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Frank Holmes



Articles by Frank Holmes

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

5 days ago

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

19 days ago

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

26 days ago

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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Signal and Bitcoin: Twenty-First Century Tools of Personal and Economic Freedom

January 18, 2021

Key Points:
Social media’s suspension of President Trump’s social media accounts should be troubling to everyone, whether you support him or not. Recall Ben Franklin: “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”
Privacy seekers are downloading Signal to replace WhatsApp.
Biden’s proposed relief package, at $1.9 trillion, is expected to boost investor demand for real assets, including gold, Bitcoin and Ethereum.
In my final commentary of 2020, I wrote that the U.S. media has a major trust issue. According to recent polls, most Americans put little faith in what they see and read on TV and the internet.
These negative sentiments were probably not improved much by big tech firms’ decision to suspend President Donald Trump

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Will Commodities Ride the “Blue Wave” Higher in 2021

January 9, 2021

What a way to kick off the new year.
If you happened to watch the storming of the Capitol unfold live on TV on Wednesday, you might have mistaken it for a movie adaptation of a Tom Clancy novel. Not since the Burning of Washington in 1814 have antagonistic forces succeeded in breaching the Capitol walls and causing damage.
I believe that may be one of the most alarming things about what happened. I’m hardly the first to question how the rioters were able to get inside the building so easily. It’s being reported that lawmakers are planning a “minute-by-minute” investigation into law enforcement failures during the attempted coup that resulted in five deaths, including an officer with the Capitol Police.
Despite the turmoil, stocks have incredibly continued to trade up. Today the S&P 500

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2020: Gold’s Best Year in a Decade; Ethereum Beat Bitcoin; Inflation Higher Than Reported

January 1, 2021

One of the keys to being a successful investor is making sure you’re getting the right facts. Otherwise, you run the risk of making investment decisions based on poor or faulty information.
The problem is, the media has a major trust issue. Many Americans put very little faith in the accuracy of the “news” they get from newspapers, TV, radio and social media. A Gallup poll in September found that 33% of Americans—a full third—don’t trust the media at all.
This would be distressing in any year, but it’s particularly so during a pandemic and presidential election.
I was curious to see if this distrust was turning up in people’s web searches. My suspicions were confirmed. Google inquiries for “media bias” have historically spiked around elections, but this year, people seemed to be more

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Bitcoin Cracks Record High Due to Institutional Investors

December 19, 2020

If I asked you how many hospital beds the U.S. has, what would you say? Two million? Five million?
Try 924,000. That’s right: The U.S. currently has under 1 million hospital beds for a population of approximately 330 million, according to the American Hospital Association (AHA). By my calculation, that comes out to 28 beds per 10,000 people.
This is the real threat posed by the pandemic, as I see it. Supply-demand imbalances can often be favorable when we’re talking about asset prices, but they’re not ideal during a global health crisis. As of today, more than a third of Americans live in areas that are critically short on intensive care unit (ICU) beds. All of Southern California—a region that’s home to around 25 million people—is now at 0% availability.
And it’s not just beds. Hospitals

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Still Plenty of Gas in the Base Metal Rally Tank

December 12, 2020

Industrial metals are well on their way to being among the top performers of 2020, supported by red hot demand from China and global supply concerns.
As of today, the MSCI Industrial Metals Index—which tracks the price of copper, nickel, aluminum and more—was up 21.4% year-to-date, just below the index of precious metals, up 21.9%. The broader S&P GSCI, which measures metals as well as agricultural and energy-related commodities, was underwater by nearly 10%.

As I discussed last week, copper prices have been on a tear this year thanks not only to the economic strength of China, the metal’s biggest consumer, but also because of its essential role in nascent technologies such as electric vehicles (EVs) and renewable green energy.
The very hottest major commodity, however, has been iron ore.

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The Investment I’m Most Grateful For

November 28, 2020

I hope all of my American readers and subscribers had a safe, happy Thanksgiving Day. This year has been exceptionally challenging for a variety of reasons, but I believe there’s still a whole lot to be thankful for. I trust you were able to spend some time with friends and family, whether in person or over Zoom, and found the time to count your blessings.
Americans appeared to buck Thanksgiving travel warnings from the Centers for Disease Control and Prevention (CDC), with the number of commercial air passengers hitting a new pandemic high. Nearly 1.05 million passengers took to the skies last Sunday, beating the previous record of 1.03 million people on October 18. That figure was beaten again on Wednesday, when 1.07 million people were screened to fly.

One of the things I’m most

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The World Has Racked Up $277 Trillion in Debt

November 21, 2020

How do you even begin to visualize $277 trillion?
If we convert it into seconds, 277 trillion is the equivalent of 8.8 million years. I’m not sure what was happening that long ago, but I guarantee you it didn’t involve people.
It’s been estimated that Jeff Bezos increases his net worth by about $321 million a day. At that rate, you’d have to work for close to 863,000 days, or 2,364 years, to reach $277 trillion. 
You get the point. It’s an unfathomable sum.
It’s also the total amount of debt the world is expected to hit by year-end. That’s according to the Institute of International Finance (IIF), whose members include some 400 banks and financial firms around the globe.
This year alone, as of the end of September, the world added $15 trillion to the debt pile, with government borrowing

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Investors Get a Shot of Hope Amid the Uncertainty

November 15, 2020

America, and the world, received a huge shot of hope this week.
The $210 billion drugmaker Pfizer announced on Monday that its coronavirus vaccine is 90% effective at preventing COVID-19.
As expected, travel and hospitality stocks were the trading session’s big winners. The best performing S&P 500 stock was Carnival, up nearly 40%. Hawaiian Airlines cruised the highest among airline stocks, up an incredible 50%. Only three airline stocks —Singapore Airlines, Air Transport Services and Cargojet—were down for the day. Airline stocks’ daily volatility has historically been ±4%, but on Monday they had a move of 4 standard deviations.

