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Frank Holmes



Articles by Frank Holmes

3 Charts I’m Thankful for This Week

10 days ago

I hope everyone reading this had a wonderful Thanksgiving full of family, love and laughter. Even if that wasn’t your experience, there’s still much to be grateful for. Below are three charts for which I happen to be most thankful this week.
1. Americans appear to be flying again.
The U.S. hit a new pandemic high last week in terms of commercial air traffic. More than 2.2. million people boarded passenger jets last Friday, November 19, according to Transportation Security Administration (TSA) data. That’s the most in a single day since February of 2020, and it’s off by only 12% compared to the same day in 2019.

Anticipating strong holiday-related travel, U.S. carriers have been scrambling to staff up, offering premium pay and hefty signing bonuses to attract new talent. International

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Reports of Gold’s Death Are Greatly Exaggerated

23 days ago

Back in December 1997, the Financial Times ran a now-infamous article titled “Death of Gold.”
In it, the author Kenneth Gooding claimed that as an investment, “gold is a goner.” The crises of the past 10 years—the 1987 stock market crash, the Gulf War, Asia’s financial meltdown—had not resulted in higher demand. Gold was now a “mere metal” and a “bad investment,” Gooding concluded.
But as it happened, reports of gold’s death were greatly exaggerated. The next decade saw the precious metal steadily rise in price, eventually hitting a then-record $1,921 an ounce in August 2011, for an increase of approximately 580% from when the Times published its obituary.
Fast forward to today, and the same gloomy prognoses are being made about the metal. And just as Gooding was proven wrong, today’s

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What Is Shadow Inflation? It Could Be More Prevalent Than You Realize

October 16, 2021

We’re all familiar with inflation, whether it’s at the grocery store or gas pump. What cost you $10 last year might cost you $12 or more today, representing a hidden “tax” that steadily corrodes your purchasing power like rust on iron.
But did you realize there’s another form of inflation that’s just as corrosive and yet is nearly impossible to measure? Some economists call it “shadow inflation,” and it refers to instances when you pay the same price for a good or service one year to the next, but the quality or quantity has diminished.
Many companies, faced with paying higher prices for materials, labor and transportation, pass some or all of the extra costs on to customers. Others opt to charge the same as before but cut back on certain things.
Ever felt like you’re being gypped on

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“Uptober” Doesn’t Disappoint as Bitcoin Touches $56,000

October 9, 2021

October 8, 2021

Bitcoin topped $56,000 on Friday for the first time since May as a number of positive crypto developments galvanized investors in the month of “Uptober.”
For one, legendary investor George Soros’s family office fund confirmed this week that it held Bitcoin in its nearly $6 billion portfolio. Speaking at a Bloomberg event, Soros Fund Management CEO and chief investment officer Dawn Fitzpatrick said that Bitcoin was more than an inflation hedge, having “crossed the chasm to mainstream.”
Indeed, there were an estimated 221 million people actively involved in the crypto ecosystem in June, according to Crypto.com. That’s more than twice the number of people who were trading and holding cryptos at the beginning of 2021, suggesting an exceptionally robust growth rate that’s far

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Gold Is Now the Second Most Liquid Asset on Earth

October 2, 2021

U.S. Global Investors Announces a 50% Increase in Monthly Dividend
 

Contrary to popular belief, what’s good for the goose is not always good for the gander.
This week the U.S. dollar advanced against a basket of foreign currencies to hit its highest level in about a year. For consumers and importers, this is good news, as it means the greenback offers greater purchasing power.
For exporters, on the other, and for the price of gold and other commodities that are priced in U.S. dollars, this is a headwind. In the chart below, you can see that gold and the dollar share an inverse relationship. When the dollar strengthens, the yellow metal falls; when it weakens, gold soars. It’s important for investors to recognize this relationship because it can help them manage their expectations.

It’s

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Gold Passed the Evergrande “Stress Test”

September 25, 2021

It’s the biggest company you’ve never heard of—until this past week, that is. Evergrande Group, the “too big to fail” Chinese property developer, rattled markets on Monday when it missed interest payments to at least two of its lenders. This gave more than a few investors flashbacks to Lehman Brothers’ demise in 2008, which helped trigger the global financial crisis.
The selloff spread to U.S. markets, and I was pleased to see that gold maintained its haven status. The yellow metal ended the day slightly up more than half a percent, passing an important “stress test” of its investment case in the age of Bitcoin.

The world’s biggest cryptocurrency, believed by many to be “digital gold,” plunged 8.5% on Monday as investors dumped riskier assets. Indeed, Bitcoin is more than four times as

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Fossil Fuels Are Under Siege. Is Misinformation to Blame?

