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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.

Christmas Edition: 2015 in Review
December 28, 2015

Wishing you robust health, buckets of wealth, and tons of happiness

Christmas is my favorite holiday, as I’m sure it is for many of you reading this. We probably all agree that 2015 had more than its fair share of pain and tragedy around the world. But during Christmas, love and charity triumph—if only for a day—helping us recharge as we approach the new year.

I remember accompanying my mum, who was a social worker in downtown Toronto, as she delivered what we call “Star boxes” to needy children on Christmas Eve. Named after the Toronto Daily Star, which still operates the Santa Claus Fund that started in 1906, the purpose of the gift parcels remains the same:  to make sure that no child in Toronto under 13 is overlooked by Santa Claus.

Delivering these packages was more instructive than any textbook. It helped me keep my own family’s financial struggles in perspective and encouraged me to count my blessings. Although we didn’t have much, things could have been many times more challenging. I was grateful to have lots of love and plenty to eat when so many had neither during the cold, snowy Canadian winters.

The experience also showed me that love, family and friends should all be cherished much more highly than any material things. Having money is important, but real happiness can be found only in helping to spread happiness to others.

Merry Christmas: President Signs $680 Billion Business Investment Deal

President Obama signing the $1.1 trillion spending bill

Before we reach 2016, I want to reflect back on 2015. Everyone is talking about interest rates and monetary policy right now, but the role fiscal policy plays is just as important—if not more so. As I always say, government policy is a precursor to change, and very recently we saw this firsthand.

Only a day after President Barack Obama signed the spending deal Tuesday that lifted the oil export restriction that’s been in place since the mid-1970s, West Texas Intermediate (WTI) crude oil rallied $2 and is now trading higher than its European counterpart, Brent, oil for the first time since 2010.

WTI Crude Oil Cross Above Brent Crude
click to enlarge

Time and again, when regulations are rolled back and markets are allowed to act freely, we see constructive moves such as the WTI rally. It’s much more significant than a 0.25 percent rate hike.

Speaker of the House Paul Ryan was Instrumental in Passing the Spending Bill

Along with $1.1 trillion, the bipartisan deal includes $680 billion in tax cuts over the next decade, which should help accelerate the velocity of money and lead to the creation of new jobs. This is a positive development that wouldn’t have happened without the much-needed leadership of the new Speaker of the House, Paul Ryan.

It’s important for investors to follow the money in this case, just as it was important in February 2009 when the $800 billion stimulus package was signed into law. House Speaker Ryan was able to negotiate a reasonable extension to government spending and usher in a substantive tax incentive program as we head into 2016, an election year.

Top 10 Frank Talk Posts of 2015

As we head into the final days of 2015, I want to share with you the 10 most popular Frank Talks of the year. Among other things, they tell the story that gold, despite being oversold, managed to hold its value better than many other investments deemed “safe.” I’m optimistic to see what 2016 has in store for the yellow metal.

10. Show Me the Stocks, Not the Cash, Say Optimistic CEOs (May 4)

A growing trend among chief executives of successful companies is to be compensated in company stock rather than cash. In May we learned that American Airlines CEO Doug Parker elected to do just that.
“This is the right way for my compensation to be set,” Parker wrote, “at risk, based entirely on the results achieved.”

9. How These 12 TPP Nations Could Forever Change Global Growth (October 12)

One of the most significant news stories to come out of 2015 was the signing of the Trans-Pacific Partnership (TPP) by 12 participating Pacific Rim nations, the United States among them. Many analysts believe that Vietnam is poised to see the biggest upside potential, as precipitously high tariffs on its important textiles, apparel and footwear exports will vanish.  

Vietnam Poised to Benefit Most From Trans-Pacific Partnership Agreement
click to enlarge

8. China to Take Reins in Funding Regional Infrastructure Projects (March 31)

A similar development that’s likely to have huge global consequences is the establishment of the China-led Asian Infrastructure Investment Bank (AIIB), designed as a competitor to the U.S.-led International Monetary Fund (IMF), World Bank and Asian Development Bank (ADB).

