than 12% over the past two weeks amid the threat of reduced supplies from refiners facing lower profits for processing the metal.
• Oil traded near a five-month high as investors weighed simmering tensions in the Middle East and as energy traders struck a bullish note at a conference in Europe. Brent was steady above $90 a barrel, according to Bloomberg.

Weaknesses

• The worst performing commodity for the week was sugar, dropping 6.85%, on prospects for a more robust supply from Brazil this season. Solar silicon prices in China plunged to a three-year low as overcapacity and fierce competition slash profits across the industry. Average prices of polysilicon dropped as much as 20% in the past week, according to a statement by the China Silicon Industry Association.
• A stuttering recovery in lithium prices is providing a fresh reminder of why the dramatic rally of recent years was followed by an even more breathtaking collapse: a fast-expanding industry that is more prepared than ever to keep pumping out supplies, writes Bloomberg. Prices have bottomed out but have struggled to meaningfully rebound, partly because miners, refiners and carmakers are still working through a mound of surplus stock clogging up the supply chain, according to Bloomberg.
• China is reducing its copper smelting output as the top producer suffers from a slump in the margin it gets from processing the metal just as global prices are surging.  Chinese smelters are at a critical juncture after so-called treatment and refining charges — the amount they are paid to convert ore concentrate into metal — collapsed to near zero levels on the spot market, according to Bloomberg.

Opportunities

• In the energy sector, as the rally has been focused on passive flows and considering the largest / highest quality names in the indexes have led, the recurring question is when / if the rally broadens to lift more of the marginal and levered boats. ISI took a refreshed look at crude versus the equities and shows a recoupling. The group sees incremental upside from the smaller cap end of the spectrum in E&P from here.
• Oil traders gathering at the FT Commodities Global Summit held in Lake Geneva, Switzerland, expressed confidence that bullish market conditions in oil demand will lead to stronger prices. Russell Hardy, CEO of Vitol Group, the world’s largest independent trader in crude, noted that the group expects demand growth of 1.9 million barrels a day this year – which is more than 30% higher than the forecast by the IEA, considered the benchmark by the industry, according to Bloomberg.
• “We are on track to have an extremely tight global oil market,” Sebastian Barrack, head of commodities at hedge fund Citadel said on Monday at the FT Commodities Global Summit. “OPEC has definitely regained control.” Bloomberg indicates that when oil jumped above $90 a barrel just days ago, military tensions between Israel and Iran were the immediate trigger. But the rally’s foundations went deeper — to global supply shocks that are intensifying fears of a commodity- driven inflation resurgence.

Threats

• For 2024, ISI’s energy capital spending survey points to spending essentially plateauing, with barely a 3% uptick. This points to the fact that capital discipline is emphatically here to stay, irrespective of how high oil prices may get.
• Egypt aims to buy more liquefied natural gas shipments over the next four months as the nation aims to avoid a repeat of last year’s chronic blackouts. Egyptian Natural Gas Holding Co. is currently aiming to import at least one shipment a month through July or August, according to Bloomberg.
• The use of coal to produce electricity is still going to be a climate problem for the world. China, the world’s biggest coal producer and consumer, set targets to add about 300 million tons of annual mining capacity for “emergency storage reserves” by 2030, the top economic planner said in a policy paper released this week. China has led a global resurgence in coal-power capacity, accounting for about two-thirds of last year’s increase, according to Global Energy Monitor as reported by Bloomberg.

Bitcoin and Digital Assets

Strengths

• Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Nevrous Network, rising 89%.
• Brevan Howard Asset management’s cryptocurrency fund is currently a bright spot for the hedge fund firm, writes Bloomberg, which lost money on macros trades this year. BH Digital, which manages around $1.7 billion of assets, returned 34.5% in the first quarter of this year, says people familiar with the matter. That brings total gains since the fund started trading in March 2022 to nearly 51%, the article continues.
• Ether grabbed the cryptocurrency spotlight this week after posting its biggest jump in more than a month. The surge is pegged to speculation about the outlook for applications to start U.S. ETFs for the token, writes Bloomberg.

Weaknesses

• Of the cryptocurrencies tracked by CoinMarketCap, the worst performer for the week was Wormhold, down 17%.
• Consumers are divided over Bitcoin’s staying power, with about one-third expecting the world’s largest cryptocurrency to slide below $20,000 by the end of the year, according to a survey by Deutsche Bank. That would slice approximately $50,000 of the token’s current price and take it back to a level last seen during the deep bear market in 2022, writes Bloomberg. 
• Galaxy Digital Holdings is down 16% in Toronto trading after the cryptocurrency company said its previously announced bought-deal financing via Canaccord Genuity was upsized to about $125 million, Bloomberg reports.

