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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.

5 Reasons Why Active Management Works
September 13, 2016

As we all know, exchange-traded funds (ETFs) have increasingly become the hot menu item, attracting a lot of money away from actively-managed funds such as mutual funds. But don’t discount active management just yet! There’s still plenty of room in your portfolio for this type of investment.

Consider the following:

1. First-Mover Advantage

Active management gives us the ability to act swiftly and strategically, with the surgical skill of a highly-trained team of Special Forces. It allows us to push out of the starting blocks much faster.

As active managers, we closely monitor key indicators and macroeconomic themes such as PMI (the Purchasing Manager’s Index), which we’ve written about many times, and negative real interest rates. These indicators, among other factors, often serve as the signals we’re looking for.

2. Explicit and Tacit Knowledge

Some people have book smarts (explicit knowledge), while others have street smarts (tacit knowledge). Active management requires that you have both.

Not only are we experts in geology and mineral resources, we’re also world travelers with “boots on the ground” experience visiting mines, spending time with mining crews and meeting with management teams.

Frank Holmes Gold Mining

3. Technical Models

We are practitioners of quantitative analysis on a per-share basis. We use a matrix of top-down macro models and bottom-up micro stock selection models to determine weightings in individual securities. When looking at mining stocks, for instance, we screen for the following factors:

Our Factors For Selecting Mining Stocks

4. Hidden Gems

Using technical stock screens and tacit knowledge of management teams can help us uncover hidden gems with attractive growth prospects.

One such company is Nevada-based Klondex Mines, which reported incredible second-quarter growth of 82 percent in net income and 25 percent in the amount of gold produced compared to the same time last year. Klondex is up more than 156 percent year-to-date, as of August 30.

Granted, this type of performance is out-of-the-ordinary, and there’s no guarantee it will be repeated in the future. But when it happens, active management can help us capture the upswing.

gold mine

5. Portfolio Manager Tenure

Active management is only as good as the people running it, and at U.S. Global Investors, we’re fortunate to have one of the best in the business—Ralph Aldis.
Ralph has over 20 years’ worth of experience at USGI alone and was even named a metals and mining “TopGun” fund manager by Brendan Wood International last year. The capital markets performance measurement firm recognized a group of investors as “optimal leaders of thought in the industry” during the year. The honor was given based on a vote from 269 sell-side professionals, and this was Ralph’s second time to receive such recognition from his peers.

Ralph Aldis Portfolio Tenure

 

Explore opportunities in precious metals and mining investment!

 

The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

Cash Flow Return on Invested Capital (CFROIC) is defined as consolidated cash flow from operating activities minus capital expenditures, the difference of which is divided by the difference between total assets and non-interest bearing current liabilities. 

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 6/30/2016: Klondex Mines Ltd., Silver Wheaton Corp.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

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11 Reasons Why Everyone Wants to Move to Texas
August 30, 2016

Texas Wind Power

As many of you know, I was born in Canada but moved to the great State of Texas 26 years ago when I bought a controlling stake in U.S. Global Investors. As a “Tex-Can,” I’m so proud of my adoptive state and grateful for all that it’s done to help our company flourish.

But you don’t have to be a business owner to love and appreciate Texas. As you’ll see, many people are moving to the Lone Star State to take advantage of its many employment opportunities, tax advantages and all-around greatness. Below are just 11 reasons why more and more people want to move to Texas!  

1. Check out Our Mettle

The 2016 Olympic Games in Rio de Janeiro now belongs to history, and by a very wide margin, American competitors walked away with the most medals: 121 altogether. Looking at gold medals, the U.S. still ranked first, with 46 won. But if we took away what Texas collected, the Land of the Free would have fallen to third place, behind the U.K. and China.

Texas would rank third in Olympic gold medals if it were its own country
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Houston was the winningest Texas city. Home to Olympic medalists Simone Biles, Simone Manuel, Kerron Clement and more, H-Town is now 10 gold medals richer.

2. Moneybags

Texas is competitive in more than just Olympic events, of course. The state has the second-largest gross domestic product (GDP) in the Union, following California. If it were its own country, Texas would clock in at number 12 in the world, snuggled in between Canada and Australia.

Texas would rank twelth in GDP if it were its own country
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3. Tex-Can

If Texas were its own nation, in fact, its economy would be about the same size as Canada’s.

