You Can’t Just Print More Gold

Author: Frank Holmes
Date Posted: May 22, 2020 Read time: 52 min

That's according to Treasury Secretary Steven Mnuchin, who supports additional fiscal stimulus to combat the economic impact of the novel coronavirus--within reason.

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

You Can’t Just Print More Gold

“I think there is a strong likelihood we will need another bill.”

That’s according to Treasury Secretary Steven Mnuchin, who supports additional fiscal stimulus to combat the economic impact of the novel coronavirus—within reason.

The secretary’s statement comes after the House passed a record-shattering $3 trillion relief package, though leaders in the Senate have said they will not put it up for a vote. Senate Majority Leader Mitch McConnell has made it clear that the next coronavirus bill “cannot exceed $1 trillion,” according to reporting by Axios.

Even so, the U.S. government’s response is already massive, dwarfing anything that’s come before it.

Across the pond, Britain’s government is likewise spending like crazy. The U.K. budget deficit widened to a record 62.1 billion pounds ($76 billion) in the month of April, equal to the government’s total borrowing in 2019, according to Bloomberg.

Against this backdrop of anything-goes spending, the idea of having a national currency backed by a real asset like gold seems less and less crazy to some. Doing so, it’s believed, would force lawmakers to practice fiscal discipline, reign in inflation and normalize international trade.  

Judy Shelton, President Donald Trump’s nominee to the Federal Reserve Board of Governors, has long favored a return to a gold standard, which officially ended in 1971. In an interview with Investment News Network (INN) this week, Shelton said she liked “the idea of a gold-backed currency,” adding that “it could even be done in a cryptocurrency sort of way.”

Although the chances of the U.S. returning to a gold standard are slim to none, I think it’s incredibly important in this time of economic uncertainty to ensure you have a 10 percent weighting in gold and gold mining stocks. I call this the 10 Percent Golden Rule.

The 10 Percent Golden Rule is rational and prudent. The U.S. government and Federal Reserve can’t pump this much money into the financial system and not trigger rapid inflation—and potentially even hyperinflation.  

There’s one thing that can’t be printed, and that’s gold. In fact, we may be looking at peak gold supply right now, which should only help the precious metal retain its value as cash deteriorates.

Unprecedented Money-Printing

Group of Seven central banks made net asset purchases of $2.5 trillion in March and April together. In April alone, these purchases were an unbelievable $1.3 trillion, nearly five times more than the previous peak of $270 billion in April 2009, according to Bloomberg data.

As of this week, the Federal Reserve’s total assets stood at a record $7.04 trillion. That’s a third of the entire U.S. economy.

net assets purchases for g-7 central banks were above $1.3 trillion in april
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You may have heard that the Fed has been buying ETFs that invest in corporate debt, as part of its emergency lending program intended to support corporate debt markets. In the first six days of the program, as much as $1.8 billion worth of such ETFs were purchased.

These are all incredibly large numbers. Fed Chairman Jerome Powell himself acknowledged this during a 60 Minutes interview this week, stating that the bank’s recent actions are “substantially larger” than they were during the last crisis.

And just check out this remarkable exchange:

SCOTT PELLEY: Fair to say you simply flooded the system with money?
POWELL: Yes. We did. That’s another way to think about it. We did.
PELLEY: Where does it come from? Do you just print it?
POWELL: We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.

Again, we can’t just print more gold, digitally or otherwise.

I’ve written before how growth in M2 money supply—which includes not just cash but also savings deposits, money market funds and other “near” money—has historically been like Miracle-Gro for gold prices. As of May 11, the percent change in money supply from a year earlier was greater than 23 percent. That’s the highest rate since at least 1981, the furthest I could go back on the Federal Reserve Bank of St. Louis’ website.

net assets purchases for g-7 central banks were above $1.3 trillion in april
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U.K. Bonds Now Have a Negative Yield. Is the U.S. Next?

Gold has also benefited from low to negative rates, which are likely here to stay for some time.

This week the U.K. sold bonds with an average yield below 0 percent for the first time ever. The yield on the two-year gilt dropped as low as negative 0.080 percent. The five-year yield traded at negative 0.043 percent.

U.K. Two-Year Bond Yield Falls Further into Negative Territory
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Meanwhile, Bank of England (BoE) governor Andrew Bailey admitted on Wednesday that a negative interest rate policy (NIRP) was in “active review,” despite saying in March that negative rates were “not an area I would want to go to.”

That’s why I don’t have a whole lot of faith when New York Fed president John Williams says that “negative rates are not the right tool to be used right now.”