Opportunities

• Gunzilla Games, the developer of the upcoming video game “Off the Grid,” has announced an integration with OpenSea that will allow players to trade in-game assets on the NFT marketplace, reports Bloomberg. OpenSea has agreed to integrate the gaming developer’s GUNZ blockchain, which is built on a custom Avalanche subnet.
• A crypto token that aims to replicate a common hedge-fund trade is attracting billions of dollars’ worth of tokens and widespread buzz in the market. Yet the project, known as Ethena, is also stoking skepticism about the sustainability of its yields, writes Bloomberg. 
• Web3 wallet MetaMask is now letting users verify their airdrop eligibility via an integration with onchain project Daylight, Bloomberg reports. The Daylight API suggests unique NFT recommendations per user based on a variety of social factors such as if they are on an allowlist, hold a required token, or hold a related token, the article continues.

Threats

• A Binance Holdings executive detained for more than 40 days in Nigeria, after being invited by the government and then charged with tax evasion and fraud, has been sent to prison ahead of trial in May. A court ordered Tigran Gambaryan, head of financial compliance at Binance, to be remanded at the Kuje correctional center in the capital Abuja on Monday, writes Bloomberg. 
• FTX co-founder Sam Bankman-Fried will appeal his conviction and 25-year prison sentence for committing multibillion-dollar fraud. The 32-year-old filed a notice of appeal in federal court in Manhattan formally starting the process to have his conviction and punishment overturned. 
• The SEC warned Uniswap on Wednesday that it intends to bring an enforcement action against the company, writes Bloomberg. It is the leading platform for decentralized finance or DeFi, a segment of the crypto market where traders rely on new computer protocols that act as automated market makers for exchanging various tokens.

Defense and Cybersecurity

Strengths

• Lockheed Martin’s stock is in focus after the company secured a $4.1 billion contract from the U.S. Missile Defense Agency. The contract will enhance the Command and Control, Battle Management, and Communications system with advanced technology for hypersonic threat management, to be primarily developed in its Alabama and Colorado facilities.
• L3Harris was chosen to build an 18-satellite constellation for missile warning and defense as part of the Space Development Agency’s Proliferated Warfighter Space Architecture, complementing its earlier projects. Mercury Systems supplies the crucial radiation-tolerant, solid-state data recorders needed for data storage and processing across these missions, embodying the commitment to advancing national security and aerospace technologies.
• The best performing stock in the XAR ETF this week was Ducommun Inc., rising 12.89%, after the Company secured two major awards for the Raytheon SPY-6 radar system, totaling over $50 million in revenue. The aerospace and defense sector, as viewed from the Dow Jones index that tracks the sector, has been on a positive move higher over the past year. Contributing factors could include continued global conflicts, as well as increased spending by governments on security measures.

Weaknesses

• Following the U.S. withdrawal from Afghanistan in 2021, recent attacks in Russia and Iran, linked to the Afghan branch of ISIS, have intensified concerns about militant groups using Afghanistan as a base for international strikes. This has prompted a renewed emphasis on global counterterrorism efforts. Meanwhile, although the Taliban has significantly reduced ISIS-K attacks within Afghanistan, ISIS-K’s growing external networks and threats against the West suggest that increased cooperation and robust security measures are urgently required to prevent future attacks.
• Russia launched a prolonged assault on five Ukrainian regions, deploying 42 missiles and 40 drones against energy facilities and underground gas storages, resulting in significant damage and triggering military responses from neighboring Poland.
• The worst performing stock in the XAR ETF this week was Hexcel Corporation, falling 13.17%, after announcing CEO Nick Stanage will be replaced by former Spirit AeroSystems CEO Tom Gentile.

Opportunities

• AAR Corp. commenced the expansion of its Oklahoma City facility to include a new three-bay maintenance, repair, and overhaul hangar with over 80,000 square feet. It is designed to support all 737 variants and bolster its partnership with Alaska Airlines, celebrated by key stakeholders and supported by significant state funding and local incentives. It is aiming for operational status by January 2026.
• Gilmour Space, an Australian rocket company, is preparing its Eris rocket for an orbital launch in April 2024 from Bowen Orbital Spaceport. This marks Australia’s first attempt since 1971, featuring innovative hybrid and 3D-printed engines designed to carry up to 305 kg into low Earth orbit.
• On April 8, 2024, Northrop Grumman revealed the Manta Ray, a new class of autonomous underwater vehicles designed for long-duration, payload-capable missions without needing human logistical support. The vehicles are inspired by the wing-like structure of manta rays in tropical waters. This vehicle, part of a DARPA project to develop advanced technologies for future undersea operations.

Threats

• The United States has warned it will hold China accountable if Russia captures new territories in Ukraine, following Beijing’s renewed commitment to cooperate with Moscow during Russian Foreign Minister Sergei Lavrov’s visit to China.
• Amid escalating tensions over the Gaza Strip, Turkish President Recep Tayyip Erdogan restricted exports to Israel in retaliation for its stance. This has prompted Israel to threaten further trade barriers, thus exacerbating strains between these former allies and derailing recent attempts at diplomatic reconciliation.
• U.S.-made drones, including those from startups like Skydio, have largely failed in Ukrainian combat due to vulnerabilities to Russian electronic warfare and GPS jamming. This has driven a reevaluation of its designs despite high investments and hopes of proving its mettle in the field.