The Global Scale of America's Economy
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4. This Is Oil Country

Another thing Texas has in common with Canada? Black gold. Barrelsful of it.

Last month, Oslo-based Rystad Energy shared a report that shows the U.S. as now having the world’s largest reserve of recoverable oil, with 264 billion barrels in existing fields, unconventional shale and as-yet undiscovered areas. This is the first time such a report has moved the country ahead of both Saudi Arabia and Russia.

Were it not for the contributions of oil-rich Texas, however, this might not be the case. Thanks in large part to fracking in prolific fields such as the Eagle Ford Formation and Sprayberry Trend, the state leads all others in crude production, annually gushing out more than a third of total U.S. output.

You can see how the fracking boom helped propel the state into the same league as major OPEC nations Iraq, Iran, United Arab Emirates and Kuwait.

Texas Oil Production Raced Up to OPEC Gulf States
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5. A Mighty Wind

Texas is more than oil, of course. The natural-resource-rich state is also known for its natural gas production (it leads the nation), coal, electricity (again, number one in the States) and renewable energy—specifically, wind energy.

Texas Wind Power

Thanks to Competitive Renewable Energy Zones (CREZ) and $33 billion in invested capital, Texas ranks first in the nation for installed wind capacity and the number of megawatts generated by wind. In 2015, close to 10 percent of the state’s electricity production came from wind, according to the American Wind Energy Association.

With an estimated 17,000 Texans already employed in the state’s wind energy industry, Texas is in the process of installing an additional 5,200 megawatts.

6. Men at Work

Speaking of employment, that’s something else you can find a lot of in the Lone Star State. The oil industry might have taken a hit from falling crude prices, but the Texas economy has proven resilient. As you can see, the 2007-2008 global financial crisis had much less of an impact on state unemployment rates compared to other major countries and regions such as Canada, Australia, the European Union and United States.  

Texas Currently Has Lowest Unemployment Rate Among Selected Countries and Regions
click to enlarge

7. All Roads Lead to Texas

Welcome to Texas, drive friendly The Texas Way

Important to keeping business and commerce flowing, as well as helping commuters travel to and from their work, are roads. Texas has them in spades. According to the U.S. Department of Transportation, the state is connected by 313,596 miles of public road, the most of any state. With 18 numbered interstate highways, it also has more interstate miles than any other does.

If it were its own country, Texas would rank 13th by road network size, somewhere between Germany and Sweden.

At only $0.20 per gallon, the Texas gas tax is among the most reasonable in the nation. And because almost that entire amount goes to public transportation—$0.05 is devoted to public education—Texas has some of the best roads in the U.S.

While we’re on the topic of transportation, Texas also boasts the most airports of any state—1,415, according to StateMaster. Two of the four major U.S. carriers, American Airlines and Southwest Airlines, are headquartered in the Lone Star State.    

8. No Income Tax

There are only seven states without an income tax, Texas among them. (Alaska, Florida, Nevada, South Dakota, Washington and Wyoming round out the list.) 

Average Income Tax by State
click to enlarge

Neither does the state impose a corporate income tax, and last summer, Governor Gregg Abbott approved $4 billion in tax cuts for businesses and homeowners.

9. Gold Star State

The Texas bullion depository will be first in the nation

Governor Abbott is also responsible for what will be a first in the United States. More than a year after he signed a law to repatriate $1 billion in Texas gold bullion from a private HSBC vault in New York, construction will soon begin on the Texas Bullion Depository. Such a state-run gold depository doesn’t currently exist anywhere else in the U.S. It’s hoped that it will help turn Texas into a “financial Mecca,” in the words of one state senator.

10. Population Destination

Low taxes are one of the main appeals driving Texas’ rapid population growth. According to the Census Bureau, five of the 11 fastest-growing U.S. cities by population can be found in Texas. Ranking number two in the nation is New Braunfels, a lovely town originally settled by Germans that lies midway between San Antonio and Austin.

Between July 2014 and July 2015, the Lone Star State added 490,036 new residents, the most of any state by a wide margin.

Texas Added More REsidents than any other STate
click to enlarge

To put this in perspective, the number of new Texas arrivals alone between 2014 and 2015 exceeds the total populations of several countries, including Malta (population: 429,366, as of December 2014), Brunei (411,900, as of July 2014) and Iceland (336,060, as of June 2016). 