September 18, 2021

It’s becoming more and more difficult to be in the fossil fuel business. On both sides of the Atlantic, lawmakers and unelected bureaucrats are turning up the heat, so to speak, on companies over the issue of climate change.
In the U.S. House of Representatives, Democrats have launched an inquiry into whether oil companies have participated in so-called “climate disinformation.” This week, letters were sent to top executives of Exxon Mobil, BP, Chevron and Royal Dutch Shell seeking records, and hearings are scheduled for next month.
Meanwhile, the Securities and Exchange Commission (SEC) is expected to propose a series of new disclosure requirements all publicly traded companies must make, possibly as soon as year-end, to inform investors about potential climate risks associated with

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Remembering 9/11 on the 20th Anniversary

September 11, 2021

Twenty years ago tomorrow, I was in Manhattan with colleagues, attending a financial industry conference.
At the time, we didn’t know how fortunate we were that our 9:00 a.m. meeting had been changed to 11:00 a.m.
I was on route when the unimaginable happened. The cell phones in the city stopped working, but mine had a San Antonio area code, so I was able to get through to the U.S. Global Investors office to let everyone know we were safe.
With me were two company executives and the extraordinary Nancy Holmes (no relation, although she would often joke that I was her adopted son). She was advising my company as a PR strategist at the age of 82.
I’ve written about Nancy before. She led one of the most interesting and full lives I have ever known. She was a code clerk for the U.S. Army, a

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When Will Social Security Run Dry? Sooner Than You Might Think

September 4, 2021

I’ve been in Sweden all week, representing HIVE Blockchain Technologies and searching for new expansion opportunities. I can’t wait to share the details with you, so make sure you’re subscribed to Frank Talk by clicking here.
In the meantime, I have some sobering news: Social Security is in worse shape than we thought. The program’s Old-Age and Survivors Insurance (OASI) Trust Fund is now expected to be insolvent by 2033, a year earlier than anticipated.
According to the annual report, its finances have been “significantly affected” by the pandemic and 2020 recession, not to mention “rapid population aging.”
Indeed, the ratio between contributors and beneficiaries has been shrinking for decades. In 1941, there were about 42 workers for every Social Security recipient. Today, that figure

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Don’t Fall for FUD: Fear, Uncertainty and Doubt

August 23, 2021

So many headlines right now are instilling FUD in investors’ minds, which stands for Fear, Uncertainty and Doubt—from the Taliban takeover in Afghanistan, to fears over cryptocurrency, and the delta variant disrupting travel plans across the globe.
Don’t let yourself fall for FUD.
There’s no reason to be fearful of cryptocurrency, for example. Many like to say “only bad guys” use these digital assets, but if that’s true, then why are over 100 million people using it today? These people aren’t criminals, they’re consumers and investors, using it on PayPal and Venmo.
Afghanistan’s Poppy Production Could Be Good for Gold
After 20 years, the longest war in U.S. history is finally coming to a (clumsily handled) close. The war on Afghanistan’s opium poppy production, on the other hand, looks

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The Metaverse: What Every Early-Stage Investor Needs to Know

July 31, 2021

You may not be familiar with the term metaverse, but if you’ve been a consumer of popular books, movies and video games over the past 30 years or so, you probably are aware of the concept.
Consider films like The Matrix or Ready Player One, set in vast virtual realities in which people live, work and play. In Neal Stephenson’s 1992 science fiction novel Snow Crash, believed to be the first work to contain the word metaverse, online inhabitants make transactions using digital currencies, as hyperinflation has all but destroyed fiat currency. No, really, Stephenson wrote this in 1992.
The reason I’m bringing this up now is because, like a lot of the best ideas from sci-fi, the metaverse could soon make the leap from page to reality.
If you listened to Facebook’s earnings call this week,

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Cuba and Venezuela Offer Cautionary Tales of Socialism

July 23, 2021

For the past decade, citizens of Latin American countries have grown bolder in protesting their governments’ failed socialist policies. We’ve seen unrest in, among other states, Venezuela, Chile and Colombia, but until last week, we hadn’t heard a peep from Cuba, which has been under communist rule since Fidel Castro’s revolution in 1959.
It’s hard to exaggerate the significance of Cubans taking to the streets to air their grievances against the government. Protests of this scale are unprecedented in the Caribbean island-state’s history.
But living conditions are deteriorating fast, due to President Miguel Díaz-Canel’s mishandling of the economy during the pandemic. Echoing dismal scenes from past failed socialist-communist regimes, Cubans must stand in line for hours to buy food. Power

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Gold Is Catching a Bid on Pandemic and Inflation Fears.

