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Articles by Frank Holmes

Record Unemployment Claims and Oil’s Best Day Ever

2 days ago

Some of you may have already picked up on this, but any discussion about the COVID-19 crisis will undoubtedly include a number of superlatives such as “highest ever,” “most on record” and “unprecedented.”
This week’s events were no exception. On Thursday, a head-spinning 6.6 million Americans filed new claims for unemployment benefits, bringing the two-week total to 10 million. That’s more than the combined populations of Los Angeles and Chicago.
Seeking a way to properly visualize the massive spike in initial jobless claims, analysts at Cornerstone Macro noted that they’ll need to be log-scaled now and forever for us to see the business cycle.

“There isn’t much to say about this chart aside from letting the chart show just how unique a backdrop today is,” Cornerstone wrote. “Yes, it’s

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Congress and the Fed Just Opened the Stimulus Floodgates

8 days ago

Extraordinary times call for extraordinary measures, as they say, and this past week has been nothing if not total confirmation of that adage.
As of Friday morning, the number of confirmed coronavirus cases in the U.S. stood at more than 86,000. That’s now more than any other nation on earth, including China. New York City, home to roughly half of all U.S. cases, appears to have become the new global epicenter of the pandemic.
Hospitals in the hardest-hit areas of the countries “have passed a tipping point,” writes the Wall Street Journal, with New York having to quickly set up makeshift treatment centers and morgues to meet the spread of infection.
The news comes at a time when President Donald Trump is weighing whether the “cure”––social distancing, business closures and more––is worse

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A $10 Trillion Response to the Global Pandemic

16 days ago

This week I was introduced to a board game called Pandemic. In the game, players are up against the clock to find the cure to viral outbreaks and contain them before they spread across the entire globe.
What makes Pandemic especially unique is that, unlike most games, it’s cooperative. Players are not opponents, as they are in, say, Monopoly. Instead, they must work as a team to eliminate the viral threat, or die trying.
The real-life situation involving COVID-19 is very much the same. Preventing the spread of this disease will require the vigilance and cooperation of everyone on the planet in some capacity or another. While we await treatments and a vaccine to be developed, the most impactful thing people can do is keep their distance from others and, of course, wash their hands. To that

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Should You Buy the Panic?

23 days ago

If anyone has the right to say “I told you so,” it’s Bill Gates.
Two years ago, the co-founder, former CEO and now former board member of Microsoft urged governments to step up their preparedness in the event of a modern global pandemic. Such an event, Gates warned, could conceivably be more dangerous than any other threat facing humanity today, including nuclear proliferation, due mainly to the fact that we’ve become so interconnected.
Because new vaccines take time to develop and deploy, the U.S. in particular needed to invest in “antiviral drugs and antibody therapies that can be stockpiled or rapidly manufactured to stop the spread of pandemic diseases or treat people who have been exposed,” Gates said in a speech at the time.
And in a 2018 interview with STAT, he said he found it

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Looking for Buying Opportunities After the Historical Selloff

February 29, 2020

As I write this, the market is officially in correction territory, with the S&P 500 off 14.5 percent from its all-time close on February 19. It took only six days, in fact, for the S&P to fall 10 percent from its high into a correction­­—a new record, according to data from Deutsche Bank Global Research.
The decline has certainly hurt many equity investors and 401(k)s, and there may still be more pain ahead. Today the World Health Organization (WHO) raised its threat assessment of the coronavirus, or COVID-19, to “very high,” and warned that the illness could soon reach most, “if not all,” countries across the globe in the coming days and weeks.
I choose to remain optimistic, though. The underlying economy is sound. Nothing has changed about that. This selloff is purely incidental to the

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Investors Are Piling Into Safe Havens on Coronavirus Fears

February 22, 2020

U.S. factories rebounded strongly in February, suggesting the manufacturing recession may finally be behind us after the industry contracted for six straight months. The Philadelphia Fed Manufacturing Index jumped an incredible 20 points to 36.7, its highest reading since May 2017, while New York’s Empire State Manufacturing Survey rose more than eight points to 12.9, a nine-month high.
We won’t get the Institute for Supply Management’s (ISM) U.S. manufacturing purchasing manager’s index (PMI) until the start of March, but I see the positive regional surveys as a sign that the PMI could beat expectations.