11. Bet on Tech

Texas Leads the Nation in Technology Exports

It’s not just people moving to Texas, though. Companies are as well—specifically tech companies, and, to get even more granular, Silicon Valley tech companies. The San Francisco Chronicle reports that, in recent years, more than $1 billion in taxable income has flowed from the Bay Area to Texas, as tech firms have sought not just lower taxes but also simpler regulation.

Indeed, the Lone Star State has emerged as a formidable tech hub to rival Silicon Valley. Employing more than 270,000 people, the state’s tech industry supports firms ranging in size from hip Austin startups to massive Fortune 500 companies such as Dell, Texas Instruments and Rackspace Hosting (which just agreed to a $4.3 billion acquisition deal by private equity firm Apollo Global Management).

For the last three years, Texas has led the nation in high-tech exports—everything from semiconductors to communications equipment. Last year, in fact, the state’s total sales amount exceeded California’s by a whopping $6.3 billion.

No wonder so many people are choosing Texas as the place to hang their hat!

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 6/30/2016: American Airlines Inc., Southwest Airlines Co.

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The Real Truth About Millennial Investors
August 29, 2016

Millennials are expected to control up to $24 million by 2020

We’ve finally reached late August, meaning your Facebook newsfeed is probably brimming with children and teenagers sporting brand new sneakers and backpacks in preparation for their first day of school. Maybe one or two of your young ones are heading back this week or next. If so, I wish them all the best this year, and I hope you enjoy and cherish watching them grow.

It’s also around this time that hundreds of thousands of 18-year-olds will be attending their very first day of college or university. This cohort, born mostly in 1998, is among the youngest of millennials, the generation born between 1980 and 2000. According to Census Bureau data, millennials are now the most populous adult segment in U.S. history, 83.1 million strong as of last summer. (By comparison, baby boomers number 75.4 million.)

This is why I find it so crucial to keep up with the trends, lifestyles and spending habits of this important group (not least of all because my own two sons belong to it). Any investment manager would be wise to do the same. Millennials are often characterized as entitled, lazy and disengaged, but many of these perceptions fail to stand up to scrutiny when we consider what they’ve already achieved in the information technology space. If you regularly use Facebook, Airbnb, Uber, Pinterest, Dropbox or any number of other popular apps valued in the tens of billions, you benefit from the work and imagination of entrepreneurs who came of age sometime during George W. Bush’s eight-year presidency.

There’s no getting around it: Millennials are our future leaders, innovators, consumers and investors. By 2020—a mere four years from now—they will make up an estimated 50 percent of the global workforce. What’s more, they’re expected to control between $19 trillion and $24 trillion on a global scale, according to consulting firm Deloitte.

Twenty-four trillion dollars. Let that sink in for a moment.

The First Digital Natives

One of the best ways to get a clear sense of the world this group has come of age in, I’ve found, is the Beloit College Mindset List. Every August since 1998, Beloit College has put together a list of cultural touchstones that helped shape and influence the current incoming class of college freshmen.

Last year, I was fascinated to learn that the class of 2019 has always depended on Google to answer their questions, always treated Wi-Fi as an entitlement, always known marijuana as a legal therapeutic substance in a growing number of states.

This year’s list for the class of 2020 is no less eye opening. Below, I’ve selected several points that illustrate millennials’ close relationship with digital technology.

  • There has always been a digital swap meet called eBay.
  • They have never had to watch or listen to programs at a scheduled time.
  • If you want to reach them, you’d better send a text—emails are oft ignored.
  • Books have always been read to you on audible.com.
  • Bluetooth has always been keeping us wireless and synchronized.
  • Airline tickets have always been purchased online.  

Millennials are expected to control up to $24 million by 2020Taken together, these observations shed some light on the expectations millennials have of their brands and services—expectations such as convenience, immediacy, transparency and a strong sense of community. It doesn’t matter how iconic or longstanding a brand is. If it fails to deliver on these expectations, 83 million millennials will antiquate it. (Remember Blockbuster?) Word of mouth is as important as ever, but the scope has vastly been broadened since their parents and grandparents’ time, from a handful of neighbors and acquaintances to a digital sea of millions.