It may only be a matter of time before subzero rates make landfall in the U.S., something President Trump is in favor of. “As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the ‘GIFT,’” he tweeted on May 12.

Big-Name Money Managers Back Gold

Other financial experts and money managers are similarly making the case for gold and other hard assets as helicopter money floods the economy.

“This is a perfect environment for gold to take center stage,” wrote Paul Singer, billionaire hedge fund manager, in a memo to Elliott Management clients. “Gold today, despite its modest run up in recent months, is the answer to the question: Is there an asset or asset class which is undervalued, underowned, would preserve its value in severe inflation, and is not adversely affected by COVID-19 or the destruction of business value that is being caused by the virus?”

Macro investor Paul Tudor Jones sees gold rallying to $2,400 an ounce and possibly to $6,700 on extreme inflation reminiscent of 1980. (And he also likes bitcoin, for the same reason.)

London-based hedge fund manager Crispin Odey says he increased the gold position in his flagship Odey European Inc. fund in April. What’s more, Barrick Gold is now his largest single long equity position.

Finally, in a viral tweet, Robert Kiyosaki of Rich Dad Poor Dad fame sounded off on the “incompetent” Fed before predicting $3,000 gold within a year and $75,000 bitcoin within three years.

“ECONOMY dying. FED incompetent,” Kiyosaki said. “Next BAILOUT trillions in pensions. HOPE fading. Bought more gold silver Bitcoin. GOLD @$1,700. Predict $3000 in 1 year. Silver @ $17. Predict $40 in 5 years. Bitcoin @$9800. Predict $75000 in 3 years. PRAY for the BEST-PREPARE for the WORST.”  

Airlines Webcast

On a final note, some of you may be aware that I participated in a webcast this week on the airline industry. I want to thank ETF Trends for hosting it, Dave Nadig for moderating it, and the hundreds of registered investment advisors (RIAs) who joined us as we discussed investing in airlines in the age of COVID-19.

We received dozens of thoughtful questions during the webcast, and because there were so many, I wasn’t able to respond to every single person. Instead, I compiled the most frequently asked questions and posted my answers as a special Frank Talk. I invite you to check it out by clicking here. 


Gold Market

This week spot gold closed at $1,754.40, down $13.60 per ounce, or 0.77 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week lower by 2.46 percent. The S&P/TSX Venture Index came in up 5.49 percent. The U.S. Trade-Weighted Dollar fell 0.63 percent.

Date Event Survey Actual Prior
May-19 Germany ZEW Survey Expectations 30 51 28.2
May-19 Germany ZEW Survey Current Situation -86.6 -93.5 -91.5
May-19 Housing Starts 900k 891k 1276k
May-20 Eurozone CPI Core YoY 0.90% 0.90% 0.90%
May-21 Initial Jobless Claims 2400k 2438k 2687k
May-25 Hong Kong Exports YoY -4.20% -5.80%
May-26 Conference Board Consumer Confidence 87.3 86.9
May-26 New Home Sales 493k 627k
May-28 Germany CPI YoY 0.70% 0.90%
May-28 GDP Annualized QoQ -4.80% -4.80%


  • The best performing metal this week was platinum, up 5.65 percent, due to stronger retail buying. Gold and silver rose on Friday morning on safe haven buying. U.S.-China relations remain tense and China announced that it will impose new security laws on Hong Kong. Palladium rose the most since March, holding above $2,000 an ounce on Monday, due to renewed optimism about China’s economy and stimulus for automakers. The metal finished the week up 4.04 percent. Bloomberg notes that palladium had fallen by a third since hitting a record in late February.
  • ETFs backed by gold have seen 20 straight days of inflows, adding 154,000 ounces on Thursday, and bringing year-to-date gains of 20 percent, according to BMO Capital Markets, citing Bloomberg data.
  • Purchases of physical platinum by retail investors almost tripled to 312,000 ounces in the first quarter of this year – the most on record – according to the World Platinum Investment Council (WPIC). Prestige Bullion said that over 2,000 platinum coins featuring an elephant sold out to U.S. and Asian investors after being minted in March. The company says that more coins will be produced once South Africa’s virus lockdown is lifted and will feature other animals including the lion, rhinoceros, leopard and buffalo, reports Bloomberg. “The low platinum price in March was a buying opportunity, but the concerns regarding global risk and the huge negative fiscal impact of the COVID-19 pandemic are likely to continue the demand for precious metals, including platinum,” said Trevor Raymond, director of research at WPIC.