The news also bodes well for President Donald Trump’s reelection bid. The weak U.S. PMI, under pressure from the U.S.-China trade war, has been the one significant drawback in an

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Where to Get Income in a Low-Yield World

February 15, 2020

So far in 2020, the yield on the 10-year Treasury has averaged an anemic 0.01 percent when adjusted for inflation. Since the end of January, it’s actually dipped below 0 percent, trading as low as negative 0.14 percent on January 31.
What this means is that investors are guaranteed to lose money on the 10-year T-note if held until maturity.
It’s against this low-yield backdrop that Judy Shelton, one of President Donald Trump’s nominees for the Federal Reserve Board, went before the Senate Banking Committee this week for her confirmation hearing. A former Trump campaign advisor, Shelton is seen as an unconventional pick for the central bank role for two main reasons: 1) She’s advocated for a return to the gold standard, and 2) She has recently argued in favor of lower interest rates—which

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Gold Projected to Beat the Market in 2020: CLSA

February 8, 2020

Gold will outperform the S&P 500 Index in 2020. That’s one of several projections made by CLSA in its just-released “Global Surprises 2020” report.
The Hong Kong investment firm has an impressive track record when it comes to making market predictions—last year it had a 70 percent hit rate—so it may be prudent to take this one seriously.
I’ll have more to say on this in a moment. First I want to share with you an eye-opening conversation I had this week at Harvard Business School (HBS), where I’ve been attending the annual CEO Presidents’ Seminar and going over case studies involving Netflix, Amazon and more.
As you know, the coronavirus has disrupted day-to-day life in many parts of China and the surrounding region. That includes Hong Kong, whose economy is being served a one-two punch

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Nontraditional Funds Took the Stage at World’s Biggest ETF Conference

February 1, 2020

When Derek Jeter speaks, people listen. After all, the former Yankees shortstop’s talents and successes, on and off the field, seem otherworldly.
Drafted straight out of high school in 1992, Jeter went on to become the first ever Yankee to record 3,000 hits—an achievement reached by only 27 other players in baseball history. He also holds records in doubles and stolen bases.
The five-time World Series champion was recently inducted into the National Baseball Hall of Fame—in his first year of eligibility, no less—and when casting their votes, the Baseball Writers’ Association of America (BBWAA) gave Jeter the second-highest plurality in the group’s 112-year history.
Jeter stopped by at this year’s Inside ETFs in Hollywood, Florida, drawing larger crowds of attendees than any other speaker

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New Beginnings With the Year of the Rat

January 25, 2020

It’s been a whirlwind couple of weeks! From Switzerland to Vancouver to Boston, I went from being student to teacher. I’m grateful for the opportunity to learn from others and to share my own story.
As I told you in last week’s Investor Alert, I attended the Crypto Finance Conference in St. Moritz, Switzerland, where I got to hear from not just the Winklevoss twins but also Arthur Hayes, cofounder and CEO of cryptocurrency exchange BitMEX.
Arthur has such an inspirational story. A graduate of Wharton School of Business, he moved to Hong Kong to work as an equity derivatives trader and market-maker. After losing his job in 2013, the 33-year-old decided he was done with banking and turned his sites toward bitcoin—which had just crossed above $1,000 for the first time, ending the year up a

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Bitcoin Has Its Best Start to a Year Since 2012

