December 2, 2023

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Will Zuckerberg’s Metaverse Bet Pay Off?

In 1990, a new tech start-up was spun out of Apple to invent the future.

General Magic, as it was called, was a veritable dream factory.

Over the course of its 12-year existence, its founders—former Apple engineers who had helped bring the original Macintosh computer to fruition—developed technologies and applications that wouldn’t be in common use for several more years. Chief among them was a precursor to the smartphone, but more than that, the General Magic team foresaw the age of mobile computing in totality, complete with social media, e-commerce and emojis.

Alas, no one bought its products, and General Magic was forced to close shop in 2002, a couple of years before anyone was friended on “TheFacebook” and five years before Steve Jobs introduced the iPhone to the world.

Modern history is full of inventions and technologies that failed not because they were inherently flawed but because they hit the market several years too early. Before the iPad, there was the Microsoft Tablet (released way back in 2001). Before Bitcoin, there was Bit Gold (conceived in 1998).

This week, autonomous vehicle start-up Argo AI announced it was shutting down after only five years, with financial backer Ford saying that commercialization of the technology is “further out than originally anticipated.”

The question now on many investors’ minds is: Will Mark Zuckerberg’s metaverse project follow the same path as General Magic and Argo AI, or will it go in the direction of the iPhone?

FAANG No More?

Ever since Zuckerberg announced his company’s pivot more than a year ago (he would officially change the name from Facebook to Meta Platforms in October 2021 to reflect the new emphasis), the way forward has been challenging at best.

Over the past couple of years, Meta has generated billions of dollars in free cash flow (FCF), nearly all of it now spent on developing metaverse applications that, as of now, don’t appear to be profitable. This week the company reported FCF of only $316 million in the third quarter, down significantly from $12.7 billion at the end of 2021.

Meta Platform's Free Cash flow (FCF) Now Under $1 Billion

The market has not been kind. A day after Meta’s earnings call this week, when Zuck asked investors for “patience,” shares of the company plunged a jaw-dropping 25%, its third-worst trading session ever. For the year, the stock is down more than 70%.

Briefly a $1 trillion company alongside fellow FAANG stocks Apple, Microsoft, Alphabet and Amazon, Meta is no longer in the top 20 largest companies, its market capitalization having fallen below $300 billion. In just 13 months, Zuck’s net worth has dropped by an unbelievable $100 billion.

Meta Platform's Market Cap Plummets Below $300 Billion

Spending in the Metaverse Is Down Substantially

Of course, none of this should matter much if you believe in the long-term opportunities that the metaverse may present over time. According to one estimate, a quarter of all people will spend at least one hour a day in a metaverse of one kind or another for work, entertainment or shopping by 2026. If that’s the case, Meta’s stock may look very attractive at its current price of under $100.

At the same time, there are signs that spending in the metaverse is stalling substantially. Prices for non-fungible tokens (NFTs) have collapsed, while sales fell 60% from the second to third quarters. Virtual worlds trading volume fell close to 92% between quarters, according to DappRadar.

Like others, I believe this slowdown is a result of our coming out of the pandemic. When we were all stuck at home, the idea of exploring virtual worlds was very inviting, and many young people were looking for ways to spend their government “stimmy” checks. Now, people may be more inclined to spend their money on analog experiences such as eating out, travel, live shows and more.

A Lesson from Bezos: It’s All About the Long Term

For investors who are still on the fence about Meta, it may be instructive to remember the last time a tech giant made a massive, ill-advised bet on a technology outside of its core discipline. When Jeff Bezos first came up with the idea for Amazon Web Services (AWS) many people called it risky and foolish. A 2006 BusinessWeek article was highly critical of the cloud computing project and suggested there would be no significant returns for many years to come.

Fast forward to today, and Bezos now has a framed copy of that magazine “as a reminder.” In May, he tweeted that the service Wall Street initially scoffed at generated $62 billion in revenue in 2021.

In fact, AWS has steadily become Amazon’s main profit driver. Its operating income represented a whopping three quarters of the company’s total operating income last year. AWS, the company’s chief financial officer (CFO) said in 2021, is “arguably the most profitable important technical technology company in the world.”