Gold advances post $1,700 an ounce with bleaker economy in view weak jobless claims
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  • The worst performing metal this week was gold, down slightly by 0.77 percent. Russian President Vladimir Putin ordered the army to help Polyus PJSC, Russia’s largest gold miner, treat an outbreak of COVID-19 at its Siberian unit, reports Bloomberg. 77 doctors and nurses set up a field camp and mobile hospital near the Olimpiada mine, the nation’s largest mine. There are approximately 866 virus infections in the area.
  • According to Johnson Matthey Plc, the coronavirus pandemic will cut the use of platinum-group metals in autocatalysts by at least 15 percent to 20 percent in 2020. The autocatalyst manufacturer said in a report on Monday that automakers are “expected to look closely at potential opportunities to reduce the PGM content of their systems, or to substitute some palladium with platinum, if they can do so without compromising their ability to meet current or future emissions limits.”
  • Venezuela’s central bank sued the Bank of England (BOE) for access to $1 billion in gold reserves, reports Bloomberg. The troubled South American nation asked the BOE to liquidate its gold and send the funds to the United Nations Development Programme, which is working with Venezuela to prepare for an increase in COVID-19 infections. This new lawsuit is another twist to the long dispute of cutting off President Nicolas Maduro’s regime from its overseas assets.


  • Joe Foster, portfolio manager and gold strategist at Van Eck Absolute Return Advisers Corp, says the yellow metal is expected to hit $2,000 an ounce in the next 12 months. Foster said in a webcast this week that “gold has had a V-shaped recovery as a response to the pandemic shock.” Bullion could trade even higher over the next several years if there is an inflationary cycle or unforeseen worst-case scenario, added Foster and as reported by Bloomberg.
  • The falling gold-silver ratio could be an indication that silver is on its way to outperforming the yellow metal. In March, the ratio rose as high as 127 and this week it is down to below 102, reports Kitco News. George Gero, managing director with RBC Wealth Management, says the ratio could fall back down to the 90s and that “silver was held back because of its industrial component. Now with the reopening of many of the economies, the industrial component is a tailwind instead of a headwind.”
  • Bloomberg’s Vincent Cignarella thinks the gold rally is real and not a bear trap due to the gold-copper ratio. The ratio of gold, the most widely recognized haven asset, and copper, a key industrial metal used globally, is often used as an indicator of the economy’s strength. “Since March 23, the 2020 low in equities and the ratio of copper to gold has stabilized and trended sideways – a potential indication stocks and yields have put in a bottom.”


  • Crispin Odey, one of Europe’s highest-profile hedge fund managers, said governments may ban private gold ownership if they lose control of inflation, reports Bloomberg. Odey wrote in a letter that “it is no surprise that people are buying gold. But authorities may attempt at some point to de-monetize gold, making it illegal to own as a private individual.” In 1933 the U.S. government forced purchases of private gold holdings as a part of a devaluation of the dollar. Odey has compared the coronavirus pandemic to the Great Depression of the 1930s and argues that governments before having resorted to debasing coinage.
  • Bloomberg’s Mark Cudmore has a bearish outlook for gold: “Like a teenager rebelling against the smothering love of over-protective parents, gold may upset a lot of people in the weeks ahead.” Cudmore notes that the yellow metal’s big drivers – global stimulus amid the pandemic and the U.S.-China trade war – are both stale now. Gold was supported by “shock-and-awe” policy support in March and April, and if there isn’t “something fresh soon” there could be a correction ahead.
  • COVID-19 remains a major threat globally as the virus continues to spread and lockdown measures ease in only in some countries. Brazil, a top miner and exporter, has seen a surge in infections. Reports out of China this week show that the virus is manifesting differently than doctors have seen before, raising concerns of a second wave of infections.

Index Summary

  • The major market indices finished up this week. The Dow Jones Industrial Average gained 3.29 percent. The S&P 500 Stock Index rose 3.20 percent, while the Nasdaq Composite climbed 3.44 percent. The Russell 2000 small capitalization index gained 7.84 percent this week.
  • The Hang Seng Composite lost 3.39 percent this week; while Taiwan was down 0.03 percent and the KOSPI rose 2.22 percent.
  • The 10-year Treasury bond yield rose 1 basis points to 0.66 percent.

Domestic Equity Market

SP 500 Economic Sectors weekly performance
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  • Industrials was the best performing sector of the week, increasing 7.20 percent compared to an overall increase of 3.07 percent for the S&P 500.
  • L Brands was the best performing S&P 500 stock for the week, increasing 38.86 percent.
  • Lennar’s shares rallied this week as its price target and earnings estimates were raised as new housing demand and investor sentiment have rebounded quickly. Wedbush analyst Jay McCanless reiterated his outperform rating and raised the price target to $63 from $54 and cited the homebuilder’s increasing focus on affordable price points and available supply of homes. He believes improving national affordability should drive a higher level of earnings per share versus previous assumptions.


