Wisdom of Crowds Says Better Days Are Ahead

Author: Frank Holmes
Date Posted: August 21, 2020 Read time: 50 min

The number of Americans filing for initial jobless claims this week spiked above 1 million, while the number of deaths attributed to COVID-19 remains above 1,000 a day. But there was much else to celebrate.

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

Robert Friedland from Ivanhoe and Frank Holmes

If you woke up this morning from an eight-month coma and happened to glance through the business section of the newspaper, you’d be forgiven for being unaware of any economic slowdown.

Don’t get me wrong: Many businesses and families are still struggling. The number of Americans filing for initial jobless claims this week spiked above 1 million, while the number of deaths attributed to COVID-19 remains above 1,000 a day.

But there was much else to celebrate this week.

Business activity in the U.S. snapped up to a post-pandemic high this month. The preliminary Composite Purchasing Manager’s Index (PMI), a measure of both the manufacturing and services sectors, hit an expansionary 54.7, the highest since February 2019. The upturn was due primarily to stronger exports and new orders as overseas economies continue to reopen. China is also currently positive, as I shared with you last week, meaning 40 percent of the world’s economy is now in expansion mode once again.

To learn more on the PMI, watch the video below, taken during my keynote speech at the Vancouver Resource Investment Conference (VRIC). Please also remember to subscribe to our YouTube channel and share with your friends!


U.S. homebuilders are incredibly bullish right now. This month’s National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index climbed to 78, matching a previous all-time record set in December 1988. While I’m on the subject, sales of existing homes soared almost 25 percent in July from June, the strongest monthly gain in U.S. history, on near-zero interest rates.

Finally, the S&P 500 closed at a new record high on Tuesday, ending the shortest bear market in U.S. history. The pandemic-induced pullback lasted only 33 days, compared to the median bear market length of 302 days based on data going back to the 1920s, as Reuters reports.

It’s this final point I’d like to focus on. Is the U.S. stock market’s incredible recovery justified, or is it “irrational exuberance” all over again? Year-to-date, the S&P has outperformed equities in nearly every other major economy, including the European Union (EU), United Kingdom (UK), Hong Kong and Japan. A lot of this has to do with the performance of tech stocks (more on that later), but something else appears to be happening here.

Investors Pricing In Optimism

In a recent whitepaper, GMO’s James Montier questions the rationality of higher U.S. equity valuations “in the face of overwhelming uncertainty.” He colorfully compares the stock market to the “hapless Wile E. Coyote, running off the edge of a cliff in pursuit of the pesky Roadrunner but not yet realizing the ground beneath his feet had run out some time ago.”

Interestingly, Montier doesn’t believe the market’s steady uptrend is correlated with the Federal Reserve’s or U.S. government’s unprecedented levels of monetary and fiscal stimulus. Why? Because both Japan and the EU have comparatively low interest rates and asset-buying programs, and yet “they aren’t witnessing stock market valuations at nosebleed-inducing levels” as the U.S. is.

gold seen rising amid "massive currency debasement" skyBridge gayesky Says
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Instead, Montier believes investors are simply pricing in an overly rosy outcome—from the pandemic, from the economic slowdown—which he says is “absurd.”

I’m not so sure. I believe in the wisdom of crowds, and that markets have gotten it right far more often than they’ve been wrong. Earlier in the month, for instance, I showed you that investors have historically predicted the outcome of presidential elections with a surprisingly high level of accuracy.

More recently, millennial Robinhood investors accurately called the bottom in airline stocks, and they continued to accumulate shares even after Warren Buffett announced in early May that he had dumped his holdings in domestic airlines.

Are We in a Tech Bubble? CLSA Says No

Something else Montier doesn’t bring up in his whitepaper is that tech stocks have driven much of the U.S. market’s gains since March. Were it not for a handful of them, the S&P 500 may have performed more in line with other economies’ stock indices.

Between the market bottom on March 23 and August 20, shares of Apple, Amazon, Microsoft, Facebook, Alphabet and graphics processor designer NVIDIA were responsible for an incredible 33 percent—an entire third—of the uptrend in the S&P 500.

