2021 is not going to be the year of another market crash, said Frank Holmes, CEO of U.S. Global Investors. In fact, the economy is expected to see a substantial rebound, followed by a rally in gold, stocks, and bitcoin.
2020 was a record year for economic contractions that will 2021. Turn this around and see a record for economic growth while we're here to discuss that with Frank Holmes, CEO of us global investors, Frank happy holidays. It's good to speak with you. And before the new year, how are you? Outstanding? My friend and happy holidays to you and everyone at Chicco.
Maria. Happy to speak with you. I think you are my final interview for 2020. What a way to close this year off? What a tremendous year we've had Frank looking back. How could you sum up this year in a few sentences for you contrarian? Um, the it's been so many things have been massively contrarian for our us global investors, Jetson, TF falling, uh, 70% and the $35 million.
And now it's over 3 billion, uh, going from 35,000 daily traded to frequent 5 million. I mean, there's this whatever expect that, uh, millennials coming in and discovering ETFs and stocks, the way the nineties, when baby boomers discovered mutual funds and stocks, uh, w would never expect it that, uh, I wouldn't have didn't expect, um, the theory and Bitcoin to go to the rally that they've gone through.
Uh, but I did. Feel comfortable that gold would trade higher with all this collective money printing. But that money printing is intriguing as of dollars. U S is now hitting that 10 trillion this year, which we've talked about much earlier in this year. That's what we'll take. When look at Europe, look at China, look at Japan.
You did call Chad $10 trillion in terms of stimulus. So that was the right call. What does that mean for the economy? What does that, what is the significance of that number? Frank? It's huge. It's shared because you can see what happened first in China. And then you saw the first money in Europe that you saw.
American America has been more sustainable than Europe. Is ignited the PMI. We've talked about this before that purchasing manufacturers index is a great leading indicator. And when that turns for China, and that turns for America, we 40% of all global trade copper iron, all the metal starts surging. Uh, and, and, and I think we're going to continue to see this.
Now, those last $2 trillion coming by Congress and president Trump. Well, that's going to be huge for consumer spending. 70% of the American economy is. Consumption guess what? I think that first quarter GDP is going to be over 5%, not 3%, but over five. Okay. We're going to come back to, uh, your themes and the favorite investments for 2021.
But before that, I have to ask you about cryptocurrencies. Bitcoin. What has been happening since last we spoke, it just kept going up. It's at $26,000. I mean, we talked about breaching all time highs at around close to 20. Now it's at 26. So the, the, the questions I've been getting in my personal inbox is where can we see a retracement now is now the time for a pullback?
Well, mathematically, yeah, you can get a pullback, but I think the issues are you have all this money printing and there's no doubt cryptos become an alternative asset class. Having mass mutual, all of a sudden buying Bitcoin and putting into a cold wallet is another institutional sponsorship. There are so many elements.
BlackRock is hiring a crypto blockchain analysts. I'm building out because there's more demand for their $6 trillion in assets they have. Well, now they're looking for someone to specialty. It's going to be, it's a growing thing, but for big point, that having was significant in may because of the, basically the mining supply half, just what would happen if the 90 million ounces a year don't have gold mines have, uh, gold prices would be probably $20,000 to, you know, it's just recognizing, uh, that people are still buying Bitcoin, but the supply is all of a sudden half.
So they have to reach out and buy other coins. So I think this is very bullish for what's happening in Bitcoin, but he performed Bitcoin. If there has been another spectacular performer. And another reason for that is supply restriction is the supply has been defined. DFI uses a lot of Ethereum as a backbone, and the hearing point is sucking up the theory.
Now we have Ethereum 2.0, you tender it basically for staking. You get a yield. Well, that's taking you through him out of it. Whereas what's called Metcalf's law more and more people are buying Bitcoin, Ethereum, therefore with supply restrictions, you see that prices can trade substantially higher. Last time we spoke high was trading around what a dollar 70 per share.
It's at more than $2 40 cents. Now, today, what happened in the last three weeks? Well, it, it would, it wouldn't parabolic, there were no answers. The $3 trading begins of shares. And I think it became a lot of the enthusiasm. Uh, when you looked at a lot of the other Bitcoin mining companies, they're making announcements for equipment that are going to buy, and they're going to become big revenue generators, but not for six, nine months now, even 12 months because there's no equipment.