Social Responsibility Matters

More so than past generations, millennials are mindful of ethical business practices and base many of their spending and investment decisions on those practices.

A recent study conducted by marketing tech firm Adroit Digital found that 38 percent of millennial consumers will drop a brand for another if it’s alleged to be doing “bad business”—consciously polluting a river, for example, or mistreating workers.

That social awareness translates to the investment side, even among wealthy investors. A vast majority of younger high-net worth individuals (HNWIs), defined as those controlling wealth greater than $10 million, expect their money managers to “screen investments based on environmental, social and governance factors,” according to FactSet. Sixty-one percent of millennials see these factors as essential, more than double the rate of their 55-and-older peers.

Younger Investors More Interested in "Socially Responsible" Investments
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Proceeding with Caution

The 2008-2009 financial crisis had a huge, lasting impact on young investors, who might have seen the value of their parents’ 401(k)s and portfolios cut nearly in half. As a result, many twenty and thirtysomethings tend to be a bit more cautious and conservative with their finances than Mom and Dad.

Consider this: In December 2015, UBS surveyed 2,638 affluent investors, including 584 millennials, on their investment attitudes. As a group, millennials maintained a larger cash holding than older generations (41 percent on average, compared to Generation X’s 28 percent and baby boomers’ 20 percent) and were unsatisfied with how their portfolios were positioned. Only 15 percent claimed they were “very happy,” compared to 32 percent of Generation X and 50 percent of baby boomers.

This could partially explain why millennials also have a much greater propensity to rent instead of commit to buying—which, in turn, helps explain the meteoric rise of “sharing economy” pioneers such as Uber (now worth more than Ford and GM) and Airbnb (worth more than Hyatt and Wyndham Worldwide).

Meanwhile, younger and lower-income Americans are less likely than their older peers to participate in investments such as mutual funds.

Younger, Lower-Income Americans Less Likely to Invest in Mutual Funds
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This is worrisome, especially since they themselves are skeptical of Social Security’s longevity. According to the Transamerica Center for Retirement Studies (TCRS), as many as 80 percent of millennials fear Social Security will no longer be around by the time they retire.

Fortunately, we have a solution.

Dollar-Cost Averaging

For many cautious millennials, taking a more long-term, disciplined approach to investing makes sense. This can be achieved through dollar-cost averaging, an investment technique that lets you invest a fixed amount in a specific investment at regular, automatic intervals—often just $100 per month.

Think of it like dipping your foot into a lake inch-by-inch, instead of taking a running leap off a 20-foot cliff.

That’s the case with our popular ABC Investment Plan, which allows investors to fund their financial goals more affordably. Of course, no investment plan can guarantee a profit or protection against a loss in a declining market, and you should evaluate your financial ability to continue in such a program in view of the possibility that you might have to redeem shares in periods of rising and declining share prices.

But for younger investors who might feel hesitant to make the plunge all at once, the ABC Investment Plan is an option worth considering.    

 

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more of U.S. Global Investors Funds as of 6/30/2016: Ford Motor Co., Wyndham Worldwide Corp.

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Go Gold!
August 15, 2016

Last Friday marked one week since the start of the Rio de Janeiro Olympics, and it’s been nothing short of amazing. Michael Phelps, whose name should forevermore be synonymous with the Olympics, won his 22nd overall gold medal. He also was awarded his 13th individual gold, effectively breaking a record last set in 152 B.C. by legendary runner Leonidas of Rhodes.  

What I find most remarkable about Phelps’ success is that he’s had to overcome strong personal challenges to reach the level he’s at. He was diagnosed with attention deficit hyperactivity disorder (ADHD) at a young age, and when he chose to get off his medication, he turned to swimming. More recently, he’s dealt with alcoholism, which landed him a DUI in 2014. His is a quintessentially American story of otherworldly success born out of failure, of meeting the obstacles that block his path to his goals head on.

When Phelps made the decision to compete in his fourth Olympics, he reteamed with his longtime swim coach Bob Bowman and set his mind to training harder than he ever had before—which, at his “advanced” age of 31, would be necessary if he hoped to have a shot at winning the gold.