AWS Operating Income as a Percent of Total Amazon Operating Income

Bezos has always kept his eye on the future. In his very first letter to shareholders in 1997, he stressed that “it’s all about the long term” and promised to make “bold rather than timid investment decisions.” In 2005, he acknowledged that while Free Super Saver Shipping and Amazon Prime were both “expensive in the short term,” he believed them to be “important and valuable in the long term.” In 2012, he pushed back against criticisms that the company’s “heavy investments” in AWS and Prime were “at odds with being a for-profit company.” He added: “Take a long-term view, and the interests of customers and shareholders align.”

The same could be said about Zuckerberg’s pivot into the metaverse. Time will tell, but I think that as long as Meta can stay afloat until the public’s appetite for the metaverse catches up with the technology, their interests could also eventually align with Meta shareholders’ interests.

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Index Summary

  • The major market indices finished up this week. The Dow Jones Industrial Average gained 5.72%. The S&P 500 Stock Index rose 3.90%, while the Nasdaq Composite climbed 2.24%. The Russell 2000 small capitalization index gained 5.95% this week.
  • The Hang Seng Composite lost 8.12% this week; while Taiwan was down 0.24% and the KOSPI rose 2.50%.
  • The 10-year Treasury bond yield fell 21 basis points to 4.003%.

Airlines and Shipping


  • The best performing airline stock for the week was Frontier, up 30.8%. System net sales were 3.7% below 2019 levels for the week, compared to 4.8% below 2019 last week. The modest improvement was driven by better pricing, while volumes stepped back slightly. System pricing improved 6.1% versus 2019 (versus 4.2% last week) with both domestic and international stepping up about 200 basis points.
  • Mainfreight profitability remains at record levels despite lower international freight rates. This has been supported by limited freight rate declines on Transatlantic and Australian lanes, successful renegotiating/exiting uneconomic contract rates for committed capacity, higher charges for ancillary services, a mix shift toward higher margin consolidated services in both Air (perishable) and Ocean.
  • U.S. airlines’ trailing seven-day website visits stepped up year-over-year to up 16% for the week (from 13% last week). The network carriers all saw visitation improve this week on an absolute basis and year-over-year basis. Southwest’s website visits year-over-year improved but decelerated on a trailing seven-day absolute number. JetBlue’s trailing seven-day website visits improved as well.


  • The worst performing airline stock for the week was Azul, down 13.2%. Alaska Air’s fourth quarter earnings guide is below consensus expectations, with the miss primarily driven by higher CASM-Ex fuel costs, despite including an estimated 3.3-point headwind from the newly ratified mainline pilot deal.
  • Goods for the U.S. Christmas trade are already piled up at inventories, and container volumes in the major west-coast port in Los Angeles therefore declined during September, says port management. In September, the Port of Los Angeles handled 709,873 tons, a fall of 21.5% compared to September 2021.
  • Due to rising Covid cases since the Golden Week holiday in China, per Flight Master, domestic pax volume/seat capacity in the Asian nation further dropped to 27%/36% of 2019 levels from 40%/51% in the prior week. The domestic pax load factor edged down to 65% from 67% in the prior week. Daily aircraft utilization for narrow-body aircraft was only 2.5 hours, far below the normal level (7+ hours).


  • Hawaiian Airlines intends to operate a fleet of 10 A330-300Fs for Amazon. These are passenger aircraft converted into freighters, delivered to Amazon, and operated by Hawaiian. The 10 aircraft are scheduled to be in service by year-end 2024, so the ramp up would be through the next two years, and then be fully reflected in 2025 revenue and earnings. Hawaiian intends to hire hundreds of pilots as well as maintenance workers. The company intends to place maintenance bases on the mainland U.S. to maintain these aircraft since they won’t necessarily be in Hawaii every night.
The Cargo Deal With Amazon May Be a Positive Catalyst For Hawaiian Airline's Stock
  • Höegh Autoliners, whose second-largest shareholder is Maersk, has for the third time this year, utilized an option to purchase, acquiring a ship from a leasing company. The Norwegian car carrier has, according to a stock exchange announcement, bought vessel Höegh St. Petersburg for $29.3 million from Pioneer Leasing, which is controlled by Credit Agricole Corporate and Investment Bank. The average market value for the car vessel, which has capacity for 7,850 vehicles, is set at $70 million by three different brokers at the end of the third quarter.
  • U.S. airline startups, Avelo and Breeze (founded by David Neeleman, the founder of JetBlue), announced route expansions this week to largely underserved markets, limiting overlap with incumbent airlines, with most served 2-3 times per week.