  • Health care was the worst performing sector for the week, decreasing 0.78 percent.
  • Campbell Soup was the worst performing S&P 500 stock for the week, falling 9.68 percent.
  • U.S. stocks edged lower Friday following signs that China’s economic recovery may be more fragile than hoped. China’s government did not set an annual economic target for the nation for the first time in decades amid the coronavirus pandemic.


  • Deutsche Bank analysts said Facebook’s big push into online shopping could generate a $30 billion jump in annual revenue. On Tuesday, Facebook announced Facebook Shops — a way for businesses to create online storefronts.
  • Israeli anti-viral mask maker Sonovia eyes a listing on Nasdaq this year. Its masks are coated in zinc oxide nano-particles that destroy bacteria, fungi and viruses, and the company says they can help stop the spread of COVID-19.
  • Japanese tech giant NTT is pouring $230 million into a Silicon Valley research lab to build hyper-realistic "digital twins" of people for medical research. NTT, a 300,000-employee telecommunications company, launched the research labs in July.


  • The recent lull in financial markets may not last, as evidenced by the return of sizable daily price swings in the S&P 500. While still a long way from the days of March, when stocks moved 5 percent a day in the most volatile month on record, the equity benchmark has swung an average of 1.5 percent over the last five sessions through Tuesday, among the highest readings in the last month. That may be enough to push the index out of its tight trading range of the last four weeks.
  • The Federal Reserve issued a stark warning that stock and other asset prices could suffer significant declines should the coronavirus pandemic deepen, with the commercial real estate market being among the hardest-hit industries. The Fed made the assertion in its financial stability report, which highlighted the central bank’s race to intervene in markets and temporarily dial back regulations on financial firms in response to the COVID-19 crisis.
  • Four Democratic senators wrote a letter calling on the Department of Justice (DOJ) and Federal Trade Commission (FTC) to scrutinize Uber’s potential acquisition of GrubHub. The senators wrote that the timing of the rumored acquisition is particularly troubling during the pandemic, "when consumer demand has increased and when restaurants are more desperate for revenue than ever."

The Economy and Bond Market



  • The Mortgage Bankers Association said applications to purchase a home advanced for a fifth straight week to a two-month high as the average 30-year fixed rate hovers near the lowest in data back to 1990. The figures show the Federal Reserve’s monetary policy efforts to counter the economic fallout from the coronavirus are gaining traction.
  • Private sector firms reported a slightly slower rate of contraction in activity in May, according to latest PMI data from IHS Markit. The firm said its flash manufacturing index rose to 39.8 in May, up from 36.1 in April. Meanwhile the flash services index rose in May to 36.9, up from 26.7.
  • Some of the biggest banks increased their holdings of municipal bonds during the first quarter, when waves of frantic selling caused prices to drop by the most in more than four decades. JPMorgan Chase & Co. increased its stake for the first time since 2017, boosting it by $826 million to $42.2 billion by the end of March, according to its most recent quarterly filing with the SEC. Citigroup expanded its holdings by $1.3 billion, the biggest jump, while Bank of America, US Bank, Morgan Stanley and First Republic Bank also increased their exposure.


  • Americans haven’t been this pessimistic about current economic conditions in six years. The Bloomberg Consumer Comfort Index fell to 34.7 last week, a 1.1-point drop from the prior week and its ninth straight weekly decline, matching the longest streak on record.

Sentiment among U.S. consumers declined for ninth straight month
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  • Filings for initial unemployment benefits totaled 2.44 million in the week ended May 16, according to Labor Department figures released Thursday, following a downwardly revised 2.69 million in the prior period. Continuing claims – which lag claims – totaled 25.1 million for the week ended May 9.
  • The Conference Board Leading Economic Index fell again in April after posting the largest decline in its 60-year history in March. The index fell 4.4 percent in April to a reading of 98.8. That follows the 7.4 percent decline in March.


