The New York Times - USA (2020-07-28)

B4 Y THE NEW YORK TIMES BUSINESSTUESDAY, JULY 28, 2020

VIRUS FALLOUT | ECONOMY

ors can stash their cash just as

easily. And most of the time, they

opt for bonds over gold, because

bonds pay interest.

But something has happened

over the past few months to

change that gold-versus-bond cal-

culus.

Since the Fed cut the short-term

interest rates it controls to near

zero, longer-term interest rates —

also known as yields on govern-

ment bonds — have also fallen to

some of their lowest levels ever.

The yield on the 10-year Treasury

note was roughly 0.6 percent on

Monday.

At the same time, because the

Fed has created enormous

amounts of new money, analysts

say it could set the United States

up for higher inflation down the

road.

Investors are taking note of that

possibility. In recent weeks, mar-

ket measures of expected infla-

tion, known as breakevens, have

moved higher, and investors now

expect inflation to average around

1.5 percent a year over the next 10

years. Since the 10-year Treasury

note will return those investors

only about 0.6 percent a year, that

means investors who buy the 10-

year note must essentially be

comfortable with losing nearly 1

percent on that investment a year,

after accounting for inflation. In

the argot of the market, that

means “real” or inflation-adjusted

yields are negative.

Since not losing money — re-

member, gold is supposed to hold

its value even if it pays no interest

— is better than losing money, typ-

ically investors switch to gold

from Treasuries when this hap-

pens.

“The only thing that matters in

the gold price is the U.S. real

yield,” said Natasha Kaneva, a

precious metals analyst with JP-

Morgan Chase.

Inflows into gold exchange-

traded funds — mutual-fund-like

vehicles that are one of the easiest

ways to buy gold — spiked after

the Fed made major policy an-

nouncements in late March, dur-

ing the worst of the outbreak. And

the flood of cash to gold funds has

continued.

According to the World Gold

Council, a trade group, inflows

into gold E.T.F.s hit a record in the

first half of the year, as some $40

billion arrived. The heaviest in-

flows came from the United

States, where nearly $30 billion in

investor money poured into the

gold funds.

Several analysts now expect

gold prices will rise above $2,000

an ounce in the short term. In a

note published last week, analysts

at UBS said that negative real

rates, a weaker dollar and contin-

ued geopolitical uncertainty —

such as the tensions between

China and the United States — will

continue to support the price.

On Monday, the price of gold

futures on the New York

Mercantile Exchange rose 1.8

percent to more than $1,931

an ounce, a new high.

MIKE GROLL/ASSOCIATED PRESS

As Investors Rush Toward Gold, Its Price Breaks Records

FROM FIRST BUSINESS PAGE

over 200 degrees. In South Korea,
the electronics giant LG has creat-
ed a mask powered with fans that
make it easier to breathe.
In boutiques, patterned masks
are showing up on mannequins,
exquisitely paired with designer
dresses. An Indian businessman
said he spent $4,000 on a custom
mask made of gold. And a French
costume designer has filled Insta-
gram with phantasmagoric de-
signs featuring everything from
pterodactyls to doll legs.
The coronavirus “has driven a
rapid evolution in mask technol-
ogy,” said Yukiko Iida, an expert
on masks at the Environmental
Control Center, a consulting com-
pany in Tokyo.
“When there’s demand, the
market reacts quickly,” she said.
“People are wearing them all day
every day, so we’re seeing im-
provements in things like ease of
wear and ease of communication,”
she added, citing a mask with a
clear front that allows people to
see the wearer’s facial expres-
sions.
The urge to innovate has been
great in Japan, where masks were
widespread even before the pan-

demic, used to warm faces or pro-
tect against pollen, influenza or
the unwelcome gaze of strangers.
While most people in the coun-
try are still wearing cheap white
surgical masks, consumers have
begun to move away from view-
ing face coverings as a one-and-
done commodity, something
picked up at a convenience store,
worn a few times and tossed in
the trash.
Taisuke Ono, the chief execu-
tive of a tech start-up, Donut Ro-
botics, said he envisioned a world
where people could be wearing
masks on trips abroad for the
next 10 years or more. If that hap-
pens, they will demand that their
masks do more than just protect
them from viruses, he said.
His company is building a mask
that serves as a combination
walkie-talkie, personal secretary
and translator. It can record its
users’ voice, projecting it to some-
one else’s smartphone — all the
better for social distancing — or
transmuting it from Japanese into
a variety of languages.
“The pandemic made this pos-
sible,” he said, noting that his
prototype had generated media
attention and enormous interest
from investors on Makuake, a
Japanese version of Kickstarter.
Before, he said, “even if you made
something like this, no one would
invest in it, and you couldn’t sell it.
Now, the global market has grown
several times.”
Although the pandemic will end
at some point, he added, “people
will still be using masks because
they’re afraid.”
While it’s unclear how well
some of these more ambitious
masks will fare with consumers,
one innovation has been a clear
hit: face coverings with high-tech
fabrics that are said to provide su-
perior comfort or protection.
As summer temperatures rise,
masks made of materials in-
tended to keep wearers cool are in
demand. People who have been
wearing reusable cloth masks —
including those sent by the Japa-

nese government to every house-

hold in the country — are finding

them ill suited for the heat and hu-

midity of summer in central Ja-

pan, much less Singapore or Hong

Kong.