Apple alone was responsible for more than 11 percent of the market’s moves. This week, the iPhone-maker became the first U.S. company to surpass $2 trillion in market capitalization, nearly as much as all the companies in the Russell 2000 Index of small-cap stocks combined. Apple is now valued more highly, in fact, than German stocks in the Deutsche Boerse Index and is closing in on Canadian stocks in the S&P/TSX Composite Index.

gold seen rising amid "massive currency debasement" skyBridge gayesky Says
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And then there’s Tesla, whose stock we really like. Tesla isn’t a member of the S&P 500 (yet), but its shares cracked $2,000 this week ahead of its stock split, bringing its market cap to $370 billion. As of Wednesday, that was enough to make the electric vehicle manufacturer more valuable than Walmart.

gold seen rising amid "massive currency debasement" skyBridge gayesky Says
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Some see a bubble forming. But in an interesting report dated August 12, CLSA analysts Laurence Balanco and Jonathan Estrada argue that tech doesn’t yet meet the requirements of a bubble, based on observations from the past 43 years. Those seven criteria are: 1) price gain of 555 percent over a 52-month period, 2) rising trend for four years or more, 3) gains of over 119 percent over the past 12 months, 4) 55.7 percent premium to its 200-day moving average, 5) 10-day average true range (ATR) of over 2.4 percent (volatility), 6) prime momentum divergence and 7) churning price action or a V-shaped reversal pattern. 

gold seen rising amid "massive currency debasement" skyBridge gayesky Says
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According to Balanco and Estrada, the Nasdaq 100 (tech stocks) meets only three of those seven criteria, as does the price of silver, which some people have also said may be in a bubble.

We should also add gold to that list. Even though a short-term correction in its price was expected after rising for nine weeks straight, we’re nowhere near a gold bubble.

In fact, I maintain my call of $4,000 gold over the next three years due to unprecedented global economic stimulus and money-printing. Watch my interview on CNBC below, and again, make sure to subscribe to our YouTube channel and share with your friends!


Colombia’s Classic Case of the Gold Love Trade

On a final note, Colombia sold 67 percent of its gold holdings, valued at $475 million, in June, just weeks before the yellow metal hit its all-time high of $2,075 an ounce. Even though the timing could have been better, it was a smart move by the South American country. According to Bloomberg, the sale was based on “optimization exercises,” in which the central bank “monitors interest rates and asset volatility to determine its international reserve portfolio holdings.”

This is classic Love Trade. As I’ve said many times before, it’s rational and prudent to hold gold for love of family and country. Once Colombia finds itself in a better financial situation, it can buy the gold back.

Speaking of gold and Colombia, one of our favorite gold mining stocks remains Gran Colombia. Headquartered in Toronto, the company is the largest gold producer in Colombia. It’s high-grade, and based on a cash flow basis, it’s the cheapest gold stock among 75 gold stocks in our investible universe. It trades at only three times cash flow whereas a basket of gold miners trades at closer to 13 times cash flow. Gran Colombia currently has a free cash flow yield of 15 percent, compared to large-cap Barrick, which has one of only 4 percent. It trades on the TSX under the ticker GCM and in the U.S. under the ticker TPRFF.

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Gold Market

This week spot gold closed at $1,940.48, down $4.64 per ounce, or 0.24 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 1.50 percent. The S&P/TSX Venture Index came in off 1.00 percent. The U.S. Trade-Weighted Dollar rose 0.13 percent.

Date Event Survey Actual Prior
Aug-18 Housing Starts 1245k 1496k 1220k
Aug-19 Eurozone CPI Core YoY 1.2% 1.2% 1.2%
Aug-20 Initial Jobless Claims 920k 1106k 941k
Aug-25 Conf. Board Consumer Confidence 93.0 92.6
Aug-25 New Home Sales 776k 776k
Aug-26 Hong Kong Exports YoY -3.9% -1.3%
Aug-26 Durable Goods Orders 4.0% 7.6%
Aug-27 GDP Annualized QoQ -32.5% -32.9%
Aug-27 Initial Jobless Claims 1000k 1106k


  • The best performing precious metal for the week was palladium, up 2.90 percent. Impala Platinum Holdings reported earnings for the full year surged more than 10-fold as a weaker rand and higher metal prices offset mining disruptions from the virus. Basic earnings are estimated at 15.81 billion to 16.1 billion rand in the year ended June 30, versus just 1.47 billion rand a year earlier.
  • Swiss gold exports to India hit an 8-month high in July after falling to record lows amid the pandemic. Chirag Sheth, a consultant at Metals Focus in Mumbai, said purchases are slowly returning to normal in the world’s second-largest gold consuming country.
  • Ghana is moving ahead with its initial public offering of the gold royalty fund in September to be listed in London and on the local bourse. Africa’s biggest gold producer hopes to raise $500 million through the IPO, reports Bloomberg. The fund will pay dividends from the government’s income from gold operations.


