This Summer Could Be the Start of a New Roaring Twenties

This Summer Could Be the Start of a New Roaring Twenties

A little over a hundred years ago, the United States emerged from the double whammy of a world war and deadly pandemic. Eager to get back to “normal” life, Americans went on a decade-long spending splurge, buying cars and radios and stocks.

Although we all know how it ended, the Roaring Twenties was largely a product of pent-up demand.

This summer, I believe we could see the start of a similar demand-driven economic boom as millions of Americans, newly vaccinated and $1,400 richer, make up for lost time by booking flights and vacations, going on cruises, visiting family out of state and more.

As I shared with you earlier this month, close to $18 trillion sit in Americans’ savings accounts right now—a record amount. Much of this cash is just waiting to be unleased into the U.S. economy.

Things are already heading in the right direction. According to CLSA’s proprietary reopening index, the U.S. saw the biggest weekly gain since the start of the pandemic, up 8%, as the number of new daily infections dropped further. Here in Texas, all COVID-19 restrictions were lifted 100% on Wednesday, right on time for Spring Break.

Weekly U.S. reopening index jumped the most since the start of the pandemic

Airlines Betting on a Strong Rebound in Summer Bookings

This week marks the one-year anniversary of the start of the pandemic, and if Google Trends data is any indication, Americans are ready to travel again. The number of Google queries for online travel agencies Expedia, Priceline and Travelocity hit pandemic highs this week as airlines announced new deals and routes.

AMericans ready to start booking flights and trips

Low-cost carriers Allegiant and Southwest recently expanded their networks to include 36 new non-stop routes in the former’s case, 17 in the latter’s. According to Bloomberg, this the second-largest network expansion in Allegiant’s history and the largest for Southwest since 2013.

Across the Atlantic, Lufthansa is also adding to its slate of summer destinations in anticipation of a strong rebound in bookings. Europe’s largest carrier will add around 20 new routes from Frankfurt and 13 from Munich to vacation spots such as the Caribbean, Canary Islands and Greece.

Meanwhile, credit card data from the end of February shows an uptick in airline booking among older Americans—those most likely to have been fully vaccinated. At a Raymond James conference last week, the CEOs of Delta and Spirit told investors that bookings took a positive turn in mid-February.
Passenger volume in the U.S. is still down about 60% compared to pre-pandemic levels, but I expect this to improve the closer we get to vacation season and as more people get their shots. Cowan aviation analyst Helane Becker, who helped us launch our airlines ETFs in 2015, told Yahoo Finance that she believed the number of daily passengers would cross above 1 million by March 20.

One year later, air travel demand still 60% below pre-pandemic levels

American Airlines is so optimistic on a recovery in summer leisure travel that it just increased the size of its debt financing, from $7.5 billion to $10 billion. The debt, according to MarketWatch, is underpinned by the carrier’s $20 billion AAdvantage loyalty program.

Another sign that airlines are sensing a shift in Americans’ appetite for air travel? Budget carrier Frontier filed to IPO this Monday, saying that it was “well positioned to take advantage of the anticipated demand recovery as vaccine distribution continues.” Rival carrier Sun Country also provided new details for its own upcoming IPO on Monday, telling investors it seeks to raise some $200 million to help pay off pandemic crisis loans from the federal government.

$15 Billion Stimulus for Airlines and Airline Contractors, $8 Billion for Airports

The U.S. aviation industry is set to receive another round of fresh stimulus now that President Joe Biden has signed the $1.9 trillion rescue package.

American and United immediately dropped plans to lay off or furlough a combined 27,000 workers.
Included in the bill is approximately $15 billion for airlines and airline contractors, $8 billion for airports and concessionaires.

What's in the $1.9 trillion stimulus package?

As expected, U.S. airline and airport trade groups were quick to praise the rescue package. Airlines for America (A4A) wrote that it’s “vital to have our employees on the job and ready to assist as our nation prepares to move forward from this crisis,” while the American Association of Airport Executives (AAAE) said that the amount earmarked for airports “underscores the enormous financial impact that the pandemic is having on airports and the entire aviation ecosystem.”   