Part of the reasoning behind China’s creation of the bank was to firm up the renminbi as a preferred global reserve currency on par with the U.S. dollar. And indeed, in late November the IMF voted to include the renminbi, also known as the yuan, in its Special Drawing Rights (SDR) currency basket.

7. Gold Holds Its Own Against These Media Darlings (August 10)

July 2015 was the seventh-worst-performing month for commodities going back to January 1970. Gold in particular was hit hard. But then in the week ended August 7, U.S. media companies took a huge dive, losing $60 billion for shareholders. Compared to that amount, gold managed to hold up well.

Media Stocks Collapse, Gold Hold Its Own
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6. Currency Wars Heat up as Central Banks Race to Cut Rates (February 2)

After Switzerland unexpectedly unpegged its currency from the euro in mid-January, it became clear that 2015 would be the year of the central banks. In that month alone, 14 countries cut interest rates and loosened borrowing standards. The U.S. stands as the only major economy, in fact, that has started to tighten its monetary policy.

5. Why We Invest in Royalty Companies (February 26)

One reason gold royalty companies have outperformed over the years is because, simply put, they’re not the ones getting their hands dirty. Their only obligation is to lend capital to the producers. Since its initial public offering (IPO) in 2007, Franco-Nevada, the world’s largest gold royalty company, has torn past both spot gold and most gold equity benchmarks.

Gold is Second Best Performing Currency of 2014
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4. Gold on Sale, Says the Rational Investor (August 3)

In late July, gold experienced its first “flash crash” in 18 months after five tonnes of the metal appeared on the Shanghai market. In what many called a “bear raid,” gold fell through its key support of around $1,150 and began to look extremely oversold.

Gold Price Falls Through Key Support Level
click to enlarge

3. Will Gold Finish 2015 with a Gain? (October 19)

In October, two events occurred almost simultaneously: The U.S. dollar signaled a “death cross”—meaning its 50-day moving average fell below its 200-day moving average—while gold broke above its 200-day moving average. At the time, it appeared as if gold might have a chance at doing something it hasn’t done since 2012—end the year in positive territory.

2. A Tale of Two Economies: Singapore and Cuba (March 28)

It’s almost impossible to believe now, but Cuba was once a wealthier nation than Singapore. But in 1959, Fidel Castro and Lee Kuan Yew both assumed power and took their countries in very different ideological and economic directions.

Yew, who passed away in March 2015, emphasizes free trade and competitive tax rates, which helped transform Singapore from an impoverished third world country into a bustling metropolis and leading global financial hub.

Lee Kuan Yew's Singapore Flourished while Fidel CAstro's Cuba Floundered
click to enlarge

1. Gold in the Age of Soaring Debt (June 18)

The world now sits beneath a mountain of debt worth an astonishing $200 trillion. That’s greater than twice the global GDP, which is currently $75 trillion. If we were to distribute this amount equally to every man, woman and child on the face of the earth, we would each owe around $28,000.

More surprising is that if gold—at its June 2015 price level—backed total global debt 100 percent, it would be valued at $33,900 per ounce.

Make sure to check out our most popular interactive favorites from 2015:

To all of our readers around the world, to our investors and shareholders, and to our friends and family, I wish you happiness and good health in the new year!

 

Some links above may be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for their content. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Past performance does not guarantee future results.

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 09/30/2015: American Airlines Group Inc., Franco-Nevada Corp, Time Warner Cable Inc.

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This Chinese Sector Continues to Score
December 2, 2015

Over the summer the Chinese market experienced a major hiccup, causing concern that many Asian industries would be slow, or unable to recover. Since the June collapse, however, there is one sector that continues to score with investors, both here and overseas – sportswear.

The sportswear industry in China continues to look positive.

The Great Soccer Revival

Back in March the Chinese government announced its plan to improve the country’s outlook on sports, beginning with soccer.  The soccer reform plan issued by the State Council separated the Chinese Football Association from the General Administration of Sports of China, according to China Daily.