  • June could mark a turning point in massive joblessness caused by the coronavirus pandemic, White House adviser Kevin Hassett said on Friday, adding that he expects President Donald Trump and lawmakers will still work toward a fourth round of stimulus to get the nearly frozen economy moving again. "I think that there’s a great deal of uncertainty about how fast it will recover," Hassett told reporters at the White House, saying he thought unemployment would peak in June and then start easing. "I think output will go ahead of employment, like it always does," he said.
  • Dr. Anthony Fauci, in a CNBC interview Friday, said now is the time to reopen the economy, but states should still take “very significant precautions” with social distancing. States continue to chart a path forward, reopening nonessential businesses and easing restrictions on movement.
  • A Federal Reserve official overseeing the central bank’s $500 billion lending program to states and cities says he’s seeing signs that it’s working — even before a single loan has been made. Kent Hiteshew, who was hired by the Fed to work on the program, said Monday that the April announcement of the lending facility has been “positive” for the market even before the central bank has purchased any municipal debt. The mere prospect of such an unprecedented intervention helped halt a liquidity crunch in March that sent prices tumbling by the most on record and raised concern that governments’ ability to raise capital could be cut off. The Fed will buy short-term debt sold by states and cities to cover cash-flow shortages that the economic shutdowns have created.


  • Federal Reserve Bank of Boston President Eric Rosengren said one of his biggest concerns is whether states will get enough support from the federal government to prevent severe cuts to spending and employment in the wake of the coronavirus pandemic. Most states have rules requiring them to balance their budgets and face grave shortfalls as pandemic-related shutdowns have reduced tax revenue.
  • The coronavirus pandemic has all but halted plans for what is one of the biggest U.S. travel holidays of the year, despite the cheapest average unleaded gasoline prices in at least 16 years. While many states have begun to reopen businesses and beaches ahead of the unofficial start to summer, most Americans will likely stay home this Memorial Day Weekend.
  • The Mall of America, the largest U.S. shopping center, missed two months of payments for a $1.4 billion commercial mortgage-backed security, the latest sign of the devastating impact of pandemic-related shutdowns on the retail industry.

Energy and Natural Resources Market



  • The best performing commodity this week was crude oil, up 13.45 percent. Oil jumped early in the week, as much as 13.2 percent on Monday, as demand for the fuel in China rises and signs of a viable vaccine sparked optimism. Crude then fell on Friday as traders brace for tension between the U.S. and China amid heightened Hong Kong relations. Russia said this week that it will fully comply with OPEC’s deal to dramatically cut output. WTI still gained for the week – a fourth straight positive week.
  • Iron futures in China have surged over 15 percent in the month of May on stronger-than-expected demand. Iron ore was up 10.21 percent this week alone. Brazil is emerging as a COVID-19 hotspot, which has traders concerned that mining and export operations could be affected and tighten global supply.
  • Investors continue to turn to precious metals as a store of value as other commodities continue to be volatile. Purchases of physical platinum by retail investors almost tripled to 312,000 ounces in the first quarter of this year – the most on record – according to the World Platinum Investment Council (WPIC). Prestige Bullion said that over 2,000 platinum coins featuring an elephant sold out to U.S. and Asian investors after being minted in March.


  • The worst performing commodity this week was coffee, down 3.04 percent. Vessels carrying dry bulk goods are suffering from both low seasonal demand and coronavirus-related disruptions to trade and industrial activity. William Fairclough, managing director of Wah Kwong Maritime Transport Holdings Ltd., said in an interview with Bloomberg that “the entire dry bulk carrier sector’s earnings are basically nothing.” Fairclough added that shipments out of Brazil, one of the main shippers, continue to be low. Bloomberg notes that the Baltic Dry Index, a broader gauge of vessel demand, fell last week to the lowest since 2016.
  • Dow Inc., a top chemical maker, said on Wednesday it has shut down all operating units at its headquarters in Midland, Michigan after flood water breached its sites following the collapse of two dams, reports Reuters.
  • U.S. LNG producers are facing a wave of cancellations as global buyers struggle with growing stockpiles of the fuel coupled with weaker demand, reports Bloomberg. Traders estimate that U.S. projects could get requests to cancel a total of 35 to 45 cargoes for July. The cost for shipping American LNG to markets in Asia and Europe have rapidly deteriorated. Current forward prices show that traders will lose more than 70 cents per million British thermal units (MMbtu) on exports from the Gulf Coast to Rotterdam.

Dutch July gas futures plunge
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  • Known as the oil and gas capital of the world, Houston is moving full speed toward solar power. BloombergNEF reports that Houston will begin a five-year contract in July with NRG Energy Inc. to power all its city-owned properties with solar energy. The city will now reach its goal of 100 percent renewable power five years earlier than expected.
  • A World Bank report released last week says the goal of limiting global temperature rises will require production of graphite, lithium and cobalt to increase by more than 450 percent by 2050 to meet energy storage requirements. Bloomberg notes that aluminum and copper production will also be in high demand for use in a variety of green technologies.
  • Despite growing tensions between China and various countries, it reiterated a pledge to implement the first phase of its trade deal with the U.S. despite setbacks from the coronavirus pandemic. Premiere Li Keqiang said at the annual opening session of the National People’s Congress in Beijing on Friday that “China will continue to boost economic and trade cooperation with other countries to deliver mutual benefits.” China is the world’s largest commodities consumer and an increase in demand is positive for many.