July 10, 2021

Gold notched its third straight week of higher prices as the yield on the 10-year Treasury dipped below 1.3% for the first time since February. The highly transmissible Delta variant was also ruled the most dominant strain of coronavirus in the U.S., threatening economic growth and raising uncertainty about the next interest rate hike.
Against this backdrop, the yellow metal is now flashing a golden cross, meaning the 50-day moving average is trading above the 200-day moving average. In the past, this has been a bullish indicator for gold prices, which are still off some 12% from their all-time highs set last summer.

In the short to medium term, it appears as if gold demand will continue to be driven by central bank policy, which should remain accommodative even as inflation fears

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China’s Crackdown on Bitcoin Mining Is Good News for North American Crypto Miners

June 28, 2021

Bitcoin erased its 2021 gains this week as China ramped up its crackdown on mining of the cryptocurrency, a move that’s expected to help shift the industry’s center of gravity from Asia to North America.
Meanwhile, the Bitcoin price formed a death cross on Monday, with the 50-day moving average trading below the 200-day moving average (MA). This technical pattern is often seen as a bearish sign of things to come, but that may not be the case with Bitcoin.
Bitcoin death crosses have not historically been consistent downside price predictors. Take a look at the chart below, shared in a Tuesday tweet by CoinShares. The digital asset investing firm analyzed Bitcoin’s price action one, three, six and 12 months following previous death crosses, and no pattern emerged suggesting that a

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Transitory or Not, Inflation Is Here. It Could Be Much Higher Than You Realize

June 12, 2021

I’ve been writing about the possibility of higher inflation for months, and now it looks to have finally made landfall. The headline consumer price index (CPI) came in at 5% year-over-year, the highest in over a decade.
The real rate is likely even higher.
Energy commodities, and gasoline in particular, jumped the most of any other measured item. Energy increased 54.5% year-over-year, gasoline 56.2%, as oil prices hit multiyear highs this week on strong travel demand. A barrel of West Texas Intermediate (WTI) touched $71 today, a level we haven’t seen since October 2018.
Take a look at what happens when you strip out volatile energy and food prices. Core inflation, as it’s called, surged 3.8% compared to last year—which doesn’t sound impressive until you realize that’s the fastest rate

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The Race for Copper, the Metal of the Future

May 29, 2021

The International Energy Agency (IEA) was founded in 1974 in response to oil embargos the previous year that caused the global price of oil to surge 300% from $3 per barrel to $12 per barrel. From the start, the IEA’s mission has been to help member nations deal with major oil supply disruptions.
Over the years, the group’s purview has broadened to include more than just oil security, and in its most recent report, the IEA sounds the warning bell on the global supply of key minerals—particularly copper.
“Today’s supply and investment plans for many critical minerals fall well short of what is needed to support an accelerated deployment of solar panels, wind turbines and electric vehicles,” IEA Executive Directive Faith Birol writes.
Many of these minerals are produced by a very small

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Big Investors Dump Bitcoin for Gold as Inflation Heats Up

May 22, 2021

One of the biggest reasons why people invest in assets like gold, Bitcoin and altcoins is because they act as hedges against bad government policy.
Look at Venezuela. The beleaguered country’s currency, the bolivar, isn’t worth the paper it’s printed on due to draconian socialist policies. As such, an outsized percentage of Venezuelans rely on Bitcoin as a store of value and to help make ends meet.
A less severe example—though no less impactful—is Canada. In case you haven’t heard, there’s a new bill being considered, C-10, that some critics worry could lead to the Canadian government’s regulation of the content you post on YouTube, Facebook and other social media sites. Although the bill’s main advocate, Heritage Minister Steven Guilbeault, has tried to make it “crystal clear” that the

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Elon Is Wrong About Bitcoin…

May 16, 2021

Elon Is Wrong About Bitcoin. Crypto Miners Are Key to Renewables’ Success
 
And just like that, Elon Musk has turned on Bitcoin.
In a tweet on Wednesday, the self-proclaimed “Technoking of Tesla” said his company—which announced in February that it bought $1.5 billion in Bitcoin—would be suspending vehicle purchases using the cryptocurrency. Musk cited crypto miners’ “increasing” use of fossil fuels, particularly coal, “which has the worst emissions of any fuel.”
The price of Bitcoin responded by dipping below $50,000, ending the day down more than 12%, its worst trading session since January. 
I don’t question Elon Musk’s good intentions, but I respectfully disagree with the underlying insinuation that crypto miners in particular are a threat to the climate. It’s just not true, for

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No Country Has Ever Taxed Itself into Prosperity

May 8, 2021

We’ll be hosting a webcast on Monday, May 10, 2021, at 7:30 a.m. Central time to discuss our results for the third quarter 2021. An update on HIVE Blockchain Technologies, our strategic exposure to the crypto asset boom, will also be discussed. To register for the webcast, click here.