  • The worst performing precious metal for the week was platinum, down 2.34 percent. Gold had a second weekly loss as the dollar rose against other currencies amid concern over mixed economic data.
  • Colombia sold $475 million its gold in June, equivalent to 67 percent of its holdings, according to the central bank’s website. This means the nation missed out on gold’s record price surge just a few weeks later. Gold now accounts for about 0.4 percent of Colombia’s international reserves, compared to much higher percentages of other South American countries, reports Bloomberg.
  • The Bank of Nova Scotia, also known as Scotiabank, agreed to pay $127.4 million to settle U.S. allegations that the company engaged in gold and silver futures contracts spoofing. The bank will also pay a $17 million fine on CFTC claims that it misrepresented the scope of the alleged wrongdoing. It was reported that three Scotiabank compliance officers knew of the unlawful trading by one of its traders but failed to prevent further unlawful conduct.


  • SkyBridge Capital, which recently added exposure to gold after exiting in 2011, says that gold will continue its record-setting rally due to massive currency debasement as the world prints money like crazy. Chief investment officer Troy Gayseki said “gold is obviously a natural alternative currency” as the dollar weakens against other paper currencies. Bloomberg notes that Gayseki went on to say that it wouldn’t surprise him to see bullion around the $2,100 to $2,200 an ounce range by the end of 2021.

gold seen rising amid "massive currency debasement" skyBridge gayesky Says
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  • News broke late last week that Warren Buffett’s Berkshire Hathaway bought $565 million worth of Barrick Gold in the second quarter. This reversal by Buffett, who has many times complained that gold does not pay a dividend or have any real use, could attract more generalist investors to the space. Buffett is one of the most respected and well-known investors, and hopefully other investors follow suit by adding to their gold exposure through miners, funds or the physical metal itself.
  • Northern Star Resources boosted its fiscal year 2021 production estimate after reporting a 67 percent increase in resources to 31.8 million ounces and a reserve jump of 102 percent to 10.8 million ounces. Newmont and Kirkland Lake Gold signed a strategic alliance agreement to jointly assess regional exploration opportunities around both of their projects in Ontario. Evrim Resources and Renaissance Gold completed their merger-of-equals and changed its name to Orogen Royalties. According to a statement, Orogen’s mission is to create and acquire precious metal royalties.


  • The Pebble Mine in Alaska, what would be the largest in North America, may have its federal approval put on hold after a small group of Republicans, including President Trump’s son, moved to block the project. The proposed mine was about to win a key permit despite concerns from environmentalists that it would damage Alaska’s salmon fishery. The Trump administration is now reportedly rethinking the permit, reports the Washington Post. This is a surprising turnaround since President Trump is largely anti-regulation. But not too surprising once you find out that Donald Trump Jr. often fishes in what could be a potentially impacted area from the mine’s operations.
  • Initial jobless claims rose by 135,000 to more than 1.1 million in the week ended August 15, according to Labor Department data. This unexpected increase comes just one week after claims fell below 1 million for the first time since April and underscores hopes of a swift recovery.
  • Corporate America is more indebted today than ever before. More than $1.6 trillion of “fresh cash” was injected to help scores of companies stay afloat during lockdown, but now many companies will have to divert even more cash to repay those obligations. Bloomberg Intelligence analysis found that the average junk-rated company had debt levels relative to earnings that were so high in the middle of this year that they almost would have tripped “do-not-touch” alerts from baking regulators a few years ago. This overburdened corporate sector could slow the whole economic recovery down.

Index Summary

  • The major market indices finished mixed this week. The Dow Jones Industrial Average gained 0.12 percent. The S&P 500 Stock Index rose 0.70 percent, while the Nasdaq Composite climbed 2.44 percent. The Russell 2000 small capitalization index lost 1.73 percent this week.
  • The Hang Seng Composite gained 1.17 percent this week; while Taiwan was down 1.22 percent and the KOSPI fell 5.45 percent.
  • The 10-year Treasury bond yield fell 9 basis points to 0.63 percent.

Domestic Equity Market

SP 500 Economic Sectors weekly performance
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  • Information technology was the best performing sector of the week, increasing by 3.48 percent versus an overall increase of 0.72 percent for the S&P 500.
  • L Brands was the best performing S&P 500 stock for the week, increasing 12.92 percent.
  • Apple hit a $2 trillion market cap this week. The stickiness of Apple’s customer base has become more important than ever in recent years.


  • Energy was the worst performing sector for the week, decreasing by 6.11 percent versus an overall increase of 0.72 percent for the S&P 500.
  • Kohls was the worst performing S&P 500 stock for the week, falling 19.23 percent.
  • Shares in Kohl’s Corp. plunged 17 percent after the department store chain said it experienced a sales decline last month as COVID-19 cases are on the rise and the company prepares for a softer start to the back-to-school selling season.