  • According to Bank of America, American Airlines expects its network to be 95%-100% recovered in 2023, a bit below its prior forecasts for a slight recovery for the year. While disciplined capacity growth is positive for the industry, unit cost pressures should only intensify with labor deals, regional pilot hiring challenges, and aircraft delivery delays. The bank now forecasts unit costs to increase by 8% next year (from up 5%).
  • The Evercore ISI Shipping Cos. Survey moved off its highest level since 2006, as the index pulled back from 73.8 to 69.3. Bulk shipping has moderated slightly, while tanker activity is mixed. Recently, strength in the tanker segment across petroleum, product, and chemical markets has led the survey higher and previous improvement in dry bulk activity has also helped, following its recent decline.
  • Southwest Airlines has aggressively placed capacity in Hawaii (both inter-island and U.S. mainland capacity up over 200% versus 2019) with $39 inter-island fares through the end of the year. In order to compete on these routes, Hawaiian Air is matching Southwest across much of its fare structure and is offering other benefits for loyalty members. Inter-island was a little over 20% of pre-pandemic revenues and likely a much higher portion of profitability (likely over 30%) given the few operators in the market.

Emerging Markets


  • The best performing country in emerging Europe for the week was Russia, gaining 6.1%. The best performing country in Asia this week was the Philippines, gaining 3.0%.
  • The Polish zloty was the best performing currency in emerging Europe this week, gaining 2.1%. The Philippine peso was the best performing currency in Asia this week, gaining 1.3%.
  • China reported mixed economic data heading into this week. Surprisingly, however, the country’s gross domestic product (GDP) for the third quarter was reported at 3.9% on a year-over-year basis, above the expected growth of only 3.3%, and way above the prior quarter’s expansion of only 0.40%.


  • The worst performing country in emerging Europe for the week was Turkey, losing 1.4%. The worst performing country in Asia this week was Hong Kong, losing 8.1%.
  • The Turkish lira was the worst performing currency in emerging Europe this week, losing 0.1%. The Chinese yuan was the worst performing currency in Asia this week, losing 0.3%.
  • Equities trading on mainland exchanges in China and Hong Kong sold off sharply this week on news that the Communist Party re-elected President Xi for another term. He will continue to support common prosperity, saying that “wealth will be highly regulated.” The Hang Seng Index broke below the 15,000 level on Friday, a level not seen since 2008, completing its worst-ever post-Congress five-day period.


  • Indonesian President Joko Widodo announced a peace initiative for Ukraine at the upcoming G20 summit in Bali in November. At the summit, Indonesia will invite everyone to “sit down together and engage in constructive dialogue,” Widodo said in a video message at the end of an international conference on the reconstruction of Ukraine in Berlin on Tuesday. Any sign of open dialog between Russia and Ukraine will be welcomed by international markets.
  • JPMorgan sees a buying opportunity in Chinese equites after a sharp correction on Monday, the first day of trading after the Communist Party re-elected President Xi for another term. The broker believes that the sell-off does not correspond with fundamentals and creates opportunity for investors given the expected growth recovery, gradual Covid reopening, and monetary and fiscal stimulus.
  • Mobius Capital Partners’ co-founder Mark Mobius believes the Chinese government will end its zero-Covid policy by the end of 2022 to help the economy recover due to a shortage of funds. In contrast, a majority of China’s political developments show that the zero-Covid policy could be changed no sooner than next year. Despite his optimistic view on the Covid policy, Mobius is overall more negative on China due to recent policy shifts after the 20th party congress, with concerns about suppression of the private sector and increased geopolitical tensions.


