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The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
The World of Gold
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The World of Gold
The World of Gold
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The World of Gold
The World of Gold
The World of Gold
The World of Gold
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The World of Gold
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The World of Gold
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The World of Gold
The World of Gold
The World of Gold
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The World of Gold

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Frank Holmes' General Session presentation given at the Agora Financial Investment Symposium, July 2013.

Frank Holmes' General Session presentation given at the Agora Financial Investment Symposium, July 2013.

Published in: Economy & Finance, Business
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  • 1. usfunds.com 1.800.US.FUNDS July 2013 • 13-381 The World of Gold Frank Holmes, CEO and Chief Investment Officer
  • 2. usfunds.com July 2013 13-381 usfunds.com 2 Performance and Results Oriented Winner of 29 Lipper performance awards, certificates and top rankings since 2000 (Four out of 13 U.S. Global Investors Funds received Lipper performance awards from 2005 to 2008, six out of 13 received certificates from 2000 to 2007, and two out of 13 received top rankings from 2009 to 2010.) Investment leadership results in performance
  • 3. usfunds.com July 2013 13-381 usfunds.com Fund Recognition: 2 Funds in the Top 12 Percent for 10-Year Period 33
  • 4. usfunds.com July 2013 13-381 usfunds.com 4 Based on Risk-Adjusted Return
  • 5. usfunds.com July 2013 13-381 usfunds.com Focus on Education 5 43 MFEA STAR Awards for Excellence in Education
  • 6. usfunds.com July 2013 13-381 usfunds.com Branding – Education 6  Investor Alert and Advisor Alert are key communication tools  Our original, award-winning educational content is in high demand from investors via email, website, social media platforms, apps
  • 7. usfunds.com July 2013 13-381 usfunds.com Are YOU Reading U.S. Global’s Investor Alert? Jim Cramer Is. 7 Tweeted to his loyal 600,000 readers
  • 8. usfunds.com July 2013 13-381 usfunds.com Thailand Stock Market Up 42 Percent Under New Prime Minister 8
  • 9. usfunds.com July 2013 13-381 usfunds.com President Obama Meets with Prime Minister Yingluck Shinawatra of Thailand 9 Prime Minister Shinawatra is Thailand’s first female Prime Minister, and the youngest Thai Prime Minister in over 60 years.
  • 10. usfunds.com July 2013 13-381 usfunds.com President Obama Meets with Prime Minister Yingluck Shinawatra of Thailand 10 Prime Minister Shinawatra is Thailand’s first female Prime Minister, and the youngest Thai Prime Minister in over 60 years.
  • 11. usfunds.com July 2013 13-381 usfunds.com President Obama Meets with Prime Minister Yingluck Shinawatra of Thailand 11 Prime Minister Shinawatra is Thailand’s first female Prime Minister, and the youngest Thai Prime Minister in over 60 years.
  • 12. usfunds.com July 2013 13-381 usfunds.com President Obama Meets with Prime Minister Yingluck Shinawatra of Thailand 12 Prime Minister Shinawatra is Thailand’s first female Prime Minister, and the youngest Thai Prime Minister in over 60 years.
  • 13. usfunds.com July 2013 13-381 usfunds.com 13
  • 14. usfunds.com July 2013 13-381 usfunds.com Gold Does Not Look Like a Bubble 14
  • 15. usfunds.com July 2013 13-381 usfunds.com In Percent Terms, GLD Lost More, But 15
  • 16. usfunds.com July 2013 13-381 usfunds.com Facebook and Apple Lost More Money for Investors than Gold ETF 16
  • 17. usfunds.com July 2013 13-381 usfunds.com Even After a 2 Year Gold Selloff, Investors Are Ahead With 10 Percent Weighting in Our Gold Funds 17 The chart illustrates the performance of a hypothetical $10,000 investment made in the funds and strategy during the depicted time frame. Figures include reinvestment of capital gains and dividends, but the performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees) which, if applicable, would lower your total returns. This hypothetical portfolio is presented for educational and illustrative purposes only and is not a recommendation to engage in any particular investment strategy. Past performance does not guarantee future results.
