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Please note: The Frank Talk articles listed below contain historical material. The data provided was current at the time of publication. For current information regarding any of the funds mentioned in these presentations, please visit the appropriate fund performance page.

The Impact of Seven Billion People
October 28, 2011

On October 31, the world symbolically welcomes its 7 billionth. The real date the world hits that number is up for debate, but it has been symbolically chosen by the United Nations as a way to emphasize the effects a growing population will have on the globe.

Over the past half of a century, the world has rapidly accelerated in population growth. In 1800, the Earth had about 1 billion people, 2 billion by 1927 and 3 billion in 1959. A little more than 40 years later, our population doubled.

World Population in Increments of 1 Billion

Babatunde Osotimehin, the executive director of the UNFPA noted some great statistics in the United Nations Population Fund report, “State of World Population 2011.” He says,

Today, there are 893 million people over the age of 60 worldwide. By the middle of this century that number will rise to 2.4 billion. About one in two people lives in a city, and in only about 35 years, two out of three will. People under the age of 25 already make up 43 percent of the world’s population, reaching as much as 60 percent in some countries.

In nearly every presentation I give, regardless if I’m discussing gold, emerging markets, energy or the U.S. Global Investors’ funds, I show this population S-curve. To me, this dramatically rising line illustrates the significance of the world’s population on commodity consumption, rising gold demand and infrastructure buildout taking place in every continent.

Watch the countdown to 7 billion here:

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Emerging Wonders…Abroad and in the U.S.
October 21, 2011

Last year, the Marina Bay Sands and SkyPark opened in Singapore. The new luxury casino and five-star hotel adds a very distinctive look to the Singapore skyline. Its boat-shaped “park in the sky” is one of the most unique designs I’ve seen in my East Asian travels and a reported 70,000 jaws drop in wonder each day as visitors view the structure for the first time. I encourage you to check out any one of the amateur videos on of one spectacular feature—its infinity pool at the very top of the building from which one can view the city.

The Marina Bay Sands and SkyPark is featured on the cover of our latest Shareholder Report, and is a visual reminder of the growing role emerging markets play in economic growth. Our team discusses various factors from Brazil to China to Eastern Europe that are contributing to growth, including steadily rising oil demand and increasing numbers of middle and affluent classes. This is where I see numerous opportunities for today’s international investor.

There are also compelling values at home in the U.S. In my Shareholder Report letter, I showcase how the companies in the S&P 500 Index are currently paying a higher yield than the 10-year Treasury. This means a shareholder can get paid dividend income along with receiving potential appreciation.

Don’t miss our latest edition. Read it here.

If you would like to request your own copy, send your name and address to

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Extreme Divergence Between Coal Rocks and Stocks Unwarranted
October 3, 2011

Coal Cars
The Dow Jones Industrial Average experienced its worst quarter since the beginning of 2009. The S&P 500 Index fell 14 percent during the third quarter, with the materials sector as the worst performer, falling 25 percent. Many base metal commodities saw double digit declines, but not surprisingly, gold increased 8 percent over the quarter. It appears that fear of a “2008 repeat” drove investors from stocks despite positive long-term fundamentals.

Coal was relatively flat for the quarter, but what’s interesting is that coal companies were severely discounted. Over the last two years, coal stocks and the commodity have closely tracked each other, until this summer, when worries about a global slowdown caused coal stocks to fall off a cliff, not once, but twice, in August and again in early September. This extreme divergence between coal companies and the commodity seems unwarranted when the long-term drivers of coal remain supportive.

Coal Stocks

We discussed coal in May in Coal Use in China Shines Light on Growth, and highlighted how the price of coal was supported by strong demand from reconstruction projects in Japan along with reduced supply from floods in Australia, Indonesia, South Africa and Colombia. As the largest consumer of coal in the world, China was expected to continue to demand a significant amount of coal over the long term.

This long-term driver hasn’t changed, even with China’s concentration on controlling inflation this year. Coal inventory levels at China’s top loading port have dropped, hitting a new low at the end of September, reports Macquarie Research. In mid-September, the Daqin Railway was under maintenance for a few weeks, causing reduced deliveries, which put further pressure on the country’s inventory. As the world’s largest coal transport railway, the Daqin line transports coal from northern China to Zinhuangdao for shipping to manufacturing centers in the south and the east.