January 21, 2020

Besides its breathtaking mountains, world-famous chocolate and wartime neutrality, Switzerland is perhaps best known for its commitment to financial privacy. Banking secrecy became law in 1934, making it a crime for Swiss banks to disclose accountholder information of any kind to third parties.
Although such privacy laws have been impacted in recent years—mostly by U.S.-led global efforts to counter money laundering and tax evasion—Swiss banks still enjoy a reputation for being secure and discreet, and they continue to attract assets from all over the world.
It’s appropriate, then, that the country should host the world’s most private conference on what’s potentially the most private asset class: cryptocurrencies. This week, hundreds of crypto investors, experts and enthusiasts from all

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Dollar Weakness Could Be the Catalyst Commodities Are Looking For

January 11, 2020

It’s that time of year again! Near the start of every year, I share with you our ever-popular Periodic Table of Commodity Returns, now updated to reflect the final results of 2019. To view the interactive table and download a copy of your own, click here.
Commodities as a whole had a mostly positive 2019, returning 16.53 percent as measured by the S&P GSCI. This far surpasses the five-year average of about negative 11.52 percent, between 2014 and 2018.
Precious metals were responsible for much of the growth. For the third straight year, and for the fourth time in six years, palladium was the top-performing commodity. The metal, used widely in the production of catalytic converters, increased an incredible 54.21 percent to end 2019 at $1,912 an ounce, a slightly higher price than gold’s

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America Remains the Land of Opportunity. For Everything Else, There’s Gold

January 4, 2020

By Frank HolmesCEO and Chief Investment OfficerU.S. Global Investors
In 1967, a woman then known as Svetlana Alliuyeva arrived by plane in New York. Moments after landing, she held a press conference during which she renounced her native Soviet Russia, describing it as “profoundly corrupt.” She burned her Soviet passport and called her father—who had died in Russia a decade earlier—“a moral and spiritual monster.”
Her father was Joseph Stalin, the former dictator of the USSR.
In case you weren’t around at the time, Svetlana’s defection to the U.S. was a very huge deal. Having changed her name after remarrying, Lana Peters became a U.S. citizen in 1978. She made millions from her autobiography—something that was categorically unachievable in her communist homeland.
In 1991, she got to see

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Expecting a Market Downturn? Make Sure You’re Following the “Noah Rule”

December 14, 2019

In his letter to Berkshire Hathaway shareholders for fiscal year 2001, Warren Buffett made one of his now-famous pronouncements:  “Predicting rain doesn’t count, building an ark does.”
Buffett admitted to forecasting some of the market turmoil during the year, which was exacerbated by 9/11, and yet he failed to convert thought into action. Thus, he violated what some investors now call “the Noah rule,” named for the ancient prophet who saved himself, his family and a few million animals by building a ship in anticipation of a great flood.
Predicting a major economic or financial event—whether that’s a recession, market downturn or even your own retirement—requires that you also take action. Otherwise your prediction was meaningless. This is why I’m always recommending that investors have a

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Need-to-Know Numbers You Might Have Missed This Week

November 30, 2019

Another year, another Thanksgiving. I hope all of my American friends and readers had the chance to spend some quality time with family as we begin the busy holiday shopping season. The leading retail trade group expects sales this month and in December to increase as much as 4.2 percent over last year, for a total potential value of $730.7 billion.
Part of this growth is due to the market selloff that happened at the end of 2018. But there’s more to the story than that.
As I told you last week, the U.S. purchasing manager’s index (PMI), a leading indicator of economic activity, turned up for the third straight month in November. This is a good reflection of healthy demand, and a possible signal of further upside. There’s still a month left to 2019, and yet stocks are already up an

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This Economic Indicator Is Proving the Naysayers Wrong

November 23, 2019

Flying in the face of negative economic news, U.S. factories picked up steam for the third straight month in November. The preliminary manufacturing purchasing manager’s index (PMI), a leading indicator we closely track here at U.S. Global Investors, pulled further away from its August low with a reading of 52.2 this month. That’s up from 51.3 in October and marks a seven-month high.
Remember, investors are better served when they follow the trend lines, not the headlines.

