Are We Heading for a Second Wave of Lockdowns?

“I cannot emphasize how important this could be.”

That’s Dr. Sam Parnia, a doctor and professor at the Grossman School of Medicine at New York University. What he was reacting to is news that a cheap drug, dexamethasone, has reportedly been shown to reduce deaths among COVID-19 patients on ventilators by as much as one-third.

“It’s a huge breakthrough, a major breakthrough,” Dr. Parnia said of the study conducted by scientists at the University of Oxford.

The 60-year-old anti-inflation medicine is manufactured by a number of companies, including Mylan and Merck, and is widely available in pharmacies and hospitals around the world.

The discovery—if it’s everything the researchers say it is—comes just as new coronavirus cases and hospitalizations are spiking again in several countries, including the U.S.

California, which now requires mask-wearing outside of the home, had its biggest one-day jump in infections. Arizona, Florida and Texas are also turning into new hotspots.

The threat is such that some companies are closing stores again after reopening. Apple announced it would be closing 11 locations in Florida, North Carolina, South Carolina and Arizona.

Our hometown of San Antonio recently had its largest one-day caseload, and hospitalizations are on the rise, particularly among veterans. Today the Audie L. Murphy Memorial Veterans Hospital, not a 10-minute car ride from our office, reported its highest number of coronavirus inpatients since the crisis began.

Fear and Loathing in the Age of COVID-19

The data is scary and can be paralyzing—if you let it. As I’ve said a number of times, it’s important to keep things in perspective while also being smart and cautious. The average age of death in confirmed COVID-19 cases is 82, according to figures from Massachusetts, and San Antonio’s data appears to show similar results.

Below are COVID-19 cases and deaths in San Antonio by age. As you can see, people under the age of 49 make up a vast majority of total infections in the city, and yet they represent a very small fraction of deaths due to coronavirus-related complications. Meanwhile, the group with the most deaths are those aged 80 to 89, even though they have 13.5 times fewer cases than the 20-to-29 bunch.

But even if an older person contracts the virus, it’s not automatically a death sentence. Of the 103 San Antonians aged 80 to 89 who tested positive, only 22 died as a result, or a little more than one in five.
I understand this is an uncomfortable subject, and I don’t mean to minimize the risk. My intent is simply to share the facts so we can better manage our expectations.

We fear what we don’t understand, and fear often triggers us to make decisions we later regret. Nearly one-third of investors at Fidelity who were over the age of 65 sold all of their stocks between February and May. Tragically, many got out right at the bottom. Think of Warren Buffett, 90 in August, who unloaded his entire airline holdings soon before they began to take off.

Meanwhile, a great number of millennials trading on Robinhood accurately called the market bottom, with accounts surging just as stocks began to rally.

Vacation, Had to Get Away

The U.S. isn’t the only country that’s reopening, of course—a fact that can easily be seen by the sharp rebound in global fossil fuel emissions. After falling as much as 17 million metric tons per day by early April as world governments enforced lockdowns and travel restrictions, emissions have crept back up and are presently down about 4 million metric tons from the pre-pandemic period.

People are beginning to travel again and go on holiday. According to the Transportation Security Administration (TSA), more than 576,000 people boarded commercial airlines on June 18, marking a new high in the coronavirus era. This week Hong Kong Disneyland reopened for the first time since January, following the opening of Shanghai Disneyland last month.

Elsewhere in China, a coronavirus outbreak in Beijing has been “brought under control,” according to the country’s chief epidemiologist, by locking down residential areas and schools.

My Big Fat Indian Wedding

Like the U.S., India is seeing a surge in coronavirus cases this week and—again, like the U.S.—will not initiate another lockdown. Some 12,880 people tested positive on Thursday, a record one-day number. Instead of locking down the Indian economy, Prime Minister Narendra Modi is encouraging people take up yoga to build a “protective shield” against the virus.

This made me wonder how the virus might impact the upcoming Indian wedding season. As I’ve written about many times before, the $50 billion Indian wedding industry is a huge source of global gold consumption, as weddings are considered an auspicious time to give and receive gifts of gold. Gold jewelry, in particular, is often an essential part of the dowry.

Indian weddings have a long history of being grand affairs, with attendance sometimes reaching into the hundreds and even thousands, the total cost into the tens of thousands.

But with many popular venues limiting wedding sizes, Indian couples are postponing tying the knot at a record rate.

What does this mean for the gold market? I’ll give you my thoughts in a special Frank Talk next week, so make sure you’re subscribed.   

On a final note, I would like to invite you to join us in our next can’t-miss airline webcast, to be held on Monday, June 22, at 1:00 P.M. Central time. To register for the event, just send us an email at [email protected] with “Airlines Webcast” in the subject line!

U.S. Global Investors celebrates Juneteenth Freedom day June 19

Gold Market

This week spot gold closed at $1,742.47, up $11.72 per ounce, or 0.68 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 2.00 percent. The S&P/TSX Venture Index came in up 1.96 percent. The U.S. Trade-Weighted Dollar rose 0.32 percent.

