Airline Industry May Face Doom

The aviation industry has taken a hit with the outbreak of the coronavirus restricting travel, but investors are still putting money into airline ETFs, this according to Frank Holmes, CEO of U.S. Global Investors.

“It’s amazing to me is that we’ve had this big correction, and we’ve had a quadrupling of assets. New money comes in every day, and it all started with the news of Buffett increasing his exposure to Delta, and this is the time that he deploys money,” Holmes told Kitco News.

The U.S. Global Jets ETF (JETS) has declined by nearly 50% since February.

Holmes noted that profit margins for domestic airlines are relatively strong, but European airlines, which operate on thinner profit margins, may need government bailouts.

He added that oil price’s decline is beneficial to the airlines industry, as oil is a major cost of operations.

On gold and gold mining, Holmes noted that a rebound in gold stocks will be substantial, following this decline.

“Gold [miners] this quarter are going to have huge growth in revenue per share, cash flow per share, in fact, there’s going to be [growth] much greater than the S&P 500,” he said.

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