The most decorated Olympian in history, Phelps, like all winners, focuses on winning. Losers, on the other hand, focus not on winning but on the winners in front of them. They’re more concerned about the short-term noise, at the expense of their long-term goal. The image at the top is a perfect illustration of this, with Phelps’ competitor clearly more concerned with “the Baltimore Bullet” than his own performance.

But many investors, I’ve found, are the same way. Today there’s a lot of noise and distraction, which can influence investment decisions. Much of that distraction is coming from the presidential election, which is already turning out to be one of the most negative and highly contentious in American history.

Trump Self-Sabotages

Someone who could benefit from Phelps’ steadfastness and commitment to his craft is the Republican presidential candidate, Donald Trump, who all too often sabotages his own campaign with controversial and incendiary remarks.

We saw this happen last week. While speaking to the Detroit Economic Club, Trump promised that, if elected, he would place a “temporary moratorium” on any new financial regulation. Further, he would repeal the Dodd-Frank Act and reform the tax code to include only three income-tax brackets, down from the current seven.

These are solid proposals, appealing to not only everyday taxpayers but also many of the CEOs I speak with on a regular basis. After all, they’re the ones who must deal with regulations on a daily basis.

The problem, though, is that Trump can’t stay on message. In the opening image, Trump is more like the guy who’s distracted by Phelps rather than Phelps himself. Trump invariably will say something inflammatory soon after making a sensible remark on policy, thereby effectively resetting the news cycle. In last week’s case, it was his comment on “Second Amendment people”—a veiled threat against Hillary Clinton, some interpreted—that dominated the headlines, taking all attention away from the moratorium on financial regulations.  

Research Firm: Get Ready for Madam President Clinton

The cover of TIME’s August 22 edition displays a striking likeness of Trump melting like an Air Wick candle. A single word punctuates the stark image: “Meltdown.” Whether or not you support the New York billionaire, you must admit that the “Trump train” has repeatedly jumped the track since the Republican convention. What’s more, we just learned that GOP Chairman Reince Priebus is being pressured by dozens of Republican insiders to withdraw all party support, including campaign financing, from Trump’s candidacy.

Things aren’t looking good. Even regression analysis now appears to show that Trump’s chances are retreating.

In a new report, investment research firm Ned Davis makes the case that, based on historical precedent, economic as well as stock and bond market performance so far this year is pointing to an incumbent party victory in November. The chart below shows that the upward trajectory of the Dow Jones Industrial Average in 2016 more closely resembles the average performance seen in all years when the incumbent party—Republican or Democrat—held on to office.

Dow Jones Industrial Average Performance Pointing to Incumbent Party Win in November
click to enlarge

According to Ned Davis strategists Ed Clissold and Victor Jessup, “When the economy has not been in a recession, the odds of the incumbent party retaining control of the White House has jumped to 71 percent.” Since 1900, presidential elections have landed during recessions five times. In four of these instances (1920, 1932, 1960 and 2008), the incumbent party lost. The exception was 1948 when Harry Truman won—just barely, if you remember your history—but the recession began the same month as the election.

The group points out, however, that it’s extremely rare for a two-term Democrat to pass the baton to a new Democrat via election. How rare? The last time this happened was in 1836, when Andrew Jackson—the very first Democratic president—was succeeded by Martin Van Buren.

Hillary for Precious Metals

I’m very often asked which candidate will be better for gold: Trump or Clinton? The honest truth is that the answer changes week-to-week. Sometimes it’s Trump because he has demonstrated unpredictability and unpreparedness. Other times, it’s Hillary because she has proposed policies that were clearly inspired by the socialist leanings of Bernie Sanders, who still remains very popular among far-left Democrats. In her economic address last week, she laid out her plan to make college “debt-free” and tuition absolutely “free” to children from families who earn less than $125,000 a year.

To make this plan happen, of course, income taxes will most likely need to be hiked. And if history tells us anything, it’s that gold demand has increased when socialist policies threatened economic growth. The price of gold is inversely correlated with the five-year and 10-year Treasury yields, which fall when the economy is floundering. This makes the yellow metal all the more attractive to investors.

That’s why I always recommend a 10 percent weighting in bullion and gold stocks, in both good and bad times. Gold has a history of holding its value even during economic turmoil, which is why it’s prudent to maintain an allocation in your portfolio.

Alibaba Beats Expectations. Is China Next?

