Most of us thought the pandemic would have a deep but temporary effect on the economy, that our medical ingenuity would allow us to control and eventually defeat the virus and then get back to normal.
That didn’t happen. We now face the likelihood that the pandemic will linger at a low level for years, affecting how we work, shop and interact with each other, producing sub-par economic growth, and altering the structure of the real estate market.
Some of the changes can be seen in the latest data, which show that parts of the economy are recovering quite nicely while others remain stuck. Overall, the number of jobs in October was down just 1.2 percent from the pre-pandemic level, continuing the rapid improvement of the last six months. In particular, the job level was 2 percent higher than pre-pandemic in the important business services sector, a major driver of the economy. Jobs were also up 5 percent in construction, 1 percent in finance and even 1 percent in the typically moribund retail sector.
But on the negative side, jobs were still down 1.5 percent in manufacturing, 4 percent at restaurants, 2.5 percent in healthcare, and 3.7 percent in government. The lack of growth in healthcare and government is particularly troubling because together they provide a quarter of all jobs and there has basically been no improvement in either sector in the past year; we have to assume that employment in these large parts of the economy has been permanently altered.
We don’t yet know exactly how these changes will affect real estate market, which right now are digesting the recent surge in home prices, but my bet is that the lost jobs in healthcare and government will broaden the renter population for years, especially at the lower end. No statistics yet show this to be a trend, although the renter vacancy rate and the homeownership rate are lower than last year, but the time to formulate an investment strategy is before trends are evident.
Bukele steps up El Salvador’s bet on sliding bitcoin; buys another 150 coins
El Salvador President Nayib Bukele said the Central American country had acquired an additional 150 bitcoins after the digital currency’s value slumped again, enlarging his bet on the cryptocurrency despite criticism.
Bitcoin, the world’s biggest and best-known cryptocurrency, is down about 30% from the year’s high of $69,000 on Nov. 10. Bukele said last week that El Salvador had acquired 100 additional coins to take advantage of the currency weakening.
Late on Friday, Bukele announced the government had stepped into the market again.
“El Salvador just bought the dip! 150 coins at an average USD price of ~$48,670,” Bukele wrote on Twitter.
Until Nov. 26, El Salvador had 1,220 bitcoins.
In September El Salvador became the world’s first nation to adopt bitcoin as legal tender, a move that generated global media attention but also attracted criticism from the opposition and foreign financial institutions.
The International Monetary Fund (IMF) said on Monday that El Salvador should not use bitcoin as legal tender, considering risks related to the cryptocurrency.
(Reporting by Nelson Renteria; Writing by Drazen Jorgic; Editing by Daniel Wallis)
Trump's Media Company to Get $1 Billion in Investment From SPAC – Bloomberg
Former President Donald Trump’s media company said Digital World Acquisition Corp. has agreed to a $1 billion investment following the combination of both companies.
Trump first announced the plan to merge with the so-called blank-check firm in October that would help enable him to regain a social media presence after he was kicked off Twitter Inc. and Facebook Inc. platforms. The new enterprise will be in operation by the first quarter of 2022 and plans to start a social media company called Truth Social.
Gold Is a Green Investment. Owning it Can Be Tricky. – Barron's
Most investors don’t think of gold as a sustainable investment. Historically, it has required large amounts of water, energy and toxic chemicals to mine and refine. Mining companies have been accused of exploiting developing countries and their workers.
Yet gold bullion—as opposed to miners—is surprisingly green. Once fashioned into bars, it just sits in vaults, having virtually no carbon footprint. According to the World Gold Council, there are 201,296 metric tons of previously mined gold in storage. https://www.gold.org/goldhub/data/above-ground-stocks Gold miners increase that stock by just 1.5% a year—3,000 tons.
Two money managers,
and Sprott Asset Management, recently filed with regulators to launch the Franklin Responsibly Sourced Gold https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/rule-filings/filings/2021/SR-NYSEArca-2021-73%20Pdf.pdf and the Sprott ESG Gold https://www.sec.gov/rules/sro/nysearca/2021/34-92506.pdf exchange-traded funds.
According to its filing, the Franklin ETF will seek “to predominantly hold responsibly sourced gold bullion, defined as London Good Delivery gold bullion bars produced after January 2012 in accordance with London Bullion Market Association’s Responsible Gold Guidance.” https://www.lbma.org.uk/responsible-sourcing/guidance-documents The Sprott one seeks to buy gold from miners that meet its proprietary environmental, social and governance criteria in addition to market association approval.
Neither Sprott nor Franklin Templeton were available to speak while seeking regulatory approval.