  • 18. usfunds.com July 2013 13-381 usfunds.com Tipping Points, Melting Points H2O is Like Money 18 Ice Turns to Water at 32º, but Still H2O
  • 19. usfunds.com July 2013 13-381 usfunds.com 19 Government Policy Model — Precursor for Change President Barack ObamaBen Bernanke, Chairman of the Federal Reserve
  • 20. usfunds.com July 2013 13-381 usfunds.com 20 It’s Not the Political Party, It’s the Political Policies
  • 21. usfunds.com July 2013 13-381 usfunds.com It’s Not the Political Party, It’s the Political Policies Declining Value of the U.S. Dollar Since 1970 21 Alan Greenspan Ben BernankeRichard Nixon
  • 22. usfunds.com July 2013 13-381 usfunds.com Presidential Election Cycle Follow the Money 22 Government Policy Is a Precursor to Change March 2009
  • 23. usfunds.com July 2013 13-381 usfunds.com Follow the Money — Equities and Gold Have Outperformed Bonds 23
  • 24. usfunds.com July 2013 13-381 usfunds.com The Spotty Track Record of the Federal Reserve’s Economic Projections Alan Greenspan Ben Bernanke 24
  • 25. usfunds.com July 2013 13-381 usfunds.com Gold Demand Drivers 25 Elvis Presley
  • 26. usfunds.com July 2013 13-381 usfunds.com Follow the Money – Gold Price Surged With Increase of U.S. Monetary Base 26
  • 27. usfunds.com July 2013 13-381 usfunds.com Follow the Money – Global Liquidity Boom Good for Gold and Emerging Markets 27
  • 28. usfunds.com July 2013 13-381 usfunds.com Follow the Money — Unprecedented Cash Injections from Central Banks 28
  • 29. usfunds.com July 2013 13-381 usfunds.com Great Roll Over or Rip Off Creates Opportunity 29
  • 30. usfunds.com July 2013 13-381 usfunds.com Low Real Interest Rates Historically Fuel Gold, Silver and Oil 30 Tipping Point for Gold 2% Gold & silver perform well in low or negative real interest rate environments +2%
  • 31. usfunds.com July 2013 13-381 usfunds.com Gold and U.S. Real Rates 31
  • 32. usfunds.com July 2013 13-381 usfunds.com 10-Year Rolling Average CPI Since 1972 is 2.43% 32
  • 33. usfunds.com July 2013 13-381 usfunds.com Manipulation of CPI Calculation? 9.38% vs. 1.75% Debate 33
  • 34. usfunds.com July 2013 13-381 usfunds.com Central Banks Remain Net Buyers of Gold 34
  • 35. usfunds.com July 2013 13-381 usfunds.com Global Money Supply Influencing Gold Price 35
  • 36. usfunds.com July 2013 13-381 usfunds.com Frugal American – Household Financial Obligations Ratio 36
  • 37. usfunds.com July 2013 13-381 usfunds.com U.S. GDP 37
  • 38. usfunds.com July 2013 13-381 usfunds.com Gold Would Need to Be Much Higher to Cover U.S. Money Supply 38
  • 39. usfunds.com July 2013 13-381 usfunds.com Fear Trade: Aligning Gold Price to Bretton Woods II — $46,000/oz? 39
  • 40. usfunds.com July 2013 13-381 usfunds.com Driver: The Love Trade 40
  • 41. usfunds.com July 2013 13-381 usfunds.com Gold Love Trade Strong Correlation Between Rising Incomes and Gold Price 41
  • 42. usfunds.com July 2013 13-381 usfunds.com 42 Emerging World Holds 50% of the Global Population, Just 22% of GDP
  • 43. usfunds.com July 2013 13-381 usfunds.com Compare E7 vs G7 Money Supply Growth Emerging World s Money Supply is Robust 43
  • 44. usfunds.com July 2013 13-381 usfunds.com 44 Managing Expectations — Gold Seasonality Past performance is no guarantee of future results.
  • 45. usfunds.com July 2013 13-381 usfunds.com Holidays Drive Gold Demand 45
  • 46. usfunds.com July 2013 13-381 usfunds.com China s Increasing Jewelry Demand 46
  • 47. usfunds.com July 2013 13-381 usfunds.com “Follow the Money” (Gold) to China China Consumes Almost 100% of World’s Gold Mine Production 47
  • 48. usfunds.com July 2013 13-381 usfunds.com All Known ETF Holdings of Financial Gold Bullion Falls 48
  • 49. usfunds.com July 2013 13-381 usfunds.com Shorting Gold is a Crowded Trade 49
  • 50. usfunds.com July 2013 13-381 usfunds.com Contrarian Tool Gold – Net Commercial Position 50
  • 51. usfunds.com July 2013 13-381 usfunds.com Contrarian Investing – Market Vane Bullish Consensus 51
  • 52. usfunds.com July 2013 13-381 usfunds.com Gold – Net Commercial Position – Where is the Physical Gold? 5252
  • 53. usfunds.com July 2013 13-381 usfunds.com China’s Rush to Buy Gold on Lower Prices 53 May 3, 2013
  • 54. usfunds.com July 2013 13-381 usfunds.com Gold Stocks/Gold Ratio Shows Gold Stocks Undervalued 54
  • 55. usfunds.com July 2013 13-381 usfunds.com CEOs Replaced as Growth Promise Unfulfilled Barrick Gold $20 billion spent to grow Production down 15% Market Capitalization $20 billion Newmont Mining $16 billion spent to grow Production down 34% Market Capitalization $16 billion Kinross Gold $6.5 billion in writedowns last two years Market Capitalization $6 billion 55 Last 10 Years At least 20 mining CEOs have stepped down in the last year.