Hopes for the reform include decreased corruption and increased professionalism within the sport of soccer, or “football” as it’s called in China. Perhaps too, Chinese sports enthusiasts would be able to witness their men’s soccer team regain ground, having only competed in one FIFA World Cup back in 2002.

The Chinese education ministry has also played a role in this “soccer revival.” The ministry signed a three-year deal with sportswear brand Adidas to help promote soccer in schools, “with the hope of creating interest in the sport,” according to Barclays luxury goods analyst Julian Easthope.

Anta Sports, the world’s fourth-largest sportswear brand (that just launched its soccer line in November), is one of the direct beneficiaries of such reforms, in addition to better-known names like Adidas, Nike and Puma. Anta has seen steady growth since the beginning of this year – keeping pace even throughout the rough summer downfall.

Argentina Presidential Election Drove Investor Confidence
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Follow the Leaders

Perhaps another reason the people of China are paying more attention to soccer now is current leader Xi Jinping’s love for the sport. Average Chinese citizens look up to their leaders, and often will follow or play their leaders’ sport, explains portfolio manager Xian Liang who grew up in Shanghai.

Mao Zedong, for example, was best known for his passion for swimming. “In the 1950s and 60s public swimming pools were built all over Shanghai, just because Mao Zedong was a devoted swimmer and swam across the Yangtze at the age of 73,” says Xian.

Similarly, Deng Xiaoping, paramount leader of China from 1978 to 1992, was remembered for playing bridge, a card game also enjoyed by Warren Buffett and that Deng learned in France as a young student and revolutionary.

Mao and Deng enjoyed soccer, too. Mao played goalie in high school and Deng collateralized his clothes to pay for a soccer game ticket in Paris in his earlier years.

China’s Catching Up to America’s Love for Sports

Past game preferences aside, it’s clear that Xi’s ongoing spirit for soccer, paired with the opportunities presented by recent reform, is transforming China’s outlook on sports as well as consumer habits.

Although America still beats China when it comes to sportswear spending per capita, China is catching up. Spending per capita in China is U.S. $17 per year, compared to U.S. $285 per year spent by Americans, according to Barron's. Nevertheless, Deutsche Bank highlights Chinese sportswear sales at 16 percent, surpassing that of the broader retail market.

As a more health-conscious, sports-oriented society continues to emerge, Chinese luxury shoppers could also find new interest in sportswear brands that fit their active lifestyles a bit differently than say, Louis Vuitton and Gucci would.

No matter how you look at it, the industry is changing and sportswear brands continue to score, while other sectors have come up short.

 

Past performance does not guarantee future results.

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 links above, you will be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for 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 09/30/2015:  ANTA Sports Products Ltd, NIKE Inc.

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11 Numbers that Explain the World’s Largest Shopping Holiday
November 10, 2015

In 2009, Chinese entrepreneur Jack Ma single-handedly created the Singles Day sale by converting a fabricated holiday celebrated among lonely college students into what has become the biggest revenue-generator the world has ever known. By copyrighting the phrase “Double 11”—a play on November 11—and aggressively courting merchants, Ma’s gargantuan ecommerce company Alibaba manages to stay ahead of the competition and sell more merchandise in a 24-hour period than Black Friday and Cyber Monday combined.

Today, Alibaba controls around 80 percent of China’s ecommerce market and is giving global retail giants like Amazon a run for their money. To keep up with the stiff competition, Walmart plans to spend $2 billion over the next two years to improve its own ecommerce infrastructure.

When explaining the significance of Alibaba and Singles Day, I’m prone to pull out every synonym for “big” and “huge” I can think of. So instead, I’ll let the numbers speak for themselves. Below are 11 such numbers that help tell the story of Singles Day, the holiday that Jack Ma built.  

11.11
The date Chinese university students selected back in the mid-1990s as a sort of anti-Valentine’s Day for single people. What started as a joke has become the world’s largest shopping holiday.