Throughout the world, coal demand is expected to rise significantly over the next 25 years. According to the U.S. Energy Information Administration’s (EIA) recent International Energy Outlook 2011, total coal demand will be driven largely by the non-OECD economies, which are primarily emerging markets. Specifically, the Asian non-OECD countries are projected to account for nearly all of the increase from 2008 through 2035, with China averaging 5.7 percent each year and India averaging 5.5 percent per year, says the EIA.

MSCIEM 60 day OscillatorToday’s worries about a global slowdown shouldn’t impact China’s consumption levels for many commodities. In fact, a worldwide slowdown may spur additional demand from China. Macquarie explains that China’s government tends to “de-synchronize” the country compared with the rest of the world, creating an inverse relationship. This means that when the world is growing, China becomes so concerned about rising costs and inflation, that it moves quickly to slow growth.

Conversely, when world demand for commodities slows, China ramps up its infrastructure projects and scoops up unwanted commodities. In China-The Great Stabilizer, I showed a Macquarie chart indicating how China’s demand for many base metals has run counter to world demand over the last 10 years. Most recently, in 2008, the de-synchronization took place when China first moved to slow growth to combat increasing inflation. As the global crisis caused a significant slowdown, “authorities moved quickly to substantially ease monetary and fiscal policy,” says Macquarie. Due to its long-term planning, China can start and stop infrastructure projects at will.

In addition, Macquarie says that potential growth of the country generally outpaces its energy and resources capacity.

The recent dramatic decline in coal stocks has been driven by concerns of a global slowdown, but with equities already down 40 percent from their July highs, we feel this negative sentiment is already priced in. Given the encouraging long-term fundamentals, along with the fact that the underlying commodity has roughly stayed the same over the past few months, it appears that fear is the driver. This is often when opportunity knocks.

John Derrick, director of research, contributed to this commentary.

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies

None of U.S. Global Investors Funds held any of the securities mentioned in this commentary as of 6/30/11.

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Rev Up for Resources Boom in China
July 25, 2011

Frank on MarketWatchLast week I sat down with Laura Mandaro from Marketwatch to discuss what’s currently driving commodity markets. One of the key drivers today is the robust economic activity and commodity demand taking place in Asia.

Frequent Frank Talk readers know there is something profound and significant happening in China—the building of a massive high speed rail network. It’s a $300 billion project that will connect more than 250 Chinese cities, span 18,461 miles and reach roughly 700 million people. This is going to create massive demand for commodities and a wave of investment into the sector. We believe that resource companies associated with coal, iron ore and steel are well positioned to benefit from China’s long-term sustainable bull market.

I also discuss a few individual stocks I think are structurally sound as well as talk about a market ready to take off and The Fear and Love Trade.

Investments in natural resources, emerging markets and infrastructure are subject to distinct risks as described in the funds’ prospectus.

The following securities mentioned in the interview were held by one or more of U.S. Global Investors Funds as of June 30, 2011: Freeport-McMoRan, Joy Global.

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Move at the Speed of China
July 14, 2011

Shareholder ReportOur latest shareholder report highlights what we believe to be China’s true Great Leap Forward. The country is developing at a much greater and faster rate than America’s boom time in the 1950s. The report recaps portfolio manager Evan Smith’s latest research trip to iron ore facilities in China and discusses where most of the millionaires live in 2020…take a guess where that may be?

Its epic build-out is already having an impact on international businesses vying for market share. American industries, including automobile manufacturers and hoteliers, as well as the European luxury market are all setting up shop along China’s “millionaire row.”

China’s expansion has affected gold demand too. In the article, “Asian Tiger Sinks Teeth into Gold,” we write about how China’s 2010 demand for gold jewelry, bars and coins outpaced the demand of the Developed West, which includes the U.S., France, Germany, Italy, Switzerland, U.K. and other European nations.

To receive your copy in the mail, send us a quick email at with your address. Or, click on the link below to see an online version.

View the Report Online

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Net Asset Value
as of 06/15/2018

Global Resources Fund PSPFX $5.83 -0.08 Gold and Precious Metals Fund USERX $7.61 -0.07 World Precious Minerals Fund UNWPX $3.89 -0.06 China Region Fund USCOX $11.80 -0.04 Emerging Europe Fund EUROX $6.72 -0.10 All American Equity Fund GBTFX $25.97 0.05 Holmes Macro Trends Fund MEGAX $20.22 No Change Near-Term Tax Free Fund NEARX $2.20 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change