A raft of economic reports on Friday welcomed the turnaround:
Chris Williamson, chief economist at IHS Markit—which releases the monthly PMI—wrote that the November reading “adds to evidence that the worst of the economy’s recent soft patch may be behind us.”
Responding to the manufacturing uptrend, Renaissance Macro’s

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You’re Probably Underinvested in Gold

November 2, 2019

The U.S. was founded 243 years ago, and in that time it’s amassed some $23 trillion in debt and counting. As massive as this number is, it’s still less than half what Elizabeth Warren says her government-run “Medicare-for-all” program would cost… over only 10 years.
The Massachusetts senator and presidential contender made the announcement this morning, responding to critics who’ve demanded to see some details on her proposal. According to her campaign, the price tag to provide Medicare-style health care to every American would be “just under $52 trillion.”
To put things in perspective, that’s close to one-fifth of the total wealth in the entire world, which Credit Suisse estimated to stand at $280 trillion in 2017.
The $52 trillion is just the nominal price tag. It doesn’t take into

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The Opportunities Go to Those Who Can See Past the Negative Headlines

October 26, 2019

“Follow the trend lines, not the headlines.”
The quote, attributed to former President Bill Clinton, is one of my favorite pieces of advice. Clinton was referring to long-term data that show that conditions have actually been improving for the human race despite popular opinion to the contrary. When applied to investing, it cautions against missing opportunities because you’re too busy reacting to negative news.
To be sure, there’s more than enough negative news right now: international trade tensions, volatility in Syria, Brexit, impeachment and much more.
As I’ve said before, I happen to be a news junkie. The U.S. Global Investors office has a number of TVs, all of them tuned to financial news networks. I constantly urge everyone on our team to stay informed and raise their awareness of

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If You’re Not Long, You’re Wrong

October 21, 2019

This week I visited beautiful Vancouver to attend the CEO Martini Party. The annual event, hosted by Stockhouse, is an opportunity for business leaders representing a number of industries to connect and meet with newsletter writers and potential investors.
It was great to catch up with some old faces and to get to know some new ones. I want to thank Cindy Broad and everyone else at Stockhouse for putting on another successful event!
In my keynote address, I explained why I’m bullish going forward despite signs that the world could be facing its worst economic slowdown since the financial crisis. Just this week, the International Monetary Fund (IMF) downgraded its 2019 growth forecast to 3 percent, a significant drop from the past couple of years.

The reason for my bullishness is simple:

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The Optimist’s Guide to Airlines, Crypto Mining and Gold

October 14, 2019

“Travel,” Mahatma Gandhi once said, “is the language of peace.”
If that’s the case—and I happen to believe that it is—then I’m extremely bullish about the future, especially with respect to U.S.-China relations. This week I was in Lower Manhattan, and the number of Chinese tourists I observed visiting the New York Stock Exchange (NYSE) and Federal Hall National Memorial—the epicenter of American capitalism and birthplace of the U.S. government—was encouraging. Everyone wanted their picture taken with the statue of George Washington, the father of the country with which their own government has been locked in a trade war for more than 18 months now.
The trade war’s days may be numbered, however. It’s being reported that both sides of the skirmish reached a partial agreement today, laying

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Here’s Why the Number of Conventional Oil Discoveries Just Hit a 70-Year Low

October 5, 2019

Will he or won’t he?
That seems to be the question on a lot of traders and investors’ minds today with regard to Federal Reserve chair Jay Powell. An October rate cut appeared back on the table after disappointing economic news was released mid-week. But Friday’s mostly-positive employment report may have dashed those chances.
First, the “bad” news. The Institute for Supply Management (ISM) reported this week that both the U.S. manufacturing and non-manufacturing sectors weakened in September. The non-manufacturing, or services, purchasing manager’s index (PMI) fell to 52.6, down from August’s 56.4, representing the lowest reading since August 2016.
The manufacturing PMI, meanwhile, contracted for the second straight month in September, as I mentioned in this week’s Frank Talk. The gauge