There's a real supply issue of getting wafers to make these AC chips. And there's an, has only added to that drama so that the issue is, is you're seeing, whereas hive, it has revenue and castle today, and it's very robust. So I think that that was part of that whole surge. Uh, and then we had institutional sponsors, like I said, mass mutual.
And hive has become a proxy. A Motley fools wrote about it saying it's a proxy because we also own the coins and we mind the points. We sell enough to pay the electrical bills and salaries. Other ways we store the coins and have cold wallet and that copy of imagination as Bitcoin went through $20,000.
Yeah. So here's a question that I've seen circulating on the internet. This is something that. Uh, a lot of people are wondering actually. So if you assume that Bitcoin is like a digital version of gold, they share similar attributes. Then if Bitcoin's at $26,000, why isn't gold at $26,000? Is that a, is that a legitimate question?
Where do you think they're comparing apples, oranges, apples, oranges. They're both alternative asset classes and you're not having central banks use Bitcoin as, as a monetary asset. Uh, the church, uh, bought a gold and when they couldn't get us dollars portrayed, they sold their goal. Then they turn around and buy back their goal.
Uh, we're seeing that those there's about 15 countries are a lifeline with the federal reserve, where they can basically do a big repo to get us dollars to facilitate global trade. And those countries have not had it. They don't, they sell their goal to get that us dollars to be, to facilitate trade. So I think that, uh, gold is still the fourth, most liquid asset class in the world.
It's much more liquid than Bitcoin is a lot less volatile. Gold is bald. So as the S and P 500 Bitcoin, and Ethereum can give you a nosebleeds and that only exasperates high blockchain and riot. And, and if you look at their DNA of volatility, they're like Tesla, Tesla. It was massive volatility. On a daily basis, over 10 trading days over 60 trading days.
So it's recognizing that those asset classes, as they're growing, I was just going to have more Baltic Goldsboro for 5,000 years. It's a monetary acid. It's much more stable. You brought up the key word, which is volatility. People say that Bitcoin is a store of value or emerging as a store of wealth and value, but can that still be applied?
If, if volatility, like you said, is like Tesla, if something moves up and down so much, can we, can we use that confidently as a store of value? I think that it's a store of speculative value. Okay. That's the one way to word it. Yeah. I think it's going to become like, um, Andy Warhol Prince. Okay. It should be for the Mount Prince, came out with this thousand Princeton in five different colors, uh, for a thousand dollars, $10,000 to a quarter million dollars.
They grew up as more people discover any world more as the Chinese economy, boom Chinese, all of a sudden buying the anti war house. We had this huge rise because of limited supply. So I think that Bitcoin is going to go through that way is going to be that alternative asset class. So do you have an outlook for Bitcoin and gold prices for the new year higher, lower?
Where are we headed? Well, I think the trade higher, um, there's no doubt this money printing. It doesn't show up immediately. Like we talked before. If you look at 2009, uh, all the debt money printing that took place, Oh eight or nine, it was three years later. The goal went from 700 to 1900. So that's why I still do feel very comfortable.
The next three years we can see going to 4,000. You know, on my way here, I was taking an Uber to the, to the studio and the cab driver was asking me, Hey, what do you do for a living? What's your job? And I told him, you know, I talk about golden economy. And then he starts asking me a bunch of questions about gold.
He was like, Hey, you know, I I've recently started following gold and precious metals. It's it's your it's been rising. I want to buy some more, you know, the old adage, the cab driver starts asking you about something it's probably overbought. Right. Do you, do you agree with that? Is that, what is that what's happening right now?
Well, maybe the Uber drivers, uh, got a PhD. So that's the only, there's a lot of very highly educated Uber drivers. Okay. That is a fair assumption. You're right. Okay. We've got to talk about the economy now. I want to get Frank Holmes, his major investment themes for 2021. 2020 caught everybody off guard.
What are you looking forward to for 2021 that are going to drive your investment? Just bullet point is for us, once again, government policies are precursor to change. So we monitor and track this goal monetary policies and, and to get an idea where money will be going and flowing towards. Um, the big headwind will be Biden, uh, and his group will have, will they raise taxes, uh, everywhere?