  • Preliminary Eurozone Manufacturing PMI data fell to 46.6 in October from 48.4 in September. The index dropped below the 50 mark that separates growth from contraction back in July of this year and may continue to decline due to higher cost of production and an economic slowdown in the region.
Eurozone's Manufacturing PMI Continues To Fall
  • Russian state media are suggesting that Ukraine plans to use a so-called “dirty bomb,” and will blame Moscow for it. Analysts are saying it is an effort to gain domestic support for the country’s military campaign in Ukraine. Russia may be looking for a pretext to escalate its war in Ukraine, especially now as winter is coming fast and Russian’s military advances in the south and east of Ukraine have stalled.
  • This week the dollar corrected back to its 50-day moving average and a bounce is expected. On Wednesday, for the first time since September, the euro became stronger than the dollar. However, the euro’s strength against the dollar was short lived, as the euro crossed below 1 to a dollar one day later, on Thursday. We predict that a stronger dollar next week will push emerging markets’ currencies lower.
Which Metal Are You?

Energy and Natural Resources


  • The best performing commodity for the week was natural gas, rising 5.67%. U.S. natural gas consumption was up 11% year-over-year this past week driven by higher residential/commercial demand and power demand, partially offset by lower industrial demand. On a week-over-week basis, total demand was 5.3 billion cubic feet per day (Bcf/day), higher on the back of an increase in residential/commercial demand.
  • Refiners received some good news on the policy front this week, at least temporarily, as the government did not announce a product export ban (but left the door open for a temporary ban in the future). Also, in an apparent response to the recent OPEC+ production cut, the administration extended the Strategic Petroleum Reserve (SPR) release with another 15 million barrels sale in December (completing the 180-million-barrel program announced in the Spring), with a “ready and release” policy beyond December. Both the SPR news and the lack of news around the export ban are an incrementally positive development for U.S. refiners’ prospects in the fourth quarter, where tight global diesel inventories could keep cracks elevated.
Refiners Continue to run at high operating rates
  • Lead jumped as much as 5.4% intraday on the London Metals Exchange (LME) atter it was announced that lead will become the 24th physical commodity to be added to the Bloomberg Commodity Index. Dan Smith, an analyst at the LME dealer Amalgamated Metal Trading estimated the change could drive as much as $1.1 billion into lead, which historically has been one of the least liquid contracts on the exchange.


  • The worst performing commodity for the week was lumber, falling 14.87%, on the latest reading from the Pending Homes Sales Index, which declined for a fourth consecutive month. Although natural gas prices climbed nationally this week by about 2%, in West Texas natural gas prices dropped to negative $2 per million British thermal units (MMBTU) on Tuesday as booming production overwhelms pipeline networks in the region which are also under maintenance.
  • Iron ore futures in Singapore slumped again this week, marking its longest string of weekly losses since 2014, reports Bloomberg. Prices are down 50% from their peak back in March. The continued Covid lockdowns in China are hammering the construction sector.
  • The International Energy Agency (IEA) reported that Russia’s invasion of Ukraine heralds a tipping point for global energy markets that will hasten the transition to renewables. The IEA predicts that fossil fuel demand with plateau by the middle of the decade as Russian energy is shunned and renewables replace unreliable supply lines.


  • According to Raymond James, with the potential of energy supply shocks this winter, the group believes the risk/reward profile looks attractive for the integrated energy names in coverage as recessionary fears have beaten down U.S. majors trading multiples down to 4.5x EBITDA (earnings before interest, taxes, depreciation and amortization), versus historical EBITDA multiples of 5-6x. While chemical margins have corrected lower and will be a drag to downstream earnings this quarter, refining margins are still historically high and should help downstream earnings stay well above previous mid-cycle.
  • Chile listened to its mining industry and announced changes to the proposed tax code that would help the industry remain competitive in world markets. A new sales tax of 1% versus the proposed 4%, and base sliding rates on profit rather that copper prices. There is an exemption from the tax when facing operational losses and depreciation will now be included in the margin calculation. BHP put the country on notice that it would spend $10 billion in Chile on new copper production as long as the rules don’t change too much.
  • Bloomberg reports that Schlumberger, the world’s largest oilfield service provider, is changing its name to SLB and rebranding itself as a technology company to go after more work in the clean-energy space. The Houston- and Paris-based company plans to continue operating its legacy assets while expanding its technologies that will help companies curb emissions of carbon dioxide and methane.