  • Amazon is considering buying a minority stake in Rackspace in a deal that would strengthen the ties between the two firms, sources say. Rackspace helps companies migrate their data to Amazon Web Services, Business Insider explains.
  • Oracle has reportedly entered the race to buy TikTok’s U.S. operations, competing with rival Microsoft for the viral app as Trump’s deadline looms. The Financial Times reported Oracle has been working with U.S. investors, including General Atlantic and Sequoia Capital, who own a stake in TikTok already.
  • Airbnb has confidentially filed for an IPO, reports MarketWatch. The firm declined to say when it expected to go through with the offering, how many shares it planned to sell, or what price it expected to offer them at.


  • Famed investor Jim Rogers sounds the alarm on central bank money-printing and exorbitant debt, saying “we are going to pay the price.”  Rogers warns the next market meltdown will be “the worst in my lifetime.”
  • Jim Cramer says the S&P 500 is like a patch of grass. It looks great from afar, but when you get closer, it’s covered in weeds. The S&P 500 has soared since touching March lows, but for Jim Cramer the index still has more losers than winners.
  • U.S. states are seeking a combined $26.4 billion from three major drug distributors and Johnson & Johnson to settle opioid litigation against the companies, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

The Economy and Bond Market



  • Home construction starts jumped in July by the most since October 2016 and applications to build posted the largest monthly advance in three decades, Commerce Department data showed Tuesday. Builders are responding to robust housing demand fueled by record-low interest rates.

U.S. housing starts, building permits exceeded forecasts in july on low rates
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  • Data firm IHS Markit said its flash U.S. Composite PMI Index rose to a reading of 54.7 this month – the highest since February 2019 – from 50.3 in July.
  • The Conference Board Leading Economic Index (LEI) for July was up 1.4 percent from the June final figure of 103.0. The largest positive contributions came from average weekly manufacturing hours, building permits and initial claims for unemployment insurance.


  • Another 1.1 million Americans filed initial claims for unemployment benefits on a seasonally adjusted basis last week, dashing economists’ hopes for a second-straight week with fewer than 1 million claims.
  • More state and local government debt was downgraded in the second quarter by Moody’s than was upgraded, marking the first time since the second quarter 2017. From April through June, the company cut its rating on 81 borrowers that have issued $39.7 billion of debt. That far outstripped the 52 upgrades of $5.9 billion worth of debt.
  • Senior living centers are reeling from the public health and financial crises caused by the pandemic, driving a wave of defaults in the $3.9 trillion municipal-bond market. Municipal Market Analytics, an independent research firm, said in a report Wednesday that retirement borrowers have recorded a record level of first-time payment defaults already in 2020. There have been 23 defaults by borrowers in that segment of the market this year, which is mostly assisted-living centers, the firm said in a note.


  • The Conference Board’s closely watched consumer confidence gauge will start the U.S. economic data docket next Tuesday. Expectations are for a small improvement from the prior month, with a reading of 93.
  • On Wednesday, durable goods orders for July will be the next clue on how the recovery is proceeding. Investors are hoping the nascent strength remains intact.
  • The U.S. International Development Finance Corporation, a new federal agency with a $60 billion war chest and a mandate to boost domestic manufacturing, is zeroing in on investments in Puerto Rico. Speaking in an interview Tuesday after visiting pharmaceutical and aerospace facilities in the U.S. commonwealth, Peter J. Brown, the White House Special Representative for Puerto Rico’s Disaster Recovery, said “these are precisely the kind of projects” that the agency wants to fund.


  • The biggest data highlights next week will be Friday’s personal income and spending numbers, as well as the core PCE price index. Although it’s too early to see how consumption is being impacted after most of the government’s virus relief programs expired at the end of August, the July figures will nevertheless be important to understand the scale to which the virus resurgence hurt households’ incomes and spending.
  • The failure of the U.S. to effectively limit the spread of the novel coronavirus has "worsened" its road to economic recovery, former Fed chairman Alan Greenspan said in a blog post.
  • An opulent apartment tower financed by $228 million in municipal bonds at Florida International University, with a rooftop pool and gym, hasn’t yet met tenant projections. It’s a scene playing out on campuses across the U.S. as families skip the usual college move-in frenzy, leaving thousands of dorm rooms empty. That will cascade into the more than $14 billion of municipal bonds sold for student housing, particularly securities sold by private companies relying on rental and leasing revenue to pay bondholders.

Energy and Natural Resources Market



  • The best performing commodity for the week was again lumber, up 14.38 percent and limit up for the trading session on a strong housing and remodeling surge. Iron ore futures rose above $120 a ton this week – the highest price since 2014. The metal has benefitted from record steel production in China aided by state stimulus.
  • Copper hit a two-year high after Rio Tinto announced a delayed restart of a U.S. smelter. Supply disruptions in the copper market have underpinned a price rebound and left the industry running on low inventories, reports Bloomberg. The red metal is up almost 8 percent for the year and has rebounded more than 50 percent from a March low.
  • Impala Platinum Holdings reported earnings for the full year surged more than 10-fold as a weaker rand and higher metal prices offset mining disruptions from the virus. Basic earnings are estimated at 15.81 billion to 16.1 billion rand in the year ended June 30 versus just 1.47 billion rand a year earlier.