$1 Billion
How much merchandise Alibaba sold last Singles Day within the first three minutes of the sale.

Over $9.3 Billion
Total sales within 24 hours. This amount far exceeds the combined sales revenue of Black Friday and Cyber Monday, the two largest American shopping holidays.

China's Singles Day Bigger Than Black Friday and Cyber MOnday Combined
click to enlarge

$12 Billion
What many analysts predict Alibaba will generate this Singles Day.

43 Percent
The percentage of Singles Day transactions made on mobile devices in 2014. Expect to see this number rise after the sales figures roll in this year.

China's Singles Day Bigger Than Black Friday and Cyber MOnday Combined

40,000
The number of merchants that will be participating this year, including global brands Disney, Apple, Costco, Macy’s and Lego.

6 Million
The number of items to choose from.

China's Singles Day Bigger Than Black Friday and Cyber MOnday Combined

$277
The average amount each shopper is expected to spend.

760 Million
The number of packages China’s postal service estimates will be needed to ship Singles Day orders. This is up 40 percent from the 540 million used last year.

1.7 Million
The estimated number of deliverymen and women that will be needed.

200
The estimated number of jets and airplanes that will be deployed to handle the sales volume in China alone.

China's Singles Day Bigger Than Black Friday and Cyber MOnday Combined

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

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 9/30/2015: Amazon.com Inc., Apple Inc, Wal-Mart Stores Inc.

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How Rare Are Municipal Bankruptcies? A Lot Rarer Than You Think
November 4, 2015

Weighing in at $18 billion, Detroit's 2013 bankruptcy made fro some splashy headlines, but cases such as this are rare.

The odds of being struck by lightning are an insignificant 0.03 percent, yet many people still worry it might happen to them. There’s even a name for it: astraphobia. Similarly, some muni bond investors worry about municipal bankruptcies, based on recent high-profile cases, even though such cases occur very infrequently. 

Think Orange County, California, in 1994; Jefferson County, Alabama, in 2011; or Detroit, Michigan, in 2013, the largest in U.S. history. Today, federal legislators are debating whether to allow debt-strapped Puerto Rico, which owes around $70 billion, to file for bankruptcy, something even U.S. states are not permitted to do.

These cases can sometimes lead to splashy headlines, which contributes to the misperception that they happen much more often than they actually do.

What municipal bond investors need to know is that, though there’s risk involved with any investment, municipal defaults are rare, and significantly rarer than their corporate counterparts.

Between 1937, when the U.S. Bankruptcy Code went into effect, and 2008, approximately 600 municipalities out of 90,000 filed for Chapter 9 protection. Governing magazine estimates that between 2008 and 2012, “only one of every 1,668 eligible general-purpose local governments filed for bankruptcy protection.” That amounts to a barely-there 0.06 percent—nearly in line with the odds of being struck by lightning—and includes everything from Aaa-rated municipalities to junk.

So far this year, only three local governments have filed, a 75 percent decline compared to 2012.


click to enlarge

Often More Trouble than It’s Worth

One of the main reasons why municipal bankruptcies are so rare is because the hurdles are set exceedingly high. Unlike an individual or corporation, a city can’t independently arrive at the decision to file. Federal law allows local governments to file, but the municipality’s state government must also permit it. Strings ordinarily come attached.

Currently, only 12 states authorize municipalities to file for bankruptcy without conditions—Alabama, Arizona, Arkansas, Idaho, Minnesota, Missouri, Montana, Nebraska, Oklahoma, South Carolina, Texas and Washington State. Another 12 states permit filing only when certain conditions have been met.

U.S. States Have Different Approaches to Municipal Bankruptcy

There’s also a huge amount of pushback. Bankruptcy is never an easy decision, but for local governments, it’s often more trouble than it’s worth. Citizens oppose it since it often leads to painful budget cuts and austerity measures. Obviously bondholders and pensioners are against it. States don’t like it because they fear it might tarnish their reputation and lower their credit ratings. Following Detroit’s bankruptcy, borrowing costs in surrounding Michigan counties went up.