Last Thursday, giant Chinese ecommerce site Alibaba posted spectacular numbers, suggesting a turnaround for the world’s second biggest economy possibly isn’t too far behind. Alibaba—whose 2014 IPO stands as the largest in U.S. history, according to Renaissance Capital—posted quarterly revenues of $4.8 billion, a whopping 60 percent increase from the same time last year, and the biggest ever since before the company went public.

This is constructive news for China. Alibaba works with a reported 8.5 million sellers, from mom-and-pop-type shops to multibillion-dollar, international corporations, making for a good cross-section of the Chinese economy. (You could argue the same of Amazon and the U.S. economy.) That Alibaba’s sales are up indicates that consumption in China is stronger than perhaps analysts anticipated. Indeed, Beijing reported that retail sales grew nearly 11 percent in the second quarter  year-over-year, beating estimates of 9.9 percent.   

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. None of the securities mentioned in the article were held by any accounts managed by U.S. Global Investors as of 6/30/2016.

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The Olympic Games Reflect Our Love of Gold
August 11, 2016

a gold laurel wreath dating from the 3rd or 4th century BCE

Every child knows Olympic gold medals are for first place, silver for second and bronze for third. But where does this tradition come from?

Like most everything else relating to the Olympics, we can trace the tradition back to the ancient Greeks, who assigned metals (not medals) to different Ages of Man. First among them was the Golden Age, characterized as a peaceful time when humans and gods lived in harmony and food was plentiful. The Greeks believed this to be the pinnacle of our existence, after which it all went downhill. Following that golden period came the Silver Age, when childhood lasted 100 years. Then, the Bronze Age, a time of violence and destruction among warring tribes.

The Greeks weren’t alone in their reverence of gold, of course. It fascinates me that nearly every ancient people, no matter the continent or region, imbued the precious metal with the same degree of sacredness and purity. One of the earliest known metals, gold was valued for its resemblance to the sun, itself worshipped as a powerful deity in many cultures. The ancient Incans, in fact, referred to gold as “sweat of the sun.” When you held a gold nugget, it was believed, you held a piece of the gods themselves.

Michael Phelps showing off his Olympic gold medals on the August 2008 cover of Sports IllustratedAlthough most of us no longer believe gold emerged from the sweat glands of great celestial beings, we nevertheless still hold the metal in very high regard. This is what I often refer to as the Love Trade, the proof of which can be seen all around the globe—from beautiful gold wedding rings in the U.S., to finely crafted bridal jewelry in India, to gold coins given to newborn babies in South Korea. So high is our regard for gold that we reward the world’s most gifted athletes—our modern day Greek gods and goddesses—with a small disk of the stuff.

More or less.

Alas, today’s Olympic gold medals contain only a small trace of the yellow metal. According to Kitco News, they’re about 95 percent silver and 1.2 percent gold, making them worth nearly $570 at current prices. (Of course, the real value is much higher. A gold medal earned by an obscure athlete can go for $10,000 at auction, and the price goes up from there. Jesse Owens’ gold medal, awarded during the 1936 Berlin Games, sold for $1.47 million in 2013.) The last (and only) time medals were 100 percent pure was during the 1912 games in Stockholm.

If this seems disappointing, it’s better than it once was. In ancient Greece, winners weren’t awarded a medal of any kind. Instead, they were crowned with wreaths of olive branches, a tradition that was observed in the first modern Olympics, the 1896 Athens Games. It wasn’t until the 1904 St. Louis Games that the current practice of awarding gold for first, silver for second and bronze for third was standardized.

Gold Has Taken the Gold Compared to Most Major Asset Classes

the first Olympic gold medal was awarded during the 1904 Games in St. Louis Besides the pageantry and superhuman athleticism, fans and viewers are drawn to the competitiveness that’s on display at the Olympic Games. Athletes have trained for countless hours to prepare for their events, often costing their families tens of thousands of dollars in the hopes that they will stand atop the winners’ podium and be awarded the gold medal.

Likewise, many investors, myself included, gain a lot of pleasure (and heartache) watching their favorite asset classes perform in global markets—including gold.