  • The worst performing commodity for the week was crude oil, down 0.87 percent. Oil fell below $43 a barrel on Friday as the pandemic continues to hurt its demand outlook. Bloomberg notes that the U.S. dollar has risen, making commodities priced in the currency more expensive. Valaris, the world’s largest offshore rig owner, filed for bankruptcy as it seeks to restructure around $7 billion in debt. Bloomberg notes that offshore oil services are failing at the fastest pace in three years as explorers halt high-cost drilling to deal with lower crude prices. Baker Hughes data shows that the number of active oil rigs in the U.S. fell to just 172 – the lowest level of activity since 2005.

worldwide oil and gas drilling has sunk to record levels
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  • California is experiencing rolling blackouts for the first time since 2001 due to heat waves and a failing power grid. The state’s grid operator said that power reserves fell below a critical threshold and called a stage 3 emergency. The state faces heat not seen in over 70 years with temperatures as high as 122 degrees.
  • Thermal coal prices have fallen below levels reached during the 2015 to 2016 downturn. BHP Group said in its fiscal year results release that two-thirds of seaborne supply is now estimated to be earning negative margins. The miner is “looking at options to exit” its thermal coal operations, reports Bloomberg.


  • Fortescue Metals Group held talks with Afghanistan’s president on potential mining sector opportunities in the nation. Bloomberg reports that Afghanistan has an estimated $1 trillion worth of mineral deposits but has struggled to accelerate development.
  • According to Wood Mackenzie, costs of green hydrogen production are expected to drop by 50 percent in 2030 in South Korea. Green hydrogen is currently two to four times costlier than fossil fuel hydrogen, but that could change soon due to strong business activity in electrolyser manufacturing and efficiency gains.
  • Australia’s renewable energy production hit a record high. Solar and wind provided 11.7 gigawatts on Thursday – 3.5 percent above the previous high in November. This is just one month after the AEMO said Australia needs to invest $10 billion in grid infrastructure to integrate a surge of renewable capacity that could hit 75 percent by 2025.


  • A plague of mountain pine beetles, the size of a grain of rice, has destroyed 15 years of log supplies in British Columbia and is now chewing through forests in Alberta and the Pacific Northwest. Bloomberg reports that a separate outbreak of spruce beetles is threatening to chew through even more trees. The beetles felled 730 million cubic meters of pine between 2000 and 2015 in British Columbia, Canada’s largest exporter of timber to the U.S. housing market.
  • Although evidence shows food is an unlikely route of transmitting the coronavirus, China has repeatedly found traces of the virus on packaging and foods. This is raising fears that imported items are linked to recent virus resurgences in Beijing and the port city of Dalian, reports Bloomberg. This could cause major trouble for the food chain industry if other countries find similar issues.
  • The Pebble Mine in Alaska, what would be the largest in North America, may have its federal approval put on hold after a small group of Republicans, including President Trump’s son, moved to block the project. The proposed mine was about to win a key permit despite concerns from environmentalists that it would damage Alaska’s salmon fishery. The Trump administration is now reportedly rethinking the permit, reports the Washington Post. This is a surprising turnaround since President Trump is largely anti-regulation. But perhaps not too surprising once you find out that Donald Trump Jr. often fishes in what could be a potentially impacted area from the mine’s operations.

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Emerging Europe



  • Turkey was the best performing country this week, gaining 2.4 percent. Equites bounced as Turkey announced its biggest ever-Black Sea natural gas discovery. Petkim Petrokimya Holding AS, a petrochemical manufacturer, was the best performing equity trading on the Budapest Stock Exchange, gaining 16 percent over the past five days.
  • The Turkish lira was the best performing currency this week, gaining 34 basis points. Both equites and the lira gained on news of the biggest natural gas discovery in the Black Sea. It was estimated that the new discovery could cover about eight years of Turkey’s gas needs.
  • Telecommunication services was the best performing sector among eastern European markets this week.


  • Russia was the worst performing country this week, losing 2.2 percent. Equites sold off on worries that Putin’s biggest opponent, Alexei Navalny, was poisoned and is fighting for his life. If speculations are confirmed that he was poisoned, protests may erupt across Russia. Tatneft, a Russian oil and gas company, was the worst performer among stocks trading in the VanEck Vectors Russia ETF (RSX), losing 9 percent over the past five days.
  • The Russian ruble was the worst performing currency in the region this week, losing 2.5 percent. The Russian currency declined as geopolitical risks increased. Heavy protesting in neighboring Belarus continues and there is no sign of dialog with the opposition. The EU is calling for a repeat of elections, but Putin may never allow a truly democratic system there.
  • Energy was the worst performing sector among eastern European markets this week.