Gold Market

This week gold futures closed at $2,362.00, up $16.60 per ounce, or 0.71%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 0.64%. The S&P/TSX Venture Index came in up 0.58%. The U.S. Trade-Weighted Dollar surged 1.66%.

Strengths

• The best performing precious metal for the week was platinum, up 6.68%, followed by palladium up 4.82%. China raised its gold holdings for the 17^th consecutive month at record prices, while India also added to its gold holdings. China Asset Management Co. said that the secondary market price of the “Shanghai-Shenzhen-Hong Kong Gold Industry Stock Exchange-traded Open-ended Index Securities Investment Fund ETF” traded significantly higher than NAVs with a premium as high as 30% before trading was halted. This ETF of gold stocks had climbed by 40% in value in the prior four trading sessions. Investors in China are paying attention to gold and want to own the companies that own gold in the ground that can be monetized too. Western investors should be buying what China is short on, and that is gold and gold miners.

• K92 Mining announced that underground operations at the Kainantu Gold Mine in Papua New Guinea have resumed following a 28-day shut down. The company has reiterated its 2024 operational guidance, and that the temporary suspension of underground operations will have a moderate impact on Q1 and Q2 production, according to Canaccord.
• Petra Diamonds announced that it has pinpointed a raft of operational cost saving measures from FY2025 onwards, totaling $30 million annually, that will also likely see the reduction of plant throughput at the Finsch mine. This is on top of the $75 million capex deferrals and other cost savings of $10 million in FY2024, according to BMO.

Weaknesses

• The worst performing precious metal for the week was gold, but still up 0.71%. RBC expects a modest negative reaction from Dundee Precious Metals shares following the release of first quarter production results, which were slightly below their estimates and consensus. Weaker output in the quarter was driven by lower tonnage and grades at Chelopech versus their estimates, offset by stronger production at Ada Tepe with full-year guidance reiterated.
• Calibre Mining reported preliminary first quarter production results with consolidated gold output of 61.8K ounces as production came in sequentially lower compared to consensus at 67,000 ounces. Quarterly production represents approximately 21.5% of full-year guidance at mid-point and emphasizes an H2 weighted production year, according to Stifel.
• Victoria Gold slid 12%, the biggest intraday decline since October 2022, after the mining company said gold production for the first quarter was down year-over-year. Gold produced fell around 21% to 29,580 ounces in the first quarter from 37,619 ounces the year prior, according to a company statement Wednesday.

Opportunities

• Duncan MacInnes, investment director at Ruffer Investment Co., noted with China’s and other central banks, gold buying totaled more than 1,000 tons in 2022 and 2023 (with much of that led by economies with efforts to diversify away from the dollar). “What I think is really, really bullish about gold is that those ounces will be taken off the market and never come back. And that’s clearly very different to the ETFs where ultimately everyone’s a trader of it.” Last month he increased his exposure to gold and silver to roughly 8% across his two portfolios, which combined have about $3 billion under management.
• One key factor has been enthusiasm among central banks, encouraging buyers like Matthew Schwab, head of investor solutions at Quantix Commodities with $933 million under management. The firm’s long-only fund has been overweight gold since 2022, with bullion’s weighting around 30% — compared with about 15% in the Bloomberg Commodity Index. Bigger players have been moving into gold. Now that it is setting new all-time highs, this could spur retail buying if the tide shifts.
• Bank of America Technical Strategist Paul Ciana highlights a bullish pattern formation and trend line breakout, that suggests silver is positioned to catch up to gold by rallying to the 2021 highs just above $30/ounce, with additional upside potential to the 61.8% retracement at $35.23/ounce.

Threats

• Equinox Gold reports that persistent heavy rains have caused a displacement of material in two locations in the south wall of the Piaba pit at its Aurizona mine in Brazil. There were no injuries, no damage to equipment or infrastructure, and no environmental damage, according to Scotia.
• Tharisa produced 35.3K ounces of precious metals during the second quarter of 2024, which missed BMO’s estimates of 37.5K ounces. Production during the quarter was partly impacted by a minor plant shutdown.
• Westgold’s proposed acquisition of Karoro Resources is not being loved by the market. Analysts at Macquarie cut their share price by 19% on the deal, largely on the dilution from the doubling of shares outstanding. The combined company is projected to have 70% production growth over the next five years, but Macquarie noted the companies need to demonstrate some synergies from the merger. Westgold was already underappreciated by the market given its low valuation relative to its asset base.

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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 (03/31/2024): 

Qantas

Delta Air Lines

Boeing

Airbus SE

Gucci

Kering

Louis Vuitton

Prada

Hermes

K92 Mining

Calibre Mining

Equinox Gold

Westgold Resources

Karora Resources

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.

The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months. The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.

The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks. The 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 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.

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 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. 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 private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

The S&P Global Luxury Index is comprised of 80 of the largest publicly traded companies engaged in the production or distribution of luxury goods or the provision of luxury services that meet specific investibility requirements.

The Bloomberg Commodity Index is a broadly diversified commodity price index distributed by Bloomberg Index Services Limited.