  • According to the International Energy Agency (IEA), worldwide electricity consumption will fall by 5 percent in 2020, the most in more than eight decades. Analysts predict that the plunge in electricity demand will drag on long after nations lift stay-at-home orders. The IEA adds that new power from wind and solar is set to fall for the first time in two decades. 167 gigawatts of renewable power capacity will be added this year – 13 percent less than in 2019. IEA executive director Fatih Birol said in a Bloomberg phone interview that “the continued decrease in the cost and increasing competitiveness of wind and solar alone will not shelter renewables from the economic downturn.”
  • As oil demand rebounds in China, it could take much longer for demand in India, the world’s third biggest market, to get back to pre-virus levels. Oil consumption in India fell by as much as 70 percent in April and as the lockdown slowly eases demand is still 40 percent lower than the same period last year. An executive at Hindustan Petroleum Corp said that over the next two to three months demand should get back to 80 percent of normal sales, but after that the recovery will slow.
  • A top Chinese doctor told state television on Thursday that the coronavirus appears to manifest differently among patients in its new cluster of cases in the northeast region compared to the original outbreak in Wuhan. Bloomberg writes that patients in the northern provinces of Jilin and Heilongjiang appear to carry the virus for longer and take longer to test negative. “The longer period during which infected patients show no symptoms has created clusters of family infections,” said Qui Haibo, one of China’s top critical care doctors. This news is adding to growing concerns that COVID-19 is changing in unknown ways.

Emerging Europe



  • Romania was the best performing country this week, gaining 5.1 percent. All emerging European markets moved higher on the news of a coronavirus vaccine possibly coming to the market sooner than anticipated and hope that economies will continue to recover with more restrictions lifted. In Romania, Societatea National Nuclearelectrica SA was the best performing equity trading on the Bucharest Stock Exchange, gaining 13 percent in the past five days.
  • The Russian ruble was the best performing currency this week, gaining 2.5 percent. The ruble gained with the oil price recovery. Russia’s fiscal rule to save oil revenue when the oil price is above $42.50 per barrel will be suspended until the end of 2021. This should allow Russia to spend its oil revenue and stimulate the economy.
  • Materials was the best performing sector among eastern European markets this week.


  • Czech Republic was the worst relative performing country this week, gaining 1.1 percent. Kofola Ceskoslovensko AS, a soft drink producer, was the worst performing equity among stocks trading on the Prague Exchange, losing 2.5 percent in the past five days. The company warned that a drop in profitability and a rising debt burden may curb dividends.
  • The Romanian leu was the worst relative performing currency in the region this week, gaining 60 basis points. Romania unexpectedly posted a 2.4 percent expansion from a year earlier and it may avoid a credit-rating downgrade. The Central Bank of Romania will continue to gradually cut interest rates.  
  • Health care was the worst performing sector among eastern European markets this week.


  • Investors are growing more confident that the German economy will recover from its worst postwar slump in the second half of the year as businesses resume activity. Germany’s ZEW Investor Confidence Index rose to 51 in May, up from 28.2 in April, exceeding all estimates.

investors are confident about germany's post-virus recovery
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  • Bloomberg reports that Germany and France agreed to back a plan for a 500 billion euro recovery fund for Europe that will be within the framework of the EU budget and will have the authority to borrow money on the financial markets. Funds will go to the hardest-hit countries. However, Bloomberg points out that the bloc is far from reaching an agreement, which will still have to be endorsed by the European Parliament and national governments.
  • The Eurozone flash PMI rebounded in May, though it remains in contractionary territory. The composite PMI hit a three-month high of 30.5 versus consensus for 27.0 and a prior reading of 13.6. Manufacturing PMI came in at 39.5 versus 13.6 in April and services hit 28.7 versus the prior reading of 12.0.