  • 56. usfunds.com July 2013 13-381 usfunds.com 56 The Replacement Cost for an Ounce Of Gold is $1500 with $1700 as a Sustainable Number (2012) — So Under $1500 Many Projects Will Not Come on Stream
  • 57. usfunds.com July 2013 13-381 usfunds.com +3 Million Ounce Discoveries Becoming Scarce and Expensive 57
  • 58. usfunds.com July 2013 13-381 usfunds.com Gold Exploration Spending Has Skyrocketed Without True Success 58 At $9 billion/year plus replacement requirements of 90 Million oz/year a discovery cost of $100/oz is needed. This is low.
  • 59. usfunds.com July 2013 13-381 usfunds.com Gold Mining Dividends Grew Faster than Price of Gold 59
  • 60. usfunds.com July 2013 13-381 usfunds.com Gold Stocks at Historically Low Cash Flow Multiples 60
  • 61. usfunds.com July 2013 13-381 usfunds.com Gold Stocks Discounting Plenty of Negative News 61
  • 62. usfunds.com July 2013 13-381 usfunds.com Most Gold Stocks Are Yielding More than 5-Year Government Note 62
  • 63. usfunds.com July 2013 13-381 usfunds.com Reasons for Active Management — Annual Rotation in Leadership 1-2-3 63 Past performance is no guarantee of future results.
  • 64. usfunds.com July 2013 13-381 usfunds.com 64 30 Year Gold Seasonality Past performance is no guarantee of future results.
  • 65. usfunds.com July 2013 13-381 usfunds.com Gold and Precious Metals Fund (USERX) 65 Average Dividend Yield of the Dividend-Paying Stocks and Bonds in the Fund as of 6/30/2013 Gold and Precious Metals Fund 4.01%
  • 66. usfunds.com July 2013 13-381 usfunds.com 66 Come Visit Us at Facebook: www.facebook.com/usfunds Linkedin: www.linkedin.com/company/u.s.-global-investors Twitter: www.twitter.com/usfunds Frank Talk: www.usfunds.com/franktalk Investor Alert: www.usfunds.com/alert
  • 67. usfunds.com July 2013 13-381 usfunds.com Fund Performance 67
  • 68. usfunds.com July 2013 13-381 usfunds.com Disclosure Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc. Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors. The Emerging Europe Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile. Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries. Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. Each tax free fund may invest up to 20% of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. Bond funds are subject to interest-rate risk; their value declines as interest rates rise. The tax free funds may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer. 68
  • 69. usfunds.com July 2013 13-381 usfunds.com Disclosure Morningstar Ratings are based on risk-adjusted return. The Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Bangkok SET Index is a capitalization-weighted index of all the stocks traded on the Stock Exchange of Thailand. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The COMEX is a commodity exchange in New York City formed by the merger of four past exchanges. The exchange trades futures in sugar, coffee, petroleum, metals and financial instruments. The Market Vane Bullish Consensus® measures the futures market sentiment each day by following the trading recommendations of leading commodity trading advisors. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The index benchmark value was 500.0 at the close of trading on December 20, 2002. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. M1 Money Supply includes funds that are readily accessible for spending. M2 Money Supply is a broad measure of money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market funds. M3 money supply is the broadest monetary aggregate, including physical currency, demand accounts, savings and money market accounts, certificates of deposit, deposits of eurodollars and repurchase agreements. 69