Date Event Survey Actual Prior
Jun-16 Germany CPI YoY 0.60% 0.60% 0.60%
Jun-16 Germany ZEW Survey Expectations 60 63.4 51
Jun-16 Germany ZEW Survey Current Situation -82 -83.1 -93.5
Jun-17 Eurozone CPI Core YoY 0.90% 0.90% 0.90%
Jun-17 Housing Starts 1100k 974k 934k
Jun-18 Initial Jobless Claims 1290k 1508k 1566k
Jun-23 New Home Sales 630k 623k
Jun-25 Durable Goods Orders 10.90% -17.70%
Jun-25 GDP Annualized QoQ -5.00% -5.00%
Jun-25 Initial Jobless Claims 1300k 1508k


  • The best performing precious metal for the week was silver, up 0.83 percent as hedge funds boost their net long position to a 14-week high. Swiss exports of gold to the U.S. hit another high in May to 126.6 tons. ETFs added 27,739 troy ounces of gold to their holdings on Thursday, marking the sixth straight day of inflows. Bloomberg notes that total gold held by ETFs rose 22 percent this year to 100.9 million ounces.
  • Goldman Sachs raised its 12-month price forecast for gold to $2,000 an ounce. Analysts including Mikhail Sprogis said in a note that “gold investment demand tends to grow into the early stage of economic recovery, driven by continued debasement concerns and lower real rates.” The bank added that it estimates fear-driven demand for bullion has boosted prices by 18 percent this year.
  • Gold has traded in a narrow range for the past month. The two biggest factors for the metal are comments from the Fed and COVID-19. The yellow metal has held its gains for the year on the wave of unprecedented stimulus to support the economy and concerns of the number of virus infections rising. Gold then had a surprise rally on Friday and finished the week back in the $1,755 range.


  • The worst performing precious metal for the week was palladium, down 1.08 percent, despite the positive news that it should remain in deficit this year. Traders were rotating positions to silver with expectations that industrial uses for palladium will still be soft in the near term.
  • Although gold and silver are in favor with ETF investors, money managers’ net long positions in Comex futures and options for the metals are down by more than 50 percent this year, according to Bloomberg. Commerzbank AG says gold positions have fallen for five of the past six weeks, which explains why prices are stuck in a range despite strong demand from ETFs.
  • Gold retreated early in the week after the U.S. dollar strengthened on concern that a second wave of COVID-19 infections could hurt the economic recovery. Equities fell on Monday on news that Beijing reported new virus cases. “The sell-off happening in other assets is rubbing off on gold as well,” Gnanasekar Thiagarajan, director of Commtrendz Risk Management Services, told Bloomberg.


  • Anglo American Platinum CEO Natascha Viljoen said the palladium market should remain in deficit in 2021 and sees a small deficit for this year. The metal producer also said it is targeting 70 percent of output capacity by the end of June with potential for that to rise to 90 percent in the second half of this year.
  • Cardinal Resources announced that it has entered into an agreement with Shandong Gold where Shandong will acquire 100 percent of the issued and outstanding shares in Cardinal in cash. K92 Mining provided an update on operations amid the COVID-19 state of emergency in Papua New Guinea. The miner said its gold production is one track to exceed production in the first quarter, despite lower running time due to shutdowns.
  • Advisors to the world’s wealthiest are urging them to hold more gold in their portfolio. Reuters reports that some private banks are now channeling up to 10 percent of client portfolios into gold as central bank stimulus reduces bond yields. Nine private banks spoken to by Reuters said they had advised clients to increase their allocation to the yellow metal.


  • A growing worry in the economy is that job losses could become permanent from the coronavirus effects. Bloomberg Economics research highlights that about 50 percent of job losses came from the lockdown and weak demand, 30 percent from the reallocation shock and 20 percent from high unemployment benefits encouraging workers to stay home. Federal Reserve Bank of Minneapolis Neel Kashkari commented that his base case is that a second wave of virus comes this fall and the unemployment rate could go higher.
  • Evercore ISI research showed that total macro risk has climbed to a new all-time high in its 14-year model. The research says, “volatility associated with changes in S&P correlation now accounts for more than half of total macro risk, followed by the risk influence of credit spreads and the U.S. dollar.”
  • Veteran investor Jeremy Grantham said in an interview on CNBC this week that the U.S. stock market is in a bubble and that investing in the market now is “simply playing with fire.” Bloomberg notes that the S&P 500 index has risen almost 40 percent from its March 23 low. Grantham added that “it is a rally without precedent – the fastest in this time ever and the only one in the history books that takes place against a background of undeniable economic problems.”


Index Summary

  • The major market indices finished up this week. The Dow Jones Industrial Average gained 1.04 percent. The S&P 500 Stock Index rose 1.86 percent, while the Nasdaq Composite climbed 3.73 percent. The Russell 2000 small capitalization index gained 2.23 percent this week.
  • The Hang Seng Composite gained 2.21 percent this week; while Taiwan was up 1.05 percent and the KOSPI rose 0.42 percent.
  • The 10-year Treasury bond yield fell 2 basis points to 0.691 percent.


You can read the remainder of the article here.

June 19, 2020

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