  • A survey of the European Round Table for Industry found that more than 80 percent of top European business leaders believe a global economic recovery from the coronavirus crisis will take between one and three years. The views of chief executives were overwhelmingly pessimistic about the near-term prospects. Among EU business leaders, 53 percent expect the global economy will need between one and two years to recover, while some 39 percent predict the recovery will take between two and three years.
  • French President Macron lost his outright majority in parliament after a group of MPs broke away to form a new party. Seven MPs will form a party called Ecology, Democracy, Solidarity. Their decision leaves Macron’s party with 288 seats, one short of a majority of the 577- seat lower house.
  • Rolls-Royce, a U.K. aircraft and part maker, will cut 9,000 jobs or 17 percent of its workforce in a bid to survive the virus travel slump. Rolls-Royce is particularly exposed because of its focus on larger aircraft that will play a reduced role in global fleets as travel comes back. The pandemic crisis has depressed economies, and the return to flight will be colored by health-related restrictions that will discourage long-distance flights, Bloomberg reports.

China Region



  • Vietnam was the best performing country this week, gaining 3.1 percent. Vietnam Prime Minister Nguyen Xuan Phuc said the export dependent economy could sustain growth of 4-5 percent this year as the government looks to attract more foreign investment. This Southeast Asian nation stands to benefit from companies looking to diversify their manufacturing base away from China. Not very liquid, Truong Thanh Real Estate and Construction, was the best performing equity among stocks trading on the Ho Chi Minh City Stock Exchange, gaining almost 40 percent over the past five days.
  • The Thailand baht was the best performing currency this week, gaining 55 basis points. The currency recorded its longest run of weekly gains since February 2019 on speculations that the gradual reopening of economies worldwide will help to recover the nation’s tourism sector.  
  • Energy was the best performing sector among equites trading on the Hong Kong Stock Exchange.


  • Hong Kong was the worst performing market this week, losing 3.6 percent. China is moving to impose new security laws that would give the communist party more control over Hong Kong. The U.S. threatened to impose sanctions of China for introducing this new law in Hong Kong. The proposed U.S. sanction bill would sanction Chinese party officials and entities that enforce the new national laws in Hong Kong and would also penalize banks that do business with the entities. Sunny Optical Technology Group was the worst performing equity among stocks trading on the Hong Kong Exchange, losing 14.3 percent over the past five days.
  • The South Korean won was the worst performing currency this week, losing 80 basis points.  The currency led a decline among Asian peers due to increasing tensions between the U.S. and China and prospects on a new wave of protests in Hong Kong.
  • Conglomerates was the worst performing sector among equites trading on Hong Kong Stock Exchange.


  • Bloomberg reports that Chinese oil demand is nearing 13 million barrels per day – just below the same levels a year ago and the 13.7 million barrels a day consumed in December. Domestic demand for the fuel shrunk by around 20 percent due to the lockdown imposed in February. An increase in oil demand is a sign of economic recovery and a return to pre-virus levels of activity.
  • China’s industrial production in the month of April rose 3.9 percent year-over-year versus estimates of a 1.5 percent increase. All major sectors registered growth except for a marginal decline in utilities. Goldman Sachs believes the improvement in industrial production bodes well for second-quarter growth momentum.

China industrial production is recovering
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  • Billionaire investor Ray Dalio wrote in an essay this week that the U.S. and China are approaching a point of comparability. “The U.S. is now the most powerful empire by not much, it is in relative decline, Chinese power is rapidly rising, and no other powers come close.” Dalio added that both the U.S. and China are leading the way in a new period of “of great inventiveness due to advanced information/data management and artificial intelligence supplementing human intelligence.”


  • A top Chinese doctor told state television on Thursday that the coronavirus appears to manifest differently among patients in its new cluster of cases in the northeast region compared to the original outbreak in Wuhan. Bloomberg writes that patients in the northern provinces of Jilin and Heilongjiang appear to carry the virus for longer and take longer to test negative. “The longer period during which infected patients show no symptoms has created clusters of family infections,” said Qui Haibo, one of China’s top critical care doctors. This news is adding to growing concerns that COVID-19 is changing in unknown ways.
  • The South China Morning Post reported on Thursday citing unidentified people that China’s lawmakers were preparing to soon pass measures that would curb separation, sedition, foreign interference and terrorism in Hong Kong. This would be a dramatic escalation of Beijing’s efforts to rein in dissent in Hong Kong, which saw large-scale protests for much of 2019.
  • The U.S.-China financial war heats up as NASDAQ Inc. plans new rules that would make IPOs more difficult for some Chinese companies. Bloomberg reports that new rules from the exchange include minimum fundraising thresholds and stricter requirements for auditors. The rules don’t apply solely to Chinese companies, but they would be the most impacted. President Trump said last week that he’s “looking at” Chinese companies that don’t follow American accounting rules.

Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performing for the week ended May 22 was DeviantCoin, up 9,000 percent.
  • Will we see $9,000 bitcoin or 9,000 Nasdaq next? The question, posed by Bloomberg Intelligence, could show that crypto is gaining the upper hand. Increasing demand versus declining supply and volatility imply that bitcoin is more likely to sustain higher levels versus the Nasdaq Composite Index, the article reads – particularly as a global recession approaches.

is crypto gaining the upper hand versus nasdaq?
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  • IBM has become a shareholder in, the trade-finance platform jointly owned by 12 European banks, writes CoinDesk, signaling further consolidation across the enterprise blockchain space. has the distinction of being the first enterprise blockchain consortium to go live, happening back in early 2018. “Now we’ve got a very strong partnership with IBM for scaling globally and we are working closely together on Asia, Africa and Latin America,” McGowan said.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week ended May 22 was Litecoin SV, down 78.14 percent.
  • Thesis, a blockchain venture studio, has put a pause on deposits into tBTC, writes CoinDesk. tBTC is its new platform meant to put BTC on Ethereum so BTC can be used in decentralized finance. The Thesis team cited a bug and is now helping early users withdraw any BTC that had been deposited. “An issue in the app that was missed by our security audit was found by two of our contributors, and we decided to pause deposits for now to ensure the safety of funds,” said Thesis CEO Matt Luongo.
  • Despite positive developments on both the macro and technical fronts, bitcoin prices seem to be struggling with buyer exhaustion, writes CoinDesk, having put in a negative performance in the last 24 hours. Bitcoin’s value fell from $9,760 to $9,100 mid-week, even though major investment banks like JPMorgan and Goldman Sachs called for an increase in the size of the inflation-boosting government bond purchase programs run by the Federal Reserve and other major central banks, the article continues.


  • Cryptocurrency platform Luno is in talks about expanding in Kenya and Ghana to extend its African footprint, writes Bloomberg, as bitcoin rallies 99 percent over the past two months amid the coronavirus pandemic. The South African company now employs 400 people across seven offices in Africa, Europe and Asia. “It’s markets we have a keen interest in, and Ghana and Kenya are high on our list,” Luno General Manager Marius Reitz said.
  • The latest implementation of bitcoin on the Ethereum blockchain quietly went live this week, writes CoinDesk. According to Etherscan, there are 1.24 renBTC live on the Ethereum mainnet now. Sources with knowledge of the project have confirmed this is the Ren smart contract, live ahead of its launch announcement.
  • Three new bitcoin metrics are pointing to the sky, despite $10,000 staying out of reach for the BTC/USD this week, reports CoinTelegraph. Timothy Peterson of Cane Island Alternative Advisors revealed on Twitter the following: “I track 3 #bitcoin metrics: Metcalfe value, lowest price forward and 200-day moving average.” He continued by explaining that “April 29th was only the fourth time in history they converged. The prior three were followed by a substantial uptrend in price.”


  • The Nasdaq exchange is going to introduce new restrictions on IPOs, reports CoinTelegraph, preventing smaller Chinese companies from getting listed. A Reuters report that cites anonymous sources cites Chinese IPO seekers as tending to lack accounting transparency and have “close ties to powerful insiders.” All crypto-related Chinese companies will be no exception to the new scrutiny.
  • As CoinTelegraph reports, there has been a drop-off in bitcoin mining revenue to 2019 levels – the second time in 2020. The positive news? Every time it declined to a multi-year low, it marked the start of a bullish trend for BTC.
  • Canaan, a China-based bitcoin miner manufacturer, has reported a net loss of $5.6 million for the first quarter of 2020, reports CoinDesk. The loss comes even though the company has cut down the prices for its hardware by more than half in an effort to sell more machines.

Leaders and Laggards


You Can’t Just Print More Gold


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Polyus PJSC.

*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 Vietnam Stock Index or VN-Index is a capitalization-weighted index of all the companies listed on the Ho Chi Minh City Stock Exchange. The index was created with a base index value of 100 as of July 28, 2000 The Baltic Dry Index is reported daily by the Baltic Exchange in London. The index provides a benchmark for the price of moving the major raw materials by sea. The index, tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities and takes into account 23 different shipping routes carrying coal, iron ore, grains and many other commodities. The Bloomberg Consumer Comfort Index is a weekly, random-sample survey tracking Americans’ views on the condition of the U.S. economy, their personal finances and the buying climate. The index is produced by Langer Research Associates of New York. Each release includes results among 1,000 randomly selected adults. The Conference Board Leading Economic Index is an American economic leading indicator intended to forecast future economic activity. It is calculated by The Conference Board, a non-governmental organization, which determines the value of the index from the values of ten key variables. These variables have historically turned downward before a recession and upward before an expansion.