How the Semiconductor Chip Shortage Will Contribute to Inflation

One of the anticipated consequences of economic reopening is higher inflation. Add trillions of dollars in new debt and money-printing, and inflation could end up being hotter than any of us expected.

This week, the Bureau of Labor Statistics (BLS) reported that the consumer price index (CPI) rose slightly to 1.7% year-over-year in February, up from 1.4% in January.

Of the items tracked by the BLS, used car and truck prices advanced the most at 9.3%. This was the sixth straight month that used vehicle prices jumped more than 9% compared to last year.

The reason for this is simple economics: Too few vehicles available for sale during the pandemic and too many buyers.

Weekly U.S. reopening index jumped the most since the start of the pandemic

The price hike is likely to continue with the global shortage in semiconductor chips, which are used extensively in automotive manufacturing. The “smarter” our cars and trucks get, the more chips are needed.

In a research report this week, CLSA writes that the chip shortage “should ultimately hasten electrification of the global automotive industry.” With chip supply in question, automakers are shifting priority to the products highest in demand right now, i.e., electric vehicles (EVs). A number of companies, including Ford, General Motors and Toyota, have extended plant shutdowns due to limited chip availability.

As a result, prices for traditional internal combustion engine (ICE) vehicles will certainly face upward pressure as fewer of them roll off factory floors.

The moral to the story? If you’re in the market for a new car or truck, you might want to make a purchase sooner rather than later.

Ethereum Mining Revenue Broke Above $1 Billion for the First Time

The chip shortage has hit other industries, of course, including crypto mining. Demand from miners is so high right now that chipmaker Nvidia announced it will be releasing a new series of semiconductors designed specifically for mining Ethereum.

In other Ethereum-related news, Coin Metrics data shows that monthly revenue generated by Ethereum miners hit a record $1.37 billion in February, an incredible 1,300% increase from the same month in 2020, and a 65% increase from the previous month.


Miner revenue includes inflation rewards (block subsidy) and transaction fees. Miners are paid rewards in the blockchain’s native currency for producing valid blocks and processing transactions.
This is very good news for HIVE Blockchain Technologies, the only publicly traded crypto miner that mines both Bitcoin and Ethereum using 100% green energy.

Missed our webcast this week on crypto and gold? You’re in luck! The replay is available to listen to by clicking here.


Gold Market

This week spot gold closed the week at $1,727.11, up $26.47 per ounce, or 1.56%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 3.93%. The S&P/TSX Venture Index came in up 6.96%. The U.S. Trade-Weighted Dollar fell 0.34%.

Date Event Survey Actual Prior
Mar-10 CPI YoY 1.7% 1.7% 1.4%
Mar-11 ECB Main Refinancing Rate 0.000% 0.000% 0.000%
Mar-11 Initial Jobless Claims 725k 712k 754k
Mar-12 Germany CPI YoY 1.3% 1.3% 1.3%
Mar-12 PPI Final Demand YoY 2.7% 2.8% 1.7%
Mar-16 ZEW Survey Expectations 74.0 71.2
Mar-16 ZEW Survey Current Situation -61.5 -67.2
Mar-17 Eurozone CPI Core YoY 1.1% 1.1%
Mar-17 Housing Starts 1570k 1580k
Mar-17 FOMC Rate Decision (Upper Bound) 0.25% 0.25%
Mar-18 Initial Jobless Claims 700k 712k



  • The best performing precious metal for the week was platinum, up 6.45% as it continues to pick up momentum from electrification. Gold rose the most in two months on Tuesday, rebounding from a nine-month low on a weaker U.S. dollar before falling at the end of the week. Rory Townsend, head of gold research at Wood Mackenzie said that “we just don’t think bond yields will rise indefinitely. We expect to see a resurgence in gold in the second half of the year as inflation picks up.” President Joe Biden signed a $1.9 trillion COVID-19 stimulus bill this week.
  • Franco-Nevada Corp reported record financial results for 2020, selling 521,564 gold equivalent ounces and increasing revenue by 21% to $1.02 billion. The company boosted its quarterly dividend by 15.4% to $0.30 a share.
  • Wheaton Precious Metals reported over $1 billion in revenue for the year ended December 31, a 27% increase from the year prior due to a 28% increase in the average realized gold equivalent price. Kitco News reports the royalty and streaming company saw $208 million in operating cash flow in the fourth quarter and a net debt reduction of $275 million.