Violent protests have erupted in the streets of Bogota, Cali and other cities in Colombia. The immediate cause? Proposed reforms to the South American country’s tax system, which would have lifted taxes on everything from salaries and dividends to fossil fuels, single-use plastic items and more.
According to reports, the protests have involved citizens of all walks of life, including truckers, taxi drivers and health care workers. Overworked doctors, nurses and paramedics have walked off the job to bring

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With Everything Up Right Now, Where are the Value Buying Opportunities?

May 1, 2021

If you’ve ever wondered what trillions of dollars in monetary and fiscal stimulus looks like, it appears you got your answer. Everything is up right now.
Stocks are up. Earnings are up. Consumer spending is up. Commodities are up. Food prices are up. Home prices are up. Car prices are up. Cryptos are up.
This week marked President Joe Biden’s 100th day in office. Since Inauguration Day, the S&P 500 has increased an impressive 8.6%. Those are the best returns for the start of a presidential term since Kennedy in 1961. All those stimmy checks have to go somewhere.

With the Federal Reserve signaling it will keep accommodative measures in place for some time longer, and Biden making the case for trillions more in government spending, is this what we can expect going forward?
And with

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Are Central Bank Digital Currencies the Future of Money?

April 24, 2021

Today we had the pleasure of participating in the (virtual) ringing of the NYSE closing bell to celebrate the six-year anniversary of the launch of our airlines ETF. It’s been an incredible journey, and we extend our gratitude to everyone who helped make it possible. Wheels up!
In case you missed it, you can watch the replay of the bell ringing by visiting nyse.com/bell!

Central Banks Have Been Net Sellers of Gold So Far this Year
Some major changes could be coming soon to a central bank near you, with an estimated 90% of them at some stage of developing a central bank digital currency, or CBDC. In October 2020, the Bahamas became the first economy to introduce its own CBDC, the Sand Dollar, but many more national currencies are expected to be rolled out in the coming years.
I have much

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Positive First-Quarter Data Point to a Global, Sustained Economic Boom

April 10, 2021

Millions of Americans, it seems, felt that the time was right to trade in their clunkers for a new set of wheels.
Sales of cars and light trucks surged an incredible 58% in March compared to last year, according to Bureau of Labor Statistics data. Some 1.6 million vehicles were driven off car lots during the month, representing over 18 million on a seasonally-adjusted annual rate (SAAR).

There could be several reasons why car sales skyrocketed last month, the most obvious being that pandemic restrictions are gradually being lifted. A fresh infusion of stimulus money also didn’t hurt.
But then there’s the matter of cost. Due to the global semiconductor chip shortage, which has temporarily halted production at some North American auto plants, the price of used vehicles is up an

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We’re on the Cusp of Mass Crypto Acceptance

April 3, 2021

It’s happening.
The acceptance of digital currencies as a form of payment expanded greatly this week, foreshadowing the increasingly important role cryptos such as Bitcoin and Ether will play in our lives going forward.
Both Visa and PayPal announced they will begin allowing the use of cryptocurrencies to settle transactions. This comes a week after Tesla said it will now accept Bitcoin as a method of payment, and a month after Mastercard signaled it would start supporting cryptos sometime this year.
PayPal’s Checkout with Crypto, made available to select U.S. users yesterday, gives consumers the ability to purchase goods and services at as many as 29 million merchants using Bitcoin, Bitcoin Cash, Ether or Litecoin.
What’s more, there’s no additional transaction fee.
Founded in 1998 by

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What If We’re Measuring Inflation All Wrong?

March 27, 2021

Inflation is top of mind right now for many consumers, businesses and investors. Responding to a recent Bank of America survey, asset managers around the world agreed that inflation is the number one market risk, displacing COVID-19 for the first time since February 2020.
Another survey conducted this month found that over three quarters of Americans were either “very” or “somewhat” concerned about inflation. Perhaps not surprisingly, younger Americans who have not yet reached their peak earning years were most worried.

Loyal readers know I’ve been writing about this topic a lot lately. There are many signs that inflation is already here: Commodity prices are up. Home prices are up. Energy prices are up. Shipping rates are way up. Used cars and trucks are through the roof.
And the trend

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America’s Infrastructure Needs Some Love, but Will Rising Rates Check Spending?