  • Eastern European economies are recording record plunges in output due to COVID-19, however, Eastern European economies will not contract as much as Western Europe due to swifter lockdowns, and the wealth gap may narrow with the West. The Czech Republic’s GDP to capital is closing in on Italy, despite reporting a 10.7 percent growth contraction in the second quarter. Poland may see its purchasing power parity improving next.

having topped spain in EU wealth stakes, the czechs are catching italy
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  • President Erdogan announced on Friday that Turkey found natural gas reserves of 320bcm in the Black Sea. He expects the production to start in 2023. Turkey consumes about 45bcm of natural gas per annum and has a natural gas import bill of about US$9-10bn. Russia, Azerbaijan and Iran account for the biggest share of gas imports. This gas discovery could potentially help the country cut its dependence on energy imports a total of $40B+ in 2019 of which gas imports were $10B+ and ease the pressure on the current account deficit.
  • In a world starved for yield, Russian stocks offer average one-year dividends of 6.4 percent for 2020, the highest in the MSCI Emerging Market universe. Within the Russian stock universe, steel stocks still provide the most handsome dividend payouts, along with those of telecoms as well as some oil & gas names. All of these names offer yields of around 10 percent in USD terms, according to a note published by Igor Chernomorskiy from Stone X.


  • Russian opposition politician Alexei Novalny remains in the intensive care unit after falling ill from suspected poisoning that his allies believe is linked to his political activities. Like many other opposition politicians in Russia, Novalny has been frequently detained and harassed by pro-Kremlin groups. Last year, he was rushed to the hospital from prison where he was servicing sentence following an administrative arrest, with what his team said was suspected poisoning. Doctors back then said he had a severe allergic reaction and sent him back to prison the following day.
  • Coronavirus cases are surging again in Europe, with the seven-day moving average of reported new daily cases more than doubling since the end of July in the five largest Western Europe counties. Outbreaks are multiplying around vacation hot sports, shopping centers, parties and some workplaces. Despite an increasing number of coronavirus cases, governments want to avoid broad lockdowns.
  • IHS Markit Eurozone flash PMIs for August showed a loss of momentum across the private sector. The composite PMI hit two-month low of 51.6 versus consensus 52.9 and prior 54.9. Manufacturing came in at 51.7 versus 52.9 forecast and July’s 51.8 outturn, while services fell to 50.1 versus consensus 54.5 and prior 54.7. IHS Markit said that the recovery was undermined by signs of rising virus cases in various parts of the euro area, with renewed restrictions impacting the services sector.

China Region



  • India was the best performing country this week, gaining 1.5 percent. Stocks in India had the best week in four as an Asia rally was supported by progress in trials for a coronavirus vaccine. Moreover, the central bank of India announced new measures to restructure loans and revive the economy. NTPC Ltd., a utility company, was the best performing equity among the stocks trading in the India NIFTY 50 Index this week, gaining 20 percent over the past five days.
  • The Indonesia rupee was the best performing currency this week, gaining 90 basis points. The currency appreciated against the dollar despite Fitch projecting another rate cut later this year to support the Indonesia economy against the coronavirus pandemic impact.
  • Information technology stocks were the best performers among stocks trading on the Hong Kong Stock Exchange.


  • South Korea was the worst performing market this week, losing 4.3 percent. A surge in South Korea’s coronavirus cases is bringing the nation closer to another lockdown. South Korea reported 324 coronavirus cases on Friday, the largest daily count since March. Hankook Tire & Technology Corp., a tire producer and distributor, was the worst performing equity among the stocks trading in the iShares MSCI South Korea ETF (EWY), losing 15.4 percent over the past five days.
  • The Thailand baht was the worst performing currency this week, losing 1.3 percent. The currency depreciated against the dollar weighted by growing anti-government protests and after the Bank of Thailand minutes mentioned concerns over the local currency’s strength.
  • Industrial stocks were the worst performers among the stocks trading on the Hong Kong Stock Exchange.


  • According to a U.S.-China Business Council survey, 70 percent of member companies are optimistic about the five-year business outlook in China and 83 percent counted China as either the top priority for their company’s global strategy or among the top five. 86 percent of the more than 200 member companies surveyed said that trade tensions have impacted their business in China.
  • The People’s Bank of China could give a rate cut later this year after weaker-than-expected July economic data. Growth in industrial production was 4.8 percent from a year earlier and unchanged from June. Retail sales fell 1.1 percent year-over-year, versus an expected drop of just 0.3 percent. Bloomberg economist Chang Shu predicts another 10 to 20 basis point cut in the Loan Prime Rate and a 100-basis point cut in the reserve requirement ratio by the end of this year.

