How Every Market Performed in 2020
It has been a volatile year for financial markets and their participants, with some of the largest price fluctuations imaginable across just about every single asset.
Despite the volatility, the combination of the Federal Reserve’s early stimulus interventions and positive vaccine news has rewarded dip-buyers and strong hands.
Along with visualizing the returns across asset classes, currencies, and S&P 500 sectors, we’ve included their maximum drawdown for the year—the drop from the 2020 open to the 2020 lows—along with the recovery from 2020 lows to the closing price.
This helps visualize 2020’s most resilient assets, along with the strength of their recovery.
Markets Roundup for 2020
Of all the major asset classes, precious metals provided the best returns last year.
- Gold finished the year up 24.6%, but down from its all-time highs of $2,075/oz achieved on August 7th.
- Gold was also a resilient asset. Thanks to its strong start in January (4.8%), when March came around gold held up and only fell 4.4% below the yearly open.
- Silver’s performance over the year was also sterling, offering investors 47.4% returns despite a -34.7% pullback in March.
Here’s a look at how all major asset classes performed over the course of the year:
|Asset Class||2020 Return||Asset Type|
|U.S. Small Caps||18.5%||Equities|
|U.S. Corporate Bonds||9.7%||Bonds|
|Europe, Australia, Far East||5.1%||Equities|
|U.S. Real Estate||-8.4%||Real Estate|
U.S. equities and emerging market equities had double-digit returns despite the tumultuous year. Small cap stocks in the Russell 2000 outpaced the S&P 500 by 3%, but also saw a steeper drawdown during times of volatility.
Although there were some wild drawdowns in 2020, nothing compared to the drop into negative prices for WTI crude oil that occurred in April. Futures traded all the way down to -$37.63 a barrel when travel cancellations brought oil demand to a standstill and supply cut agreements weren’t reached by OPEC members.
U.S. government and corporate bonds had a positive year, however their returns were primarily driven by support from the Federal Reserve’s monetary policy and market operations. The Federal Reserve increased its portfolio of Treasury notes and bonds by 79% since March, with its total assets reaching $7.3 trillion at the end of 2020.
Performance by S&P 500 Sector
Unsurprisingly, the energy sector was hit the hardest last year, with value sectors generally struggling to perform compared to growth sectors.
Information technology continued to outperform like in 2019, with Amazon (76%), Apple (81%), and Netflix (66%) the three best performing FAANG members. Other tech stocks like Nvidia (121%), Paypal (115%), and AMD (100%) comfortably sailed to new all-time highs with triple-digit returns for 2020.
As the communication services (21.3%) and consumer discretionary (32%) sectors also performed well, the latter saw the biggest bounce from the lows of any S&P 500 sector (96%).
Foreign Exchange Performance in 2020
Early on in the year, major currencies generally followed similar patterns as they all fell against the U.S. dollar in March’s flight to safety.
The Swiss franc was one of the most resilient currencies, drawing down only -2.1% from the 2020 open. It was also one of the best performers at the end of the year alongside the euro and Australian dollar with gains of 9% or more.
Timing the dip on the Australian or New Zealand dollar was the most rewarding opportunity for forex traders last year. Meanwhile, the Indian rupee, Mexican peso, and Russian ruble weren’t able to claw back the points they lost in March, with the ruble seeing double-digit losses.
All eyes have been on the U.S. dollar’s free-fall downwards since it spiked up in March, and as the Biden administration prepares to take office, speculative traders have returned to selling dollars.
Winners and Losers of 2020
The COVID-19 pandemic largely defined many of the winners and losers of 2020, as did the Federal Reserve’s expansion of the U.S. money supply.
Zoom became an essential communications service in lockdown and Moderna and Novavax shares skyrocketed in valuation as they announced their COVID-19 vaccines.
Bitcoin broke well beyond its previous all-time high, returning just over 300% from the 2020 open and more than 650% from the lows. Tesla had an even more spectacular run, returning 745% and making Elon Musk the second-richest man in the world.
Meanwhile, as global travel quickly came to a halt last year, Carnival Corporation (the world’s biggest cruise operator) and Air Canada suffered double-digit losses along with WTI crude oil and much of the energy sector and travel industry.
Vaccine rollouts and the U.S. stimulus bill are the current known-unknowns that the market is pricing in for this upcoming year, and investors will be watching to see if the dollar’s downturn will be reversed, or if the world’s major reserve currency will continue to decline in 2021.
Comparing Recent U.S. Presidents: New Debt Added vs. Precious Metals Production
While gold and silver coin production during U.S. presidencies has declined, public debt continues to climb to historically high levels.
Recent U.S. Presidents: Debt vs. Coins Added
While precious metals can’t be produced out of thin air, U.S. debt can be financed through central bank money creation. In fact, U.S. debt has skyrocketed in recent years under both Democrat and Republican administrations.
