Weekly Digest: Brazil Goes for Gold, Global Food Prices Rising

Newsdesk
5 minutes read
Jul 21, 2021

21/07/21: Brazil’s Central Bank increased its gold reserve by 52.7%, rising food prices are sweeping around the globe, a US fund manager says gold is “truly a place to be.” And more.

Investment news

U.S. stocks tumbled on Monday on concerns over a rebound in Covid cases that could slow global economic growth. The Dow Jones Industrial Average had its worst day since last October.

The Dow fell 2.1% before recovering some ground into the close, while the S&P 500 dropped 1.6%. The tech-dominated Nasdaq Composite slid 1.1%, posting its worst losing streak since October.

However, major indexes rebounded on Tuesday with Dow Jones Industrial Average gaining 1.5%, the S&P 1.31% and the Nasdaq Composite 1.24%.

Getting more gold: the Brazilian Central Bank bought 41.8 tons of gold, making the total amount of the yellow metal jump 52.7% in just one month.

Now, the total amount of gold held by the bank is 121.1 tons, which is equivalent to $6.873 billion.

The move comes as banks are regaining their appetite for gold: central banks from Thailand to Serbia have been increasing their gold holdings, and Ghana recently announced plans to buy the precious metal.

BlackRock Inc. Chief Executive Officer Larry Fink thinks U.S. inflation will bring about “epic change” and is more than just a temporary phenomenon.

To catch up with inflation, BlackRock Inc. announced a wage raise by 8%, joining a bunch of other companies on Wall Street, competing to attract and keep talented employees.

Earlier this month, Citigroup Inc. raised base salaries to $100,000 for first-year analysts, along with Barclays Plc, JPMorgan Chase & Co. and Guggenheim Partners.

Zoom has announced that it’s buying Five9, a provider of cloud contact center software, for $14.7 billion, as part of an all-stock transaction. The deal marks Zoom’s first billion-dollar acquisition.

It’s the second-biggest U.S. tech deal this year, after Microsoft’s planned $16 billion purchase of Nuance Communications.

🤓 Bonus economics reading: while it’s obvious the U.S. is currently struggling with a problem of increasing prices, it is not at all clear that the problem will last.

Take a look at the dashboard of indicators to add some clarity to the debate.

Opinion

Gold is truly the place to be”: that’s what David Tice, the hedge fund co-founder, said when discussing the current market situation with CNBC. He warned against investing in stocks and bitcoin right now because, according to Tice, a market meltdown is unavoidable.

The market is very overpriced in terms of future earnings. We are adding debt like we’ve never seen. We have the Treasury market acting very strange with rates falling dramatically … We’re not out of the woods yet, and this is a dangerous market,” Tice said.

Inflation in the U.S. is likely to climb to between 6% and 9% by the end of the year, with the economy experiencing the highest increase in consumer prices since the 1970s, former member of Ronald Reagan’s Council of Economic Advisors says.

According to Steve Hanke, an increase in the money supply last year has “worked like a charm” in boosting the economy and, in turn, pushing asset prices to grow.

“[The 1970s] was terrible. It was the worst of all possible worlds. You have a lot of inflation and jobs are scarce. That’s not what we’re seeing now, by the way. We’re seeing inflation in a booming economy. We’re not seeing the stagflation type of thing where the real economy is weak. The real economy is very strong and booming right now as we’re coming out of lockdown and things are getting on track,” he explained.

Thinking of adding Bitcoin to your individual retirement account? Maybe you should, but there are some stumbling rocks to take into account.

For example, volatility, new rules on crypto gains, account-maintenance fees…

What else is happening

The price of food across the world is the highest it’s been in years. FAO’s (Food and Agriculture Organization) food price index, which tracks a basket of vegetable oils, grains, meat, dairy and sugar, in May rose to its highest level in a decade.

And there are fears that the factors that bring prices up could stay in place even after returning to pre-pandemic norms, with the world’s poorest bearing the highest cost.

Amid a heated debate over Bitcoin’s environmental impact, power startup Oklo Inc. is partnering with Bitcoin mining firm Compass Mining to work on advanced fission reactors to reduce fossil-fuel emissions from Bitcoin mining.

Oklo said its advanced fission reactors will be able to start supplying clean energy in the early 2020s. The plan is to provide Compass with at least 150 megawatts of clean power in the first phase of the 20-year partnership deal.

OPEC and its allies have reached a deal to increase oil production in response to soaring oil prices. According to the agreement, OPEC+ will boost oil output by an extra 400,000 barrels a day each month from August.

The deal comes after a two-week dispute between the United Arab Emirates and Saudi Arabia, which were at loggerheads over the oil production policy.

🚀 Rocket maker Blue Origin said Oliver Daemen, the 18-year-old son of a Dutch financier, will fly to space with Jeff Bezos on the company’s first crewed mission. Daemen, who graduated from high school last year, will be the youngest person to go to space.

Meanwhile, the anonymous bidder who agreed to pay $28 million for a seat on the rocket ride had a scheduling conflict and will instead fly on a future trip, the company said without elaborating.

And finally…

The 1,000-year-old pieces, minted in England, Dublin, Germany and the Isle of Man, were made public for the first time at a coroner's hearing.

The Viking era “piggybank” was discovered by former police officer Kath Giles, who has already made headlines after finding a collection of gold and silver Viking jewellery.

See you next week!


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