China's activity indicators
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  • China’s Supreme Court ordered interest rates on private loan agreements between individuals and small businesses to be lowered by as much as 10 percentage points, reports Bloomberg. The move is an attempt to foster economic growth and stabilize the banking sector.


  • The U.S. Department of Commerce further restricted access by Huawei to U.S. technology by adding another 38 affiliates to the Entity List and imposed license requirements. Commerce Secretary Wilbur Ross said: “Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party.”
  • The U.S. State Department, in a similar tension-heightening move, asked American colleges and universities to divest from Chinese holdings in their endowments. Bloomberg reports that a letter when out to schools warning that they get ahead of more onerous measures on holding shares in Chinese companies.
  • Joe Biden, the Democratic presidential candidate for the upcoming U.S. election, is known for being soft on China. A Nikkei commentary discussed the potential implications of a Biden presidency and noted that he would be less of a hardliner toward Beijing than Trump. Other Asian countries are fending off China’s aggressive military buildup and are betting that Biden might not be much help in the matter.

Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performing for the week ended August 21 was yffi finance, up over 9,000 percent. The price of bitcoin continued to climb higher this week too, slowly approaching the $12,000 mark.

bitcoin hovers near $12,000
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  • Bloomberg researchers believe that bitcoin will only stop gaining in value if “something unexpected” stops it, reports CoinTelegraph. The popular digital currency has reentered mainstream consciousness in recent weeks thanks to price rises which topped out at over one-year highs of $12,400, the article continues.
  • Popular author of Rich Dad Poor Dad Robert Kiyosaki has warned this week that bitcoin is an essential investment as the world is about to face a “major banking crisis,” reports CoinTelegraph. In a recent Tweet, Kiyosaki said there was no time to “think about” investing in safe havens, the reason being that Warren Buffett had chosen to dump bank stocks.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week ended August 21 was TW Token, down 77.89 percent.
  • Operators of a global cryptocurrency-based Ponzi scheme have been charged with fraud and money laundering following a United States Homeland Security Investigations probe, writes CoinTelegraph. Four of the five alleged operators of AirBit Club were arrested and due to appear in court on August 18, according to an announcement from the U.S. Department of Justice. The fifth was arrested in Panama and is awaiting extradition to the U.S.
  • Recent capital flight from China could be cryptocurrencies’ fault, Tether in particular, writes CoinTelegraph. A New report from Chainalysis states that over 44 percent of crypto transactions in East Asia are conducted with counterparties within the region. However, over the past 12 months, its relative share of global crypto activity has begun to decline, with over $50 billion worth of cryptocurrency leaving China, the article reads.


  • 21Shares, formerly known as Amun, now has $100 million in assets under management, reports CoinTelegraph, posting major growth in 2020. The surge has come in response to an increased demand for crypto investment services in Switzerland as the firm is one of the largest providers for crypto ETPs. “From the start of the year, AUM is up around 164 percent,” said CEO Hany Rashwan. “In just the last month and a half, trading is up over 20X more than its usual levels. This indicates a lot of new buyers, not just an increase in crypto prices.”
  • Tone Vays, the well-known bitcoin derivatives trader, thinks that bitcoin will stay above $10,000 for the rest of 2020. If the popular digital currency surpasses $20,000 in the medium-term, Vays says that history shows it tends to double. Based on historical price cycles, CoinTelegraph reports, Vays said the $5,000 to $50,000 range is a reasonable target.
  • Three Swiss cryptocurrency companies announced today that they’ve successfully completed the first automated bitcoin transaction that meets anti-money laundering (AML) standards, writes CoinDesk. “The transfer was fully automated using TRP (Travel Rule Protocol), instead of manually creating PDFs and sending that for each transaction, which happened to be the case for FINMA-regulated Swiss VASPs (virtual asset service providers) so far,” said Lucas Betschart, CEO and founder of 21 Analytics.


  • Graeme Garioch, Scottish retiree and former winner of the game show Deal or No Deal, has been scammed out of his retirement savings after investing in bitcoin through an ad on Facebook, reports CoinDesk. Garioch was defrauded $39,000 by a phony investment company called OMC Markets, which claimed to be based in London but was actually based in Bulgaria.
  • Raghuram Rajan, former governor of Reserve Bank of India, says that cryptocurrencies like bitcoin and Facebook’s Libra, could very well have a future, even when central banks roll out their own digital currencies, reports CoinTelegraph. On a recent CNBC podcast, however, Rajan said that one of these digital currencies might only become problematic if it were to hold a monopoly.
  • If your phone rings and the caller ID says it’s your bank, telecom company or employer’s IT department, CoinDesk is warning that it might be someone else. Little-discussed types of SIM cards offer the ability to spoof any number, can be encrypted and in some cases even allow the user’s voice to be altered and cloaked. SIMs present a challenge for those working to protect against social engineering, including banks and other financial institutions. In fact, for years the cryptocurrency community has been the target of SIM swaps, a subset of social engineering, CoinDesk explains.