Following the positive news, Goldman Sachs was quick to adjust its market forecast for the next 12 months. The investment bank sees the S&P hitting 4300 by the

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Red, Blue or Both? Still A Bullish Scenario For Stocks

November 7, 2020

As I write this, former vice president Joe Biden has not yet been named president-elect, but with him leading in the crucial battleground states of Pennsylvania and Georgia, it looks more and more likely that he will be sworn in this January.
The market seems to have predicted this outcome. If the S&P 500 is up between July 31 and October 31 before an election, it has historically favored the incumbent party. And if it’s down, it has favored the challenger. Following a loss of 5.6% last week, the S&P was underwater about 4 basis points from the end of July.
Many of you reading this are no doubt disappointed. In a poll I ran back in August, 76% of you said you believed President Donald Trump would be better for the stock market than Biden.
I’m here to tell you there’s probably no need for

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If Inflation Is the Trick, Gold Is the Treat

October 31, 2020

October 30, 2020

Want to hear something really scary? Inflation, the scourge of the modern economy, may be running much faster than we’re led to believe.
I’ll use consumer spending on Halloween as an example of what I mean.
Total Halloween spending has fallen for the past three years and is projected to fall yet again this season, to $8 billion from $8.8 billion last year, according to recent data from the National Retail Federation (NRF).
No surprise there. With many people still avoiding large gatherings due to the pandemic, and health officials calling trick-or-treating a “high-risk activity,” less is going to be spent on candy, costumes, party decorations and other Halloween-related items.
Indeed, spending on costumes is forecast to plunge a not insignificant $600 million compared to

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Some Are Betting on Red, Some on Blue. I’m Betting on Gold

October 11, 2020

Whether you support President Donald Trump or not, you must acknowledge that one of the bedrocks of his governing style is unpredictability. To some critics, Trump’s behavior and decision-making process may seem erratic, but I believe they make a sort of sense when viewed through the lens of game theory.
Take, for example, his hot-and-cold stance on a new coronavirus stimulus bill this week. On Tuesday, Trump unexpectedly tweeted that negotiations with House Speaker Nancy Pelosi would halt until after the election. “After I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Businesses,” he said.
That same day, Trump appeared to change his mind—reportedly after he saw how the stock market, and particularly airline stocks, reacted to the news. (I often

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October Is Already Living Up to Its Reputation as the “Jinx Month”

October 3, 2020

For the past several months, I’ve been watching “Resurrection: Ertugrul” on Netflix.
It’s a Turkish television series that first aired in 2014. Set in the 13th century, the series centers around the titular Ertugrul, the father of Osman, who founded the Ottoman Empire.
Some viewers have called the show the Turkish “Game of Thrones,” and for good reason. It’s full of adventure and excitement as well as intrigue and corruption.
It’s also controversial within the Arab world for showing why the Middle East has so many problems to this day. A number of Arab countries have actually banned it because they believe Turkey’s president Recep Erdogan may see himself as a modern day Ertugrul, out to create a new Ottoman Empire.
In the show, members of the Byzantines, Mongols and Templars are all

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Keep Calm and Stay Long: This Gold Price Correction Is Normal and Healthy

September 26, 2020

In the nearly six years since Greg Abbott has been governor of Texas, the Lone Star State has been the number one destination for U.S. businesses looking to relocate.
That includes California businesses. In 2018 and 2019, as many as 660 California-based companies pulled their stakes up and moved to greener pastures in Texas, where the cost of doing business is roughly 10 percent below the national average.
Next up is Tesla. The electric vehicle (EV) company is currently in the process of building its fourth factory in the Texas capital of Austin, a growing tech hub with a young, highly educated population.
A city in Texas may also be named headquarters to TikTok, the popular video-sharing app whose fate is still in limbo after Oracle and Walmart struck a deal to jointly buy the U.S.

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The Urban-to-Suburban Exodus May Be the Biggest in 50 Years

September 20, 2020

In the past three or four months, you may have noticed a plethora of headlines proclaiming the “death” of big U.S. cities such as New York, Chicago and Seattle. To paraphrase Mark Twain, these reports may be greatly exaggerated. However, there’s no denying that many urban city-dwellers—a great number of them high-income—are either relocating into the suburbs or strongly considering it, due to the double-whammy of the coronavirus and historic social unrest.
This latent “exodus,” as some are already calling it, may end up being among the biggest in U.S. history, or at least the biggest since the “white flight” of the 1950s and 60s. According to real estate brokerage firm Redfin, a record 27.4 percent of homebuyers sought to move out of their metro areas in the second quarter, with New York

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