What will they do? Because that's all we spirituality economy that will affect different industries. So that's probably that, you know, the most unsettling, unknown, uh, thing ahead of us, but the momentum is so strong right now that I think, uh, the G 20 countries are going to continue. This sort of sport, a sporting event of using MMT modern monetary theory to try to push, uh, Columbo sustainable growth.
I think that ESG investing is going to become more important. Uh, I think that, uh, we're going to see gold prices trade higher, uh, because this is money printing is not going to go away. I think we're going to get a CPI rising. I think we're going to see them face your rising. It's just not showing up as it yet as populating, but we still have negative religious rates and that'll be a very positive note, but governments have been able to keep the engine going with negative religious rates.
They're going to keep doing it. And so all of a sudden it hits the wall. And I think that in the next three years, we're going to see all of a sudden that pattern breakaway with gold really becomes a unique asset class CPI rising, which components of CPI do you think will rise more? Well, I remember I've said it before that they changed the algorithm.
So if you use the algorithm of golden eight 50 a inflation's running at eight, 9% today, I I'm a big believer of ablation is much higher than the reported 1.4, 1.5. I, I just don't believe that because I see what I'm spending money on. I see for buying Christmas gifts, uh, it's just more costly. And, uh, and I see what professional service fees and legal bills they're going out much more than, than 1.3% or 1.4%.
So I think it's way understated housing is up. I know that I love where prices are up. 40%, uh, cost of new construction. The housing is up 40%. So I think inflation's being masked, it's being masked. Why do you think, why do you think that's happening? Do you think the, uh, central banks don't want really volatile prices to affect the monetary policy?
That's why they look at core inflation, right? They don't look at headline. Correct. I think there's probably something there. And I think that people have to really respect that the G 20 finance ministers and in particular there, their central bankers. Uh, work together, uh, and presidents and prime ministers come and go.
But so often the, uh, the chief banker of the G 20 countries are there through many terms of presidents and prime ministers, and they all connected to each other. They all have relationships and they have symposiums together. So I think that that would, that's something people have to be really cognizant of sense of off.
Okay. Now you were telling me offline inflation and housing is starting to show, how is that possible, Frank? Well ever since in 2009, that the structure of new housing where we're lending restrictions, et cetera, mortgages have risen and now they've come down. Um, but I think with COVID, uh, five of the big sawmills in the U S have shut down.
So if people are just trying to build new houses and COVID basically pushed so many people to go to the country and build, build new homes, they want a bigger house, or they want things in the backyard. Take a look at home Depot and Lowe's those stocks have been on a tear. Why because people are stuck at home, they're all refurbishing their homes.
Uh, and if you look at new homes being built, there's a shortage of them. So I think there's pretty big pricing pressure here. That seems counterintuitive. You would think that during, during, uh, COVID w with, uh, with people getting evicted left and right, because they can't pay the rent housing prices would fall under pressure.
Right. But you're saying that's not happened. No, because everything's contrary now. I mean, in fact, the checks, the checks helped build a lot of people, the airlines industry at a huge infusion. So rather than seeing all these workers get laid off and they get rehired because of all the regulatory of may, it was better just to give money to the, uh, airline companies to keep them employed so they could turn a dime.
So remember they went from down to 90,000 daily, employ people flying. Now they're up to 1.3 million. They have people ready to be able to process and move those passengers. So I think that that they're spenders, they're buying food to buy gas. What's really been on a terrorist Amazon, uh, this morning, will they have all Amazon who was at my doorstep at 7:00 AM.
Well we're, I mean, here in Canada, we're, we're back into lockdown, so we don't have a choice. They have to buy basic necessities. They have to go to Amazon because all the stores are closed except for the grocery stores. So yeah, definitely Amazon is one tray to watch. So basically just do the reverse of whatever logic tells you, right?
The economy is going to do poorly by stocks. If the, uh, if people are getting, uh, kicked out of the home pod by real estate ETFs. But the con the economy turned because of all the money printing and what the governments did collectively. So you did see that money tripled down right down to the lowest common, uh, person to the buddy.