There was much heartache indeed during the recent bear market that sunk gold from its 2011, all-time high of $1,900 an ounce to its trough of $1,053 near the end of 2015. Since the start of the year, however, the yellow metal has rallied more than 26 percent, leading many analysts and brokers— including Paradigm Capital, HSBC, RBC Capital Markets and the World Gold Council (WGC)—to declare this the beginning of a new upcycle, as uncertainty over central bank policy is deepening.

gold has outperformed most asset classes
click to enlarge

According to the WGC, gold has outpaced other major benchmarks and asset classes for both the one-year (horizontal axis) and year-to-date (vertical axis) periods of return. In addition, the metal’s volatility has been fairly comparable to S&P 500 Index stocks. (In the chart above, volatility is represented by the size of the circles.) The Love Trade is still strong globally, but much of gold’s appeal right now stems from investors’ concerns that unconventional monetary policies have not been effective at jumpstarting growth.

Gold is up not just in U.S. dollars. It’s also rising steadily in countries with a major presence in the gold-mining space, including the U.K., Turkey and Russia. Note the huge spike in pound sterling-priced gold following the Brexit vote and subsequent currency drop.

gold returns priced in various currencies
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These Gold Funds Are Built to Compete

That doesn’t mean all gold funds have provided the same level of performance. Like a highly trained Olympian, our Gold and Precious Metals Fund (USERX)and World Precious Minerals Fund (UNWPX) have demonstrated a competitive edge in a cutthroat competitive space.

Check out the stats: According to Morningstar data, the Gold and Precious Metals Fund ranked five out of 73 Equity Precious Metals funds for total return for the one-year period as of June 30, 2016. The fund also ranked six out of 69 and 35 out of 50 such funds for total return for the five- and 10-year periods.

As for the World Precious Minerals Fund, it ranked two out of 73 Equity Precious Metals funds for the one-year period, 44 out of 69 funds for the five-year period and 47 out of 50 funds for the 10-year period as of June 30.

What’s more, USERX and UNWPX have BOTH been recognized by Morningstar, with USERX earning four stars overall among 71 Equity Precious Metals funds and UNWPX receiving five stars for the three-year period among the same number of funds.

Morningstar Rating
    Gold and Precious Metals Fund   World Precious Minerals Fund
  Overall/71 Overall/71
  3-Year/71 3-Year/71
  5-Year/69 5-Year/69
  10-Year/50 10-Year/50

Morningstar ratings based on risk-adjusted return and number of funds
Category: Equity Precious Metals
Through: June 30, 2016

Don’t settle for the bronze! I invite you to explore the performance and holdings of the Gold and Precious Metals Fund and World Precious Minerals Fund.

SHOW ME THE WAY TO GOLD INVESTING!

 

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. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

Performance data quoted above is historical. Past performance is no guarantee of future results. Results reflect the reinvestment of dividends and other earnings. For a portion of periods, the fund had expense limitations, without which returns would have been lower. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees of 0.05%) which, if applicable, would lower your total returns. Performance quoted for periods of one year or less is cumulative and not annualized. Obtain performance data current to the most recent month-end here or by calling 1-800-US-FUNDS.

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.

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 Ratingä 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 S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The S&P GSCI Total Return Index in USD is widely recognized as the leading measure of general commodity price movements and inflation in the world economy. Index is calculated primarily on a world production weighted basis, comprised of the principal physical commodities futures contracts. The Barclays High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated as emerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issue zeroes, step-up coupon structures, and 144-As are also included. The Barclays 1-3 Month Treasury-Bill Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturely of less than 3 months and more than 1 month, are rated investment grade and have a $250 million or more of outstanding face value. The Barclays U.S. Credit Bond Index represents publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity and quality requirements. To qualify, bonds must be SEC-registered. The index includes both corporate and non-corporate sectors. The corporate sectors are Industrial and Finance, which include both U.S. and non-U.S. corporations.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

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Net Asset Value
as of 09/25/2017

Global Resources Fund PSPFX $5.78 -0.04 Gold and Precious Metals Fund USERX $8.02 0.06 World Precious Minerals Fund UNWPX $6.69 0.06 China Region Fund USCOX $10.96 -0.46 Emerging Europe Fund EUROX $6.94 -0.06 All American Equity Fund GBTFX $24.34 0.10 Holmes Macro Trends Fund MEGAX $19.99 0.03 Near-Term Tax Free Fund NEARX $2.23 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change