  • According to S&P, both Japan and South Korea expect a 40% probability for a colder-than-average northern hemisphere winter (with 40% probability for an average winter) given La Niña conditions, a weather pattern that occurs every few years. This could drive increased demand for spot cargoes and put further pressure on liquified natural gas (LNG) prices. Looking at recent global LNG trends, production was flat in September at 366 million tons, as lower production from the Middle East was offset by higher output from Asian and African plants.
  • Freeport-McMoRan warned that the balance of power in the copper market is shifting over to the smelters, reports Bloomberg. The International Copper Study Group (ICSG) expects new copper supply to increase by 5.3% next year, the biggest jump in several years. Coper miners will be dealing with a short-term surplus of concentrates which will cater to the buyers’ interest.
  • A milder start to winter has reduced demand, accelerating U.S. inventory builds in recent weeks and narrowing the gap to just 5% below the five-year normal from 9% a month ago. Over the same period, front month Henry Hub prices have fallen 30% from $7 to $5/MMBTU. Additionally, initial forecasts now point to a mild winter for much of the U.S. If correct, this would add further pressure to prices over the next few months and push the market firmly into oversupply for much of 2023. 

Luxury Goods


  • In a Seeking Alpha “deep dive” into LVMH, analysts at MT Capital Research highlight the incredible accomplishments by the largest luxury house in the world. To note a few, in 2019, it was estimated that the LVMH portfolio accounted for nearly 22% of all champagne sales and nearly 46% of cognac sales, an astonishing metric, the article points out. From 2013 to 2021, LVMH’s topline has compounded at a rate of 10.4%, with the average pre-pandemic period organic growth rate coming in at approximately 8%. Finally, the company’s perfume and cosmetics business segment are home to 15 different houses, the oldest of which dates back to 1803.
  • According to Bloomberg, China’s October year-over-year GDP, one of the leading luxury goods markets worldwide, increased considerably. It was reported at 3.9% versus a consensus of 3.3% and the previous month’s reading of 0.4%. This represents a significant increase from the last month and an improvement in the Chinese economy.
  • MYT Netherlands Parent, an e-commerce company that offers apparel, shoes, jewelry and accessories, was the best performing S&P Global Luxury stock for the week, gaining 22.04%. The company reported promising results for the fourth quarter this year. Sales increased by 7.7%, and its gross profit improved by 22.4%.


  • Based on an article from Yahoo Finance, Tesla cut prices in China as a result of weaker demand. Even though the company had an all-time high in September sales in China (83.135 EVs), this remains considerably lower than its domestic competitors like BYD (200,973 cars). The Model 3 sedan dropped by around 5% to 279,000 yuan, and the Model Y SUV by 9% to 316,000 yuan.
  • According to Bloomberg, the S&P U.S. Global Manufacturing PMI, and the Global U.S. Services PMI, both key indicators of the economy’s health, decreased for the month of October. The Manufacturing PMI was reported at 49.9 versus the previous month’s 52, and the Services PMI was reported at 46.6 versus last month’s 49.3. This represents a decrease of 4% and 5.5%, respectively, and points to a weakening of the U.S. economy.
  • Tod’s S.p.A., an Italian company which produces luxury shoes and other leather goods, was the worst performing S&P Global Luxury stock this week, losing 22.57%. Founders of the shoemaker have reportedly said they would be ditching a planned buyout after failing to achieve the 90% ownership threshold required to take the group private.