Everyone got it. So I think, uh, what's hard hit or restaurants. Um, I think that they've been hit the most, uh, indoor dining places like that, but they've reinvented themselves. And I think that you have to take a look at, in the U S California kitchen went bankrupt because they have a good delivery system where as other companies hire 10,000 employees and all of a sudden you see Chipotle, they stock taking off.
And who's adopted the fastest to this crisis and the ones that survive. So the magic as a financial analysis look for where's the revenue growth, which industries in America rule the best in the last quarter, the last three quarters. Uh, take a look at those industries and you can see a high correlation of great stock prices.
What about economic growth? Frank, are we going to see a contraction in QS one and two? Oh, well maybe Canada. Uh, but not the us. You have, uh, it's it's it's on fire. It's going to be big GDP numbers that they're thinking it's going to be 3%. That'd be 5%, 6%. There's this a lot of money is being spent now, as we talk, you know, I've had a lot of market bears and, uh, investment bears in their show.
And one of the arguments is that we haven't seen the full extent of bankruptcies yet. That's going to happen in the next two quarters. And we're going to see a major market correction in equities and basically everything else do you, so I know you don't agree with that viewpoint. Walk us through why that rationale, where that assumption is wrong.
Well, the bankruptcy has already taken place and, and, uh, many companies were bailed out small businesses across America or given. Uh, and so I, I would share with you, I don't believe that I believe what would derail an economy or market is always historically been government policies. So discipline policies, people really call me B rate, rising taxes on versatile consumption and incorporations.
Um, uh, monetary would be raising interest rates, cutting money supply, uh, those type of factors, uh, taxes that, or a host of new regulations, which is friction on any industry that will slow down the economy. But right now it's, it's on a tear. Yeah. So that was my final question to you about the economy was taxes.
Are you not concerned that the button administration is going to raise corporate taxes, capital gains taxes, all that's bad for investments. Yes. And Marcus will adopt the adjust when it happens and there'll be winning industries and there'll be losing industries. Uh, where that capital is going to be allocated, I think in the mining sector, uh, and you see mining companies really pushing for a very powerful ESG footprint.
They have to do it all along, but even more so now, uh, to be able to attract that is that capital and there'll be lots of breaks. And I think there was a, almost a trillion dollars raised for green infrastructure spending in Europe. Uh, if the government will give money for it, that's green. But they're trying to create jobs with a very focused, uh, so I think we're going to see that type of evolution take place, uh, in the next four years.
Okay. All right. Final question for your Frank. So I'm a millennial was, you know, most of my friends are millennials, so let's say a millennial wants to start a new year resolution to invest better in 2021. So somebody in the late twenties, early thirties, what should they be doing with their money? When you're young invest, invest, invest.
Uh, you can take risks that someone, my age shouldn't be taking big risks on, uh, taking all my money and putting on something. Speculative is very risky by age, but your age it's okay. So speculating on the junior mining sector. Uh that's I think that's prudent and that's wise, uh, owning some gold. Uh, it remember the volatility is not being like, uh, you're expecting that you're going to get from speculating on a junior mining company or find the latest healthcare technology company.
Uh, there's going to be a big boom off telemedicine. It's going to, it's going to be a growth industry. So focusing on that, which your age is, if you're 25, that means you should be 75% invested in growth ideas. 25% in conservative ideas and yours owners should be 50, 50 you're, 70 years old. It should be 70%, very conservative income.
Generation 30% more growth. You know, a lot of my friends have called me up recently in the last couple of months, even the last couple of weeks to ask me about gold. And these were people that I would never would have expected to be interested in gold. So what has the sector done this year to attract new demographics of investors, Frank?
Well, I think the interest by many. Highly respected and successful hedge fund managers from Druckenmiller. Uh, Paul Tudor Jones, uh, particular, uh, Ray Valeo, Ray Dalio's footprint has become massive on YouTube. A lot of millennials follow a YouTube. That's how they learn. And, uh, Ray deli has always been an advocate of having gold as a runner, uh, having your portfolio rebalancing.
So I think that that's been an important part. And then for the stocks, I think the big crescendo was buffet buying Barrack, uh, some legitimize, uh, gold mining stocks, as long as they had free cashflow yield. Right. Okay. Frank, excellent update as usual. Happy new here. And I look forward to catching up with you in 2021.
Happy investing and stay safe. .