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Leaders and Laggards

Weekly Performance
Index Close Weekly
10-Yr Treasury Bond 0.63 -0.09 -12.74%
Oil Futures 42.25 +0.01 +0.02%
Hang Seng Composite Index 3,850.12 +44.35 +1.17%
S&P Basic Materials 388.97 -4.38 -1.11%
Korean KOSPI Index 2,304.59 -132.94 -5.45%
S&P Energy 269.45 -14.86 -5.23%
Nasdaq 11,311.80 +269.30 +2.44%
DJIA 27,930.33 +33.61 +0.12%
Russell 2000 1,552.48 -27.31 -1.73%
S&P 500 3,397.16 +23.73 +0.70%
Gold Futures 1,947.40 -23.00 -1.17%
XAU 147.51 +0.95 +0.65%
S&P/TSX VENTURE COMP IDX 730.31 -11.08 -1.49%
S&P/TSX Global Gold Index 376.08 +6.48 +1.75%
Natural Gas Futures 2.44 +0.26 +11.87%


Monthly Performance
Index Close Monthly
Korean KOSPI Index 2,304.59 +75.93 +3.41%
10-Yr Treasury Bond 0.63 +0.03 +5.18%
Gold Futures 1,947.40 +54.80 +2.90%
S&P Basic Materials 388.97 -0.08 -0.02%
S&P 500 3,397.16 +121.14 +3.70%
DJIA 27,930.33 +924.49 +3.42%
Nasdaq 11,311.80 +605.67 +5.66%
Oil Futures 42.25 +0.35 +0.84%
Hang Seng Composite Index 3,850.12 +85.20 +2.26%
S&P/TSX Global Gold Index 376.08 -6.42 -1.68%
XAU 147.51 -2.48 -1.65%
Russell 2000 1,552.48 +62.34 +4.18%
S&P Energy 269.45 -16.94 -5.92%
S&P/TSX VENTURE COMP IDX 730.31 +36.51 +5.26%
Natural Gas Futures 2.44 +0.76 +45.21%


Quarterly Performance
Index Close Quarterly
XAU 147.51 +22.96 +18.43%
S&P/TSX Global Gold Index 376.08 +25.20 +7.18%
Gold Futures 1,947.40 +197.00 +11.25%
DJIA 27,930.33 +3,456.21 +14.12%
S&P 500 3,397.16 +448.65 +15.22%
Nasdaq 11,311.80 +2,026.92 +21.83%
Korean KOSPI Index 2,304.59 +306.28 +15.33%
Natural Gas Futures 2.44 +0.73 +42.75%
S&P Basic Materials 388.97 +55.53 +16.65%
Russell 2000 1,552.48 +204.92 +15.21%
Oil Futures 42.25 +8.33 +24.56%
Hang Seng Composite Index 3,850.12 +389.59 +11.26%
S&P/TSX VENTURE COMP IDX 730.31 +198.48 +37.32%
S&P Energy 269.45 -21.43 -7.37%
10-Yr Treasury Bond 0.63 -0.04 -6.39%


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

Impala Platinum Holdings Ltd, Barrick Gold Corp, Northern Star Resources Ltd, BHP Group Ltd, Newmont Corp, Kirkland Lake Gold Ltd, Fortescue Metals Group Ltd, BHP Group, Tatneft, Amazon.com Inc, Alphabet Inc, Facebook Inc, Tesla Inc, Microsoft Corp, GRAN COLOMBIA GOLD CORP

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index. The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months. The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks. The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500. The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period. The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500. The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500. The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500. The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500. The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500. The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500. The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

The NIFTY 50 is a benchmark Indian stock market index that represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange. The NAHB/Wells Fargo Housing Market Index is based on a monthly survey of members belonging to the National Association of Home Builders (NAHB). The index is designed to measure sentiment for the U.S. single-family housing market and is a widely watched gauge of the outlook for the U.S. housing sector. The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization. The German Stock Index is a total return index of 30 selected German blue-chip stocks traded on the Frankfurt Stock Exchange. The S&P/Toronto Stock Exchange Composite Index is a capitalization-weighted index designed to measure market activity of stocks listed on the TSX. The Nikkei-225 Stock Average is a price-weighted average of 225 top-rated Japanese companies listed in the First Section of the Tokyo Stock Exchange.