The London bullion association’s 2012 Responsible Gold Guidance required gold to be sourced from refiners not linked to human rights abuses or armed groups, i.e., “conflict gold.” The association’s standards have evolved since then to include environmental criteria. Still, gold sourced after 2012 before those criteria were added could come from dirtier sources.
A 2021 open-letter https://www.globalwitness.org/en/press-releases/open-letter-lbma-concerns-responsible-sourcing-programme-fails-curtail-human-rights-abuse-and-illicit-gold-supply-chain/signed by five human rights groups said “downstream customers cannot have confidence that the LBMA’s Good Delivery gold is free of human rights abuses and not linked to conflict.”
The association responded to these accusations with its own open letter, https://www.lbma.org.uk/articles/lbma-responds-to-ngo-open-letter-on-responsible-sourcing stating that it “recognizes the challenges that all audit programs face, and whilst no program is perfect, we remain committed to continuous improvements, and ongoing engagement with stakeholders in addressing the supply-chain risks.”
The new Sprott ETF should have a higher standard for sourcing gold because of its unique ESG criteria. But its regulatory filing acknowledges that it may not be able to find enough ESG-approved gold, so that the trust expects to hold some amount of unallocated [i.e., non-ESG approved] gold at any given point in time.”
All of which is to say these new ETFs may not be much greener than traditional bullion ones.
Yet gold’s carbon advantages are real. According to one study https://www.gold.org/goldhub/research/gold-and-climate-change-decarbonising-investment-portfolios by climate-risk analysis firm Urgentem, for a portfolio of 70% equities and 30% bonds, introducing a 10% allocation to gold (and reducing the other asset holdings by equal amounts) reduced portfolio carbon emissions intensity by 7%, while a 20% gold allocation lowered it by 17%.
“The emissions associated with holding gold are frankly a lot less than holding equities,” says Terry Heymann, CFO of gold trade-group World Gold Council.
While bullion as a low-carbon investment makes sense, Heymann posits that the mining industry is also becoming ESG-friendly, pointing to the World Gold Council’s 2019 publishing of its Responsible Gold Mining Principles https://www.gold.org/about-gold/gold-supply/responsible-gold/responsible-gold-mining-principles, which the Council’s 33 member companies—including the world’s largest miners—have all committed to following. The principles support the Paris Climate Accord’s goal of producing zero carbon emissions by 2050.
“You’re going to see a lot more use of renewables [at mines]— solar, hydro, or wind,” Heymann says. “Secondly, you’re going to see a move towards electric vehicles.” He points to miner Newmont’s (NEM) “all-electric mine” in Northern Ontario, https://mining.ca/mining-stories/goldcorp-electric/ which has a fleet of battery-powered trucks as an example of the industry’s future.
Yet miners have a long way to go to convince ESG experts. The differences between bullion and mining stocks are “night and day,” says Adam Strauss, co-manager of Appleseed (APPLX), an ESG-focused fund which has 7% of its portfolio in the
Sprott Physical Gold Trust
(PHYS). “Gold mining is a very dirty business.”
A 2020 report by the Columbia Center on Sustainable Development and the Responsible Mining Foundation called the mining industry’s efforts to achieve its sustainable development goals so far “cosmetic.” https://www.responsibleminingfoundation.org/app/uploads/RMF_CCSI_Mining_and_SDGs_EN_Sept2020.pdf Although she acknowledges individual miners differ, Perrine Toledano, the CCSI’s mining analyst, says that some miners “just cherry-pick the [sustainable goal] they want and then communicate on its positive impact.”
Could an ESG ETF tracking just the 33 World Gold Council member companies that have agreed to its principles be sustainable? Sustainalytics, one of the largest ESG ratings services, gives mixed grades to different members, calling the ESG-risk of Chinese miner Zijin Mining Group “Severe,” and rating it one of the worst companies in its entire coverage universe.
That said, those ratings could improve in time. “Every single one of our members is committed to implement the responsible gold mining principles, and I know that work is under way,” says Heymann. “We’ve got four members in China, and they’re all committed to doing this.” This March, Zijin issued a release regarding its “ESG Report to emphasize Sustainable Development,”stating it continues “to improve our ESG performance in environmental and ecological protection, human rights protection, anticorruption, responsible supply chain and community engagement.” and that it invested 1.92 billion renminbi in 2020, a 51% increase over 2019, on environmental protection.
“Having some sort of [ESG] guidance is very positive,” Sustaianlytics mining analyst Dana Sasarean says about the Council’s principles. “If the world requires gold, I think it’s important to make sure that this gold is produced in the most responsible way. But there are challenges.”
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