  • “Smart clothing,” or clothing that monitors the wearer’s physical condition (using fabrics embedded with ultrathin, flexible, and transparent sensors), has officially been categorized as part of the global apparel, accessories, and luxury goods market. As reported by Benzinga, the smart clothing market is now expected to grow by $4.49 billion from 2021 to 2026. In addition, the growth momentum of the market will accelerate at a CAGR of 18.83% during the forecast period, according to Technavio.
  • According to Bloomberg, the MSCI Europe Textiles Apparel & Luxury Goods Index has fallen 23% year-to-date, underperforming the Stoxx Europe 600 Index, which dropped 20% during the same period. Luxury stocks are now trading at about 20 times their estimated earnings, in line with their 10-year average, and way below the price-to-earnings level from a year ago, making the industry more attractive to bargain hunters.
European Luxury's Valuations Are Back To Their Long-Term Average
  • Based on a Vogue Business article, LVMH’s German luggage brand, Rimowa, for the first time with Nike’s digital fashion startup, RTFKT, launched a collaboration on the Metaverse. This digital product has been available since October 27 on the RTFKT platform. The digital design is of a suitcase (limited edition with 888 digital pieces, or NFTs). The cost is $3,000 in Ethereum. Buyers also have the option of redeeming the NFT for a physical suitcase.


  • Adidas terminated its partnership with American rapper Ye, best known as Kanye West, on Tuesday, due to his recent antisemitic comments. Ye, who previously had a successful line of limited-edition sneakers with Nike, signed with Adidas in 2013 and entered into a new long-term partnership with the German sportswear brand in 2016. Adidas’ decision to end the deal is expected to have a negative impact on Ye’s income of up to €250 million.
  • China’s president, Xi Jinping, declared that his government would keep the zero-Covid policy and prioritize the population’s security over economic growth. China continues reporting new Covid cases, and the government keeps imposing further restrictions that could be a significant threat to global supply chain stability. At the same time, China remains one of the biggest markets among a variety of sectors, one of which includes luxury goods.
  • According to Bloomberg, the ISM Manufacturing Index, which tracks the general state of the U.S. economy as it relates to business, is expected to decrease from 50.9 in the month of September to 50 in October. This could represent decreased desired financial results for companies, including those in the luxury goods industry. The United States is one of the leading luxury goods markets in addition to China. The data will be announced next week on November 1.

Blockchain and Digital Currencies


  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was KLAY, rising 82.01%.
  • Crypto hedge fund Strix Leviathan has hired ex-BlackRock Inc. executive Matthew McBrady as its new head of strategy, reports Bloomberg. The firm said that he will advise on its trading and investment strategies as well as oversee plans for growth. His entry into crypto illustrates the growing number of industry leaders who have traded traditional finance positions for ones in digital assets despite the market’s volatility and steep downturn, the article continues.
  • Bitcoin gained for a second day, spurring optimism among the almost bullish advocates of the bellwether cryptocurrency for an end to the months-long decline known as crypto winter, writes Bloomberg. Crypto traders celebrated the advances as a welcome change after months of limited price action. Bitcoin broke above $20,000 for the first time in more than two weeks on Tuesday, ending its longest run below that price level since the token first breached the threshold in late 2020.


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was XCN, down 23.17%.
  •, stung by the crypto bear market that has rocked the industry, is in talks over a potential “down round” fundraising that may value the digital financial-services firm at a fraction of the $14 billion mark it achieved earlier this year. While terms of the current possible round are still being worked out and it is in the early stages, reports Bloomberg, the financing will result in a significant cut to the website’s valuation, likely leaving it worth $3 billion to $4 billion.
  • The latest exploit against crypto platform Team Finance, which lost some $14.5 million of various tokens, occurred despite a number of recent security audits, according to the company. The Ethereum-based project said Thursday that it had exploited via its audited Uniswap V2 to V3 migration’s function. The project later said those audits had been conducted by a “reputable” firm.


  • Bitcoin is poised to break above $20,000. If it succeeds, the token will end its longest run below that price level since it first breached that threshold in late 2020, reports Bloomberg. The token has traded below $20,000 for nearly three weeks, breaking from the coin’s trademark volatility.
Bitcoin Edges Closer to $20,000, Boosting Hopes For a Break out
  • Crypto’s new class of Kingpins emerged after The Merge. The Merge created a new class of blockchain participants, called “builders”. The software upgrade, which refers to the Ethereum blockchain switching to a system called “proof of stake” from “proof of work”, is a significant shift in the current decentralized ecosystem, reports Bloomberg. Now there are a relatively small number of these builders who have significant amount of power on the blockchain.
  • Hong Kong is pivoting toward a friendlier regulatory regime for cryptocurrencies with a plan to legalize retail trading, contrasting with the city’s skeptical stance of recent year and the ban in place in mainland China. A planned mandatory licensing program for crypto platforms set to be enforced in March next year will allow retail trading, according to people familiar with the matter, writes Bloomberg. 