This infographic from Texas Precious Metals compares the increase in public debt to the value of gold and silver coin production during U.S. presidencies.
Total Production by Presidential Term
We used U.S. public debt in our calculations, a measure of debt owed to third parties such as foreign governments, corporations, and individuals, while excluding intragovernmental holdings. To derive the value of U.S. minted gold and silver coins, we multiplied new ounces produced by the average closing price of gold or silver in each respective year.
Here’s how debt growth stacks up against gold and silver coin production during recent U.S. presidencies:
|Obama's 1st term (2009-2012)||Obama's Second Term (2013-2016)||Trump's term (2017-Oct 26 2020)|
|U.S. Silver Coins Minted||$3.7B||$3.3B||$1.4B|
|U.S. Gold Coins Minted||$6.7B||$5.1B||$2.9B|
|U.S. Public Debt Added||$5.2T||$2.9T||$6.6T|
Over each consecutive term, gold and silver coin production decreased. In Trump’s term so far, the value of public debt added to the system is almost 1,600 times higher than minted gold and silver coins combined.
During Obama’s first term and Trump’s term, debt saw a marked increase as the administrations provided fiscal stimulus in response to the global financial crisis and the COVID-19 pandemic. As we begin to recover from COVID-19, what might debt growth look like going forward?
U.S. Public Debt Projections
As of September 30, 2020, the end of the federal government’s fiscal year, debt had reached $21 trillion. According to estimates from the Congressional Budget Office, it’s projected to rise steadily in the future.
|U.S. Public Debt||21.9T||23.3T||24.5T||25.7T||26.8T||27.9T||29.0T||30.4T||31.8T||33.5T|
By 2030, debt will have risen by over $12 trillion from 2020 levels and the debt-to-GDP ratio will be almost 109%.
It’s worth noting that debt will likely grow substantially regardless of who is elected in the 2020 U.S. election. Central estimates by the Committee for a Responsible Federal Budget show debt rising by $5 trillion under Trump and $5.6 trillion under Biden through 2030. These estimates exclude any COVID-19 relief policies.
What Could This Mean for Investors?
As the U.S. Federal Reserve creates more money to finance rising government debt, inflation could eventually be pushed higher. This could affect the value of the U.S. dollar.
On the flip side, gold and silver have a limited supply and coin production has decreased over the last three presidential terms. Both can act as an inflation hedge, while playing a role in wealth preservation.
The World’s Gold and Silver Coin Production vs. Money Creation
In 2019, the value of global money creation was over 500 times higher than the world’s gold and silver coin production combined.
Global Gold & Silver Coin Production vs. Money Creation
Note: Data has been updated to correct a previous calculation error pertaining to Japanese Yen money supply.
Both precious metals and cash serve as safe haven assets, intended to limit losses during market turmoil. However, while modern currencies can be printed by central governments, precious metals derive value from their scarcity.
In this infographic from Texas Precious Metals, we compare the value of the world’s gold and silver coin production to global money creation.
Total Production Per Person, 2019
We calculated the value of global currency issuance in 2019 as well as precious metal coins minted, and divided by the global population to get total production per person.
Throughout, global money supply is a proxy based on the 5 largest reserve currencies: the U.S. dollar, Euro, Japanese Yen, Sterling Pound, and Chinese Renminbi.
|2019 Production||Ounces||Dollar Value||Dollar Value Per Person|
|Global Gold Coins||7,204,982||$10.9B||$1.42|
|Global Silver Coins||97,900,000||$1.8B||$0.23|
|Global Money Supply||$4.3T||$556.33|
All numbers are in USD according to exchange rates as of December 31 2019. Gold and silver values are based on the 2019 year close price of $1,510.60 and $17.90 respectively.
The value of new global money supply was 390 times higher than the value of gold coins minted, and 2,400 times higher than silver coins minted.
Put another way, for each ounce of minted gold coin, the global money supply increased by more than $593,000.
Change in Annual Production, 2019 vs. 2010
Compared to the start of the decade, here’s how annual production levels have changed:
|Global Silver Coins (oz)||95,900,000||97,900,000||2.1%|
|Global Gold Coins (oz)||6,298,331||7,204,982||14.4%|
|Global Money Supply (USD)||$2,936,296,692,440||$4,268,993,639,926||45.4%|
Annual increases to global money supply have increased by half, far outpacing the change in the world’s gold and silver coin production.
Even more recently, how has production changed during the COVID-19 pandemic?
The COVID-19 Effect
In response to the global pandemic, central banks have enacted numerous measures to help support economies—including issuing new currency.
The global money supply increased by more than $6.8 trillion in the first half of 2020. In fact, the value of printed currency was 930 times higher than the value of minted gold coins over the same timeframe.
Investors may want to consider which asset is more vulnerable to inflation as they look to protect their portfolios.
Want to learn more? See the U.S. version of this graphic.
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