  • 70. usfunds.com July 2013 13-381 usfunds.com Disclosure Holdings in the U.S. Global Investors Funds mentioned as a percentage of net assets as of 6/30/2013: Agnico Eagle Mines (Gold and Precious Metals Fund 2.10%, World Precious Minerals Fund 2.49%); Alamos Gold (Global Resources Fund 0.20%, Gold and Precious Metals Fund 1.55%, World Precious Minerals Fund 1.62%); Anglogold Ashanti (Gold and Precious Metals Fund 0.01%, World Precious Minerals Fund 0.01%); Apple 0.00%; Aurico Gold (Gold and Precious Metals Fund 0.95%, World Precious Minerals Fund 0.46%); Barrick Gold (Gold and Precious Metals Fund 2.18%, World Precious Minerals Fund 0.12%); Cia De Minas Buenaventura (Gold and Precious Metals Fund 0.34%); Eldorado Gold (Gold and Precious Metals Fund 0.19%, World Precious Minerals Fund 0.12%); Facebook 0.00%; Franco-Nevada (Gold and Precious Metals Fund 2.30%, World Precious Minerals Fund 0.89%); Gold Fields (Gold and Precious Metals Fund 0.01%, World Precious Minerals Fund 0.01%); Goldcorp (Global Resources Fund 1.89%, Gold and Precious Metals Fund 0.21%, World Precious Minerals Fund 0.12%); Harmony Gold (Gold and Precious Metals Fund 1.95%, World Precious Minerals Fund 1.55%); Hecla Mining 0.00%; Iamgold (Gold and Precious Metals Fund 0.07%, World Precious Minerals Fund 0.02%); Impala Platinum 0.00%; iShares Core Total US Bond 0.00%; Kinross Gold (Gold and Precious Metals Fund 1.00%, World Precious Minerals Fund 0.14%); Newcrest Mining (Gold and Precious Metals Fund 1.56%); Newmont Mining (Gold and Precious Metals Fund 2.25%, World Precious Minerals Fund 0.06%); Pan American Silver Corp (Gold and Precious Metals Fund 2.00%, World Precious Minerals Fund 0.25%); Randgold Resources (Global Resources Fund 1.47%, Gold and Precious Metals Fund 0.06%, World Precious Minerals Fund 0.06%); Royal Gold (Gold and Precious Metals Fund 0.65%); Semafo (Gold and Precious Metals Fund 0.17%, World Precious Minerals Fund 0.15%); Silver Wheaton (Gold and Precious Metals Fund 0.35%, World Precious Minerals Fund 0.28%); SPDR Gold Trust (GLD) (Gold and Precious Metals Fund 4.45%, World Precious Minerals Fund 2.59%); SPDR S&P 500 ETF (All American Equity Fund 0.34%); Yamana Gold (Gold and Precious Metals Fund 2.37%, World Precious Minerals Fund 1.54%) 70
  • 71. usfunds.com July 2013 13-381 usfunds.com Disclosures Investment Objective: The Gold and Precious Metals Fund is an actively managed mutual fund that focuses on gold and precious metals producing companies. The World Precious Minerals Fund is an actively managed fund that focuses on junior and intermediate precious metals exploration companies around the world. The SPDR S&P 500 ETF Trust (SPY) is a passively managed fund that, before expenses, seeks to correspond generally to the price and yield performance of the S&P 500 Index. Liquidity: The Gold and Precious Metals Fund and World Precious Minerals Fund can be purchased or sold at a net asset value (NAV) determined at the end of each trading day. The SPDR S&P 500 ETF can be purchased or sold intraday. These purchases and redemptions may generate brokerage commissions and other charges not reflected in the ETF’s published expense ratio. Safety/Fluctuations of principal/return: Loss of money is a risk of investing in the Gold and Precious Metals Fund, the World Precious Minerals Fund and the SPDR S&P 500 ETF. Shares of the three securities are subject to sudden fluctuations in value. The SPDR S&P 500 ETF may also be subject to bid-ask premiums or discounts to net asset value (NAV) that could adversely affect a shareholder’s actual returns. Tax features: The Gold and Precious Metals Fund and World Precious Minerals Fund intend to make distributions that may be taxed as ordinary income or capital gains. Under current federal law, long-term capital gains for individual investors in the fund are taxed at a maximum rate of 15%. For the SPDR S&P 500 ETF, long-term capital gain distributions will result from gains on the sale or exchange of capital assets held by the fund for more than one year. Any long-term capital gains distributions you receive from a fund are taxable as long-term capital gain regardless of how long you have owned your shares. Long-term capital gains are currently taxed at a maximum of 15%. Information provided here is neither tax nor legal advice and is general in nature. Federal and state laws and regulations are subject to change. 71

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