  • Core Scientific, one of the world’s largest miners of Bitcoin, warned that it may run out of cash by the end of the year and could seek relief through bankruptcy protections. Operating performance and liquidity have been severely impacted by the prolonged drop in the price of Bitcoin, explains Bloomberg, along with a rise in electricity costs, increase competition and litigation with bankrupt Celsius Networks. 
  • Nearly a year into the “Bitcoin bear market” most investors who bought the cryptocurrency in 2021 are facing heavy losses and look to be waiting for rallies to close their positions, Morgan Stanley said in a research report. The bank says that trading volumes have been falling on most exchanges except Binance, which lowered BTC trading fees to zero in July, writes Bloomberg. 
  • Crypto enthusiasts have hailed decentralized finance as a way to cut out Wall Street middlemen. But DeFi is riddled with small-time scams, according to a report released Thursday. There have been more than 188,000 scams based on “smart contracts,” the pieces of software that serve as the building blocks of DeFi, according to a report from software firm Solidus Labs, based on data going back to 2020, writes Bloomberg.
How Well Do you Know Your Flags?

Gold Market

This week gold futures closed at $1,648.40, down $7.90 per ounce, or 0.48%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 2.87%. The S&P/TSX Venture Index came in up just 0.66%. The U.S. Trade-Weighted Dollar fell 1.19%.

Date Event Survey Actual Prior
Oct-23 China Retail Sales YoY 3.0% 2.5% 5.4%
Oct-25 Hong Kong Exports YoY -14.0% -9.1% -14.3%
Oct-25 Conf. Board Consumer Confidence 105.9 102.5 107.8
Oct-25 New Home Sales 580k 603k 677k
Oct-27 ECB Main Refinancing Rate 2.000% 2.000% 2.000%
Oct-27 GDP Annualized QoQ 2.4% 2.6% -0.6%
Oct-27 Durable Goods Orders 0.6% 0.4% 0.2%
Oct-27 Initial Jobless Claims 220k 217k 214k
Oct-28 Germany CPI YoY 10.1% 10.4% 10.0%
Oct-31 Eurozone CPI Core YoY 4.9% 4.8%
Oct-31 Caixin China PMI Mfg 48.5 48.1
Nov-1 ISM Manufacturing 50.0 50.9
Nov-2 ADP Employment Change 195k 208k
Nov-2 FOMC Rate Decision (Upper Bound) 4.00% 3.25%
Nov-3 Initial Jobless Claims 222k 217k
Nov-3 Durable Goods Orders 0.4%
Nov-4 Change in Nonfarm Payrolls 200k 263k


  • The best performing precious metal for the week was platinum, up 1.73%, as hedge funds boosted their bullish sentiment to a seven-month high. Perseus Mining’s production of 137,000 ounces was 10% ahead of consensus with Sissingué and Edikan both much better than consensus, while Yaouré also recorded a solid beat. Edikan’s production was up 82% quarter-over-quarter as throughput, grades, and recoveries all improved. Sissingué saw a healthy 11% quarter-over-quarter uptick in mill throughput while total movements also improved despite wet weather.
  • SSR Mining announced the acquisition of an additional 30% interest in the Kartaltepe Mining JV at Copler for total consideration of $150 million in cash. This will increase SSR’s ownership interest from 50% to 80% of the entire Copler district from partner Lidya Mining. SSR sees this improving life-of-mine cash flows for the Cakmaktepe Extension and providing exploration upside.
  • Aya Gold & Silver has secured $100 million in debt financing from the EBRD and CTF for the Zgounder Silver Mine Expansion. This is a major development for the company, since having EBRD’s investment is considered to be a seal of approval and further validates the project. The company is in a strong financial position, considering much of the expansion is already funded by its current cash position of $65 million.