March 6, 2021

Every four years, the American Society of Civil Engineers (ASCE) releases its report card on the condition of America’s infrastructure. In 2017, the group gave the U.S. a dismal D+, writing that crumbling infrastructure “is impeding our ability to compete in the thriving global economy.”
The 2021 report demonstrates slight progress from four years ago. America’s infrastructure scored a C-, the first time in 20 years that our “GPA” is out of the D range.
But as those of you with kids and grandkids know, a C- is nothing to celebrate. Much work still remains to bring our roads, bridges, sea ports, electric grids and more up to satisfactory standards.
That means there may be some incredible opportunities for investors in companies that produce the metals, minerals and other raw materials

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Government Bond Yields Have Surged, but Real Yields Are at Zero

February 27, 2021

Government bond yields have been rising steadily for the past three months, but they went parabolic in February. The yield on the 10-year Treasury touched 1.6% yesterday, up from 0.9% just a couple of months ago. That’s more than a two standard deviation move, suggesting the bond selloff may be overdone. Remember, bond yields rise as prices fall.
Yields have jumped so much, in fact, that they’re giving stocks a serious run for their money. The 10-year yield is now higher than the S&P 500 dividend yield, which may have added to the selling pressure that cost stocks close to 2.5% yesterday.
click to enlarge
It’s important to recognize the reasons why yields are rising. In an email to clients today, Evercore ISI analysts explained that the move is “associated with the higher inflation

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Texas Freezes, but a New Commodities Supercycle Could Be Heating Up

February 20, 2021

As many of you know, I grew up in Toronto, where winters can be brutally cold. Like most people who live in northern U.S. states, I’m accustomed to driving on snowy, icy roads.
But then, roads in the north are plowed, sanded and salted when there’s snowfall. With rare exception, the roads here in sunny San Antonio, Texas, do not see that kind of maintenance. There are no snow plows or salt trucks. Driving, then, can be several times more precarious when we get the kind of extreme weather that hit us this week.
Similarly, our electrical power infrastructure was designed to withstand heatwaves, not blizzards. I think a lot of Texans this week learned for the first time that a large share of the Lone Star State’s power grid operates separately from the rest of the U.S. Because of this,

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The Chinese Economy Charges Ahead in the Year of the Ox

February 13, 2021

Happy Year of the Ox! Today China and a number of other Asian countries celebrate the Lunar New Year, also known as the Spring Festival.
In pre-pandemic years, the Lunar New Year has been an opportunity for individuals and families to travel and visit loved ones. Millions of Chinese people took as many as 3 billion trips in early 2019, representing the largest annual human migration in history.
As you might imagine, things look a little different in February 2021, more than 12 months into the global pandemic. Although China has mostly contained the virus, travel is largely being discouraged. Officials expect only 1.2 billion trips to be made this year by plane, train and automobile.
That’s bad for families, obviously, but good for Chinese factories and exporters, some of which are

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Could $1,400 Stimulus Checks Lift Air Travel Demand?

February 7, 2021

President Joe Biden’s massive $1.9 trillion stimulus package took a giant step toward becoming reality today as the Senate narrowly voted to approve the measure. Squeaking by with a final tally of 51-50—Vice President Kamala Harris cast the tie-breaking vote—the resolution includes $1,400 checks to individuals earning under $50,000, expand federal unemployment benefits and raise the minimum wage to $15 an hour.
The resolution now moves on to the House and, if approved there, will be legislated in as many as 25 different committees across both chambers of Congress.
It’s highly doubtful that the final bill will be a carbon copy of the resolution—to the relief of budget hawks—but it’s hoped that an extra $1,400 in the pockets of everyday Americans may help support lagging consumption. U.S.

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Power to the Players: Reddit, Robinhood and Bitcoin

January 30, 2021

Those of you with kids and grandkids may at some point have stepped inside a GameStop. If so, you might be familiar with the video game retailer’s tagline: “Power to the players.”
The same slogan could just as easily be the rallying cry for the millions of millennial and Gen Z Reddit-users who took to Robinhood this week to drive up the share price of the beloved yet struggling GameStop.
(Fun fact: Ross Perot was one of the earliest seed investors in GameStop’s predecessor, Babbage’s, which first opened its doors in Dallas, Texas, in 1984.)
By now you’ve likely heard the full story. But just in case: A number of hedge funds, including Melvin Capital and Maplelane Capital, took out short positions in GameStop, whose sales were lagging even before the pandemic killed foot traffic. In

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