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Gold: The Unimpeachable Commodity Investment

September 30, 2019

It’s official: Donald Trump has become only the fourth president in U.S. history to be the subject of a House impeachment inquiry.
I won’t say much on this, as the details of the inquiry are still unfolding. Plus, it’s an extremely divisive topic. Less than half of Americans support Trump’s impeachment, even after the news broke of his call with Ukrainian president Volodymyr Zelensky.
I will say one thing. If history is any guide, it’s highly unlikely that Trump will be convicted of any impeachment charges, especially with Republicans in control of the Senate. The only two presidents who have ever faced such charges, Andrew Johnson and Bill Clinton, were both acquitted. Richard Nixon, as you know, resigned before articles of impeachment could be drawn up.
I don’t believe investors have

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Pierre Lassonde Says Gold Could Hit $25,000 in 30 Years

September 21, 2019

September 20, 2019

By Frank HolmesCEO and Chief Investment OfficerU.S. Global Investors
This year marked the 30th anniversary of the Denver Gold Forum (DGF), the world’s most prestigious precious metal equities investment conference. The invitation-only event, held earlier this week, was attended by an incredible seven-eighths of the world’s publicly traded gold and silver companies by production, as well as leading metals and mining executives, money managers, analysts and investors.
We were one of the founding members of the DGF back in 1989, when I first bought a controlling interest in U.S. Global Investors. During this year’s forum, I was honored and moved to be recognized for our company’s contribution to the group’s creation and ongoing legacy.
U.S. Global gold and precious metal

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Protect Your Wealth Against the Law of Unintended Consequences

August 18, 2019

A number of weeks ago, I told you about my visit to the New York Stock Exchange (NYSE), where we celebrated the two-year anniversary of our quantamental gold ETF. The timing couldn’t have been better. Investor sentiment in gold was surging, as was the price of the yellow metal, on plunging yields around the world and uncertainty surrounding the U.S.-China trade war.
Some of the institutional investors I met with at the NYSE relayed their clients’ concerns about the state of the world economy right now. They were receiving more calls and emails lately about gold, which has been used in the past as a hedge against government policy that was well-intentioned but that ultimately had unintended consequences.
I can sympathize. The United States is the strongest, most prosperous country on the

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Yields Sinking Everywhere, But Gold Just Hit New All-Time Highs…

August 10, 2019

By Frank HolmesCEO and Chief Investment OfficerU.S. Global Investors
“It is no longer absurd to think that the nominal yield on U.S. Treasury securities could go negative,” Joachim Fels, PIMCO’s global economic advisor, warned investors this week. “Whenever the world economy next goes into hibernation, U.S. Treasuries—which many investors view as the ultimate ‘safe haven’ apart from gold—may be no exception to the negative yield phenomenon.”
Fels seems not to be the only investor with this idea, judging by the increased demand for gold.
The price of the yellow metal headed for its best week in nearly two months as the total value of negative-yielding debt around the world touched a new record of $15 trillion. With the nominal yield on the 10-year Treasury having fallen below 2 percent—and

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Gold Heats Up and Silver Joins the Race

July 20, 2019

Now that gold has broken through the $1,450 an ounce level, a six-high year high, the next big test is $1,500. And as I’ve said before, it can do this in the blink of an eye under the right conditions.
We may end up seeing those conditions emerge sooner rather than later.
On Thursday, Federal Reserve Bank of New York President John Williams seemed to indicate that a rate cut could be expected later this month, saying that central bankers need to “act quickly” as economic growth cools. Although he later clarified his comment, claiming he was simply citing research and not forecasting central bank action, the price of gold jumped as much as 2 percent on the news before closing above $1,440 for the first time since May 2013.
Investors took some profits on Friday, knocking the price down

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