  • The worst performing precious metal for the week was palladium, down 5.24%, as hedge funds boosted their bearish sentiment to a 12-week high. Once inflation hits 8%, history suggests that it sticks around, reads one Bloomberg article. This is according to a new report from the Deutsche Bank analysts, led by Jim Reid. The team looked at 318 separate occasions since 1920, Bloomberg explains, across both developed and emerging markets, where inflation had risen above 8%. On average, inflation then took “around two years to even fall beneath 6%, before settling around that level out to five years after the initial 8% shock.”
Inflation has passed the point of no return
  • Evolution Mining’s gold production came in at 161,000 ounces versus consensus of 176,000 ounces. The 8% miss was driven by 13% lower production at Cowal due to a bi-annual shutdown and a 27% miss at Mt Rawdon, attributed to above-average rainfall restricting access to the pit. Newcrest Mining announced that a team member from its mining and development contractor, Procon, was involved in a critical incident at the Brucejack mine. All mining and processing operations at Brucejack have been suspended until further notice.
  • reported a weaker-than-expected third quarter 2022 update with the metals in concentrate production missing consensus by 7%. The key production miss came from Styldrift, which management attributed to an extended Section 54 safety stoppage and operational challenges at the North mining sections. Higher on-reef dilution and reduced stopping tonnage contributions drove a 47% increase year-over-year in Styldrift’s third quarter unit costs.


  • Goldman Sachs expects the focus for miners will center around a handful of things going into the new year, including: 1) the ability to mitigate operating inflation and capital inflationary pressures, 2) capital allocation strategies, and 3) production expectations into the fourth quarter of this year and into 2023, particularly given weaker first half of the year volumes.
  • Bloomberg Intelligence highlighted Centamin PLC’s potential to grow into a multi-asset producer with its Sukari mine projected to produce over 500,000 ounces of gold per year. If Centamin has success in delivering the Doropo project in the Ivory Coast, annual output could climb to almost 700,000 ounces a year by 2025. Exploration spending in West Africa will run about $25 million in 2022 with $15 million allocated to Doropo. Initial capex for Doropo is estimated at $275 million.
  • According to Stifel, while K92 Mining has already grown its mineral resources to host 16 million ounces of gold, the group thinks drilling is only starting to scratch the surface. The high resolution and deeper MT geophysical surveys completed earlier this year have helped identify numerous prospects that will be tested in the coming years. The stock has recently come under selling pressure with some recent insider selling filings.


  • Broader market and macro themes continue to weigh on junior gold valuations (at levels last seen with gold between $1,200-$1,300 per ounce). Many projects are continuing to advance toward construction decisions; however, investors will need to be patient and increasingly selective with a more challenging financing environment and ongoing cost risk. The junior gold/silver developer universe has seen a 30% average decline over the last 12 months, underperforming the metal by 25%.
  • Pure Gold, after it announced insufficient liquidity, is immediately suspending operations and placing the mine under care and maintenance. Despite a downtrend in mine operating costs, the mine has been unable to consistently generate positive cash flow resulting in insufficient liquidity, and considering the current debt obligations, this puts the company at a high risk of default, should it be unable to secure additional financing.
  • The United States imposed sanctions on a Nicaraguan state gold mining operation Monday, saying it finances the regime of President Daniel Ortega and his wife Vice President Rosario Murillo. The sanctions focus on the Nicaraguan General Directorate of Mines, as well as Lenin Cerna, a close advisor and former security chief for Ortega. The U.S. Treasury said the directorate manages most mining across the country, and that proceeds from gold mining benefit Ortega’s regime directly. Calibre Mining, though not sanctioned directly, sold off more than 30% on the week on this news, with 12% of its float trading hands.

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Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (09/30/22): 

SSR Mining

Royal Bafokeng Platinum

Southwest Airlines

JetBlue Airlines

Alaska Air

Hawaiian Holdings

AP Moeller Maersk

American Airlines

LVMH Moet Hennessy Louis Vuitton

Tesla Inc.

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.

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