Toyoshima, a Nagoya-based

trading company, began collect-

ing funds for a new mask made

with military-grade nylon in mid-

April. It raised over $1.2 million —

more than 13,000 percent of its

goal.

Customers told the company

that they wanted a highly effec-

tive mask that was also fashion-

able, said Koki Yamagata, who

leads the company’s crowdfund-

ing initiatives.

“A lot of people said that they

wanted more colors,” he said as he

modeled a white version of the

mask, which retails for around

$50, on a Zoom call. The products

have not generated much profit,

he said, adding that the company

began making them partly out of a

sense of social responsibility.

Other Japanese companies

have followed suit. Tadashi Yanai,

the founder of Uniqlo, the giant

clothing retailer, insisted that his

company would not sell masks,

but changed his mind after

customers clamored for a product

made from the brand’s high-per-

formance, fast-drying fabric.

The masks sold out immedi-

ately, and the company has com-

mitted to making 500,000 packs a

week, according to a spokesman,

Aldo Liguori, who said that the

company was now planning to sell

them overseas, as well.

For some clothing makers, pro-

ducing masks has been a necessi-

ty, with retail sales slowing con-

siderably as consumers stay

home.

Many “factories haven’t had

much to do for two or three

months, so they’re saying ‘Why

don’t we make cloth masks?’ ”

said Kensuke Kojima, a product

consultant for the fashion indus-

try.

These Japanese producers

have entered a market that had

seen only incremental changes

over the decades, like masks that

came in different colors or offered

no-smear coatings to protect

makeup.

While medical practitioners

have worn masks of one sort or

another for hundreds if not thou-

sands of years, the masks worn to-

day were first developed in the

late 19th century for use during

surgeries.

They were first employed to

fight epidemics in the early 20th

century, when Wu Lien-teh, a doc-

tor of Chinese descent, began pro-

moting simple gauze masks as an

effective method for battling an

outbreak of pneumonic plague in a

part of northeastern China then

known as Manchuria.

When the Spanish flu hit in 1918,

the practice went global for the

first time.

While masks soon fell out of fa-

vor in most countries, the Japa-

nese government continued en-

couraging their use for fighting

common illnesses like the flu, said

Christos Lynteris, a medical an-

thropologist at the University of

St. Andrews in Scotland.

The ubiquity of surgical masks

in Japan, which are typically

made of nonwoven synthetic ma-

terials, has risen and fallen over

the years as the country con-

fronted different health issues and

crises.

In the 1990s, they became a pop-

ular defense against clouds of sea-

sonal pollen created by fast-grow-

ing trees, like cypress, planted

across the country to provide a

source of cheap timber.

In 2011, after the nuclear melt-

down at Fukushima, mask stocks

ran low as consumers feared ra-

dioactive fallout. And in the fol-

lowing years, drastic increases in

pollution from China drove more

demand, particularly in the win-

ter.

But, even in Japan, it took a pan-

demic to push mask sales into the

stratosphere, with face coverings

in such short supply early on that

people were lining up at the crack

of dawn to buy a box.

Months later, masks are abun-

dant, and shops in Harajuku, the

youth fashion mecca, are increas-

ingly putting them on prominent

display. On Takeshita Street,

storefronts are lined with masks

ranging from the playful (plush

animal faces) to the punk-inspired

(leather straps studded with

spikes and safety pins).

Although these masks may be

fashionable, buyers should be-

ware, said Kazunari Onishi, an ex-

pert on infectious diseases at the

Graduate School of Public Health

at St. Luke’s International Univer-

sity in Tokyo.

“You must choose a mask that

meets the national standards,” he

said, adding that “other types of

masks are not intended to be used

against infection.”

“If your priority is reliably pre-

venting infection, these masks

will not protect your life,” he said,

adding that even if you wear a

mask, “you must maintain a safe

social distance.”

Likely Here to Stay,

Masks Get Upgraded

For the Long Term

FROM FIRST BUSINESS PAGE

Rieko Kawanishi, above, a jewelry designer in Tokyo, designed pearl masks that she recommends

wearing over a regular mask. “I just thought, I want to make something elegant,” Ms. Kawanishi said.

Colorful masks in Tokyo, above. The chief executive of Donut Robotics, Taisuke Ono, below right, holding

a mask prototype that serves as a combination walkie-talkie, personal secretary and translator, and

includes an app. He believes people could be wearing masks for the next 10 years. Although the pandemic

will end at some point, he added, “people will still be using masks because they’re afraid.”

PHOTOGRAPHS BY NORIKO HAYASHI FOR THE NEW YORK TIMES

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