  • The worst performing precious metal for the week was palladium, but still up 1.47% as precious metals got an across-the-board boost. Gold dipped on Friday, nearly erasing gains made earlier in the week as both bond yields and the U.S. dollar rose. Higher Treasury bond yields weaken demand for non-interest-bearing bullion.

Gold remains under pressure from

  • ETFs backed by gold saw 144,432 troy ounces of outflows on Wednesday, bringing net sales for 2021 to 4.84 million ounces. Bloomberg data shows it to be the 19th straight day of declines.
  • Silver is also facing headwinds from higher real rates. UBS Group AG’s global wealth management unit said high real rates are unlikely to fade soon and lowered its silver price forecasts to $25 an ounce across all time periods.


  • Commodity strategists at RBC Capital Markets say the gold-versus-bitcoin comparison is overdone. Gold and bitcoin “may prove to be complementary assets that at times also compete on the margin.” Bitcoin is more volatile than gold and the two markets have different sizes and depths. 
  • Senior silver producer First Majestic Silver announced a deal to acquire Jerritt Canyon Canada Ltd. from Sprott Mining for $470 million in shares plus five million warrants. The move brings First Majestic into Nevada. The company said this acquisition, plus its two operating mines in Mexico, will help the North American producer hit its annualized production of 30 to 33 million silver equivalent ounces. This marks another consolidation transaction in the mid-tier space following the taking of Premier Gold by Equinox Gold. With the pull back in gold prices some attractive valuations can be found, where a deal might get done now.
  • FireFox Gold shares rose nearly 30% after announcing it secured new gold concessions in the Central Lapland Greenstone Belt in Finland. The company is rapidly expanding its exploration reach in Finland, which is seeing somewhat of a gold rush.


  • Bloomberg’s Eddie van der Walt writes that gold could decline further to $1,500 an ounce before finding a bottom as the “doomsday” reason to buy gold is over. Gold had a strong buy signal when the pandemic first broke out, but the vaccine rollout and economy recovery take away the safe-haven appeal. The investment case for gold is collapsing for many as yields remain high and outflows from gold-backed ETFs continue.
  • Gold is “failing as an equity hedge” according to BlackRock portfolio manager Russ Koesterich. In a blog post last week, Koesterich says gold faces a double whammy of being a less effective hedge against stocks and inflation, plus the headwind of the economic recovery.
  • Alamos Gold said it may take legal action against the government of Turkey for failing to renew its mining license, reports Bloomberg. Alamos has a 60-year mining permit for the Kirazli project that requires re-approval every 10 years, but operations have been halted since 2019 as the government has not renewed the permit. Alamos spent $6.6 million last year in Kirazli for holding costs and government, public and community-relations initiatives, according to its latest earnings release. In 2017, the company said 540,000 ounces of gold could be produced from the mine in five years.


Index Summary

  • The major market indices finished up this week. The Dow Jones Industrial Average gained 4.07%. The S&P 500 Stock Index rose 2.64%, while the Nasdaq Composite climbed 3.09%. The Russell 2000 small capitalization index gained 7.38% this week.
  • The Hang Seng Composite lost 0.62% this week; while Taiwan was up 2.52% and the KOSPI rose 0.93%.
  • The 10-year Treasury bond yield rose 6 basis points to 1.626%.

Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Chiliz, rising 355.65%.
  • The Central Bank of Russia is planning to launch its prototype of the ruble-backed digital currency. Alexey Zabotkin, the bank’s deputy chairman, explained that the prototype will be available for people to use and give feedback on, but will not support any real money transactions. The plan, according to Zabotkin, is to study the usage of the prototype and make necessary developments to start testing the digital currency in 2022.
  • Christie’s, the storied auction house, completed the sale of “EVERYDAYS: THE FIRST 5000 DAYS” by crypto artist Beeple. The digital artwork, created as a non-fungible token (NFT) on the Ethereum blockchain, was sold for a record $69.3 million. Ether was supported as a payment option for the first time by Christie’s, and it is unclear whether the buyer used fiat or cryptocurrency to buy the artwork. The chart below shows that Bitcoin’s finite supply will reach 98% within this decade and decrease its monetary inflation to near 0% within the same time frame.

Bitcoin's finite supply will reach 98% in 10 years


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was NEM, down 45.06%.
  • Binance, the cryptocurrency exchange, is being investigated by the Commodity Futures Trading Commission (CFTC) to determine whether U.S. residents traded derivatives on it, which is a violation. For now, Binance has not been accused of any wrongdoing and the CFTC might not bring any enforcement action. This probe into Binance is another sign that regulators in the U.S. are trying to funnel investors into regulated channels.
  • Analysis has shown that companies allocating their balance sheet to Bitcoin risk their company stock to be highly correlated with the volatile digital asset. The correlation coefficient between Bitcoin and an equal-weighted basket of five stocks that announced investments in the cryptocurrency – Tesla, MicroStrategy, Square, Meitu and Aker ASA – has shot up to an average of 0.72 this year from 0.26 in 2020.


  • BlockFi, one of the world’s largest cryptocurrency lenders, raised $350 million in its Series D funding round, co-led by Bain Capital Ventures. This funding round gives BlockFi a valuation of $3 billion, and currently has $10 billion in outstanding loans and $15 billion in total assets. Zac Prince, BlockFi’s CEO, mentioned that the company has been operating profitably for several months and is looking to cement itself as the leading lender in the cryptocurrency industry, providing both trade execution services for institutions and opportunities for retail investors to get yield on their Bitcoin holdings.
  • WisdomTree, the exchange-traded fund (ETF) giant, has become the latest investment company to apply for launching a Bitcoin ETF by filing an S-1 form with the U.S. Securities and Exchange Commission. The company intends to list the shares of its ETF on Cboe’s BZX Exchange. Grayscale is mulling either applying for a new Bitcoin ETF or converting the Grayscale Bitcoin Trust into an ETF.
  • Binance is adding new features to its cryptocurrency payment platform that it released as a beta in February. Binance Pay is set to allow businesses to process payments in crypto, both online and in-person, via QR codes and a dedicated API. The beta version only allowed peer-to-peer payments and drew a reported 250,000 users and the platform supports more than 30 cryptocurrencies, including Bitcoin, Ether, dogecoin, as well as five fiat currencies: the Australian dollar, Brazilian real, euro, U.K. pound and Turkish lira.


  • Uncertainty surrounding cryptocurrency regulations in South Africa is driving cryptocurrency startups away from the country in search for friendlier environments. Revix, a Cape Town-based crypto and fintech startup, is reportedly shifting its head office to the U.K. and planning a Germany-based location. This is just one of multiple crypto startups and exchanges leaving the country. The Financial Sector Conduct Authority (FSCA) is seeking to regulate digital currencies with more power to prosecute fraudsters and will focus on better protection for consumers rather than businesses, according to Head of Enforcement Brandon Topham.
  • The Internet and Mobile Association of India (IAMAI) is appealing to the Indian government not to ban cryptocurrencies and is proposing that the government introduce mechanisms to regulate the crypto sector claiming that the country could see considerable benefits such as job creation. This is in response to the Indian government planning to introduce a bill into the parliament’s budget session that would ban “private cryptocurrencies.” Cryptocurrency trading volume in India reached $1.4 billion this January, before jumping to $2.3 billion in February.
  • South Korea’s Financial Services Commission (FSC), the country’s leading financial regulator, has introduced penalties for cryptocurrency exchanges that do not implement stringent anti-money laundering laws. Crypto exchanges and other companies that facilitate crypto transactions will face fines between $26,000 to $52,000 if such laws are not implemented.

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