This could affect what a state contributes to the national economy. The diagram below, courtesy of HowMuch.net, shows the relative economic value of each state, with California (13.3 percent), Texas (9.5 percent) and New York (8.1 percent) generating the most.

Relative Economic Value of Each State

Highly-Rated Municipal Bonds Remained a Relatively Safe Asset Class

Closely related, default rates for high-quality municipal bonds—the kind our Near-Term Tax Free Fund (NEARX) heavily invests in—remain close to zero. Between 1970 and 2013, Baa-rated munis historically had similar default rates as Aaa-rated corporate bonds, according to ratings agency Moody’s.

Average Cumulative Default Rates, Municipals vs. Corporates: 1970-2013
10-Year Period
Ratings Corporate Municipal
Aaa 0.49% 0.00%
Aa 0.99% 0.01%
A 2.73% 0.05%
Baa 4.61% 0.32%
Ba 19.27% 3.53%
B 40.48% 15.14%
Caa-C 66.02% 14.64%

Out of 25,000 equity and bond funds, only 30 have managed to deliver 20 straight years of positive returns, according to Lipper. NEARX is one of those 30 funds.

That’s a rare achievement indeed and represents the kind of track record most investment firms envy.

The recipient of glowing acknowledgements by popular financial and investment newsletter writers, NEARX is also highly-rated by Morningstar. It holds five stars overall among 187 Municipal National Short-Term funds as of 9/30/2015, based on risk-adjusted return.

Start taking advantage of our fixed-income expertise by requesting more information on NEARX today.

 

TELL ME MORE ABOUT NEARX

 

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.

Past performance does not guarantee future results.

Total Annualized Returns as of 9/30/2015
Fund Year to Date Five-Year Ten-Year Gross Expense Ratio Expense Cap
Near-Term Tax Free Fund 1.59% 2.05% 3.03% 1.08% 0.45%

Expense ratio as stated in the most recent prospectus.The expense cap is a contractual limit through April 30, 2016, for the Near-Term Tax Free Fund, on total fund operating expenses (exclusive of acquired fund fees and expenses, extraordinary expenses, taxes, brokerage commissions and interest).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 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 at www.usfunds.com or 1-800-US-FUNDS.

Morningstar Rating

Overall/187
3-Year/187
5-Year/172
10-Year/120

Morningstar ratings based on risk-adjusted return and number of funds
Category: Municipal National Short-Term funds
Through: 9/30/2015

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 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.)

Bond funds are subject to interest-rate risk; their value declines as interest rates rise. Though the Near-Term Tax Free Fund seeks minimal fluctuations in share price, it is subject to the risk that the credit quality of a portfolio holding could decline, as well as risk related to changes in the economic conditions of a state, region or issuer. These risks could cause the fund’s share price to decline. Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local taxes and at times the alternative minimum tax. The Near-Term 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.

A bond’s credit quality is determined by private independent rating agencies such as Standard & Poor’s, Moody’s and Fitch. Credit quality designations range from high (AAA to AA) to medium (A to BBB) to low (BB, B, CCC, CC to C).

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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Follow the Leaders: Learning from ETFs, BCA and the New PM
October 26, 2015

Reggie Browne, the Goldfather of ETFs, gave the opening remarks at the ETF conference in Austin.Last Thursday I had the pleasure of attending an intensive daylong ETF conference in Austin, just up the road from our office in San Antonio. Hosted by Cantor Fitzgerald, the conference was designed for institutional investors.

Welcoming the group was Reginald “Reggie” Browne, the “Godfather of ETFs,” who now serves as the senior managing director at Cantor Fitzgerald. His celebrity and prominence are nearly as big as his six-foot-five frame—and with good reason. Reggie has been instrumental in building the ETF landscape over the last decade and convincing investors of the power of the exchange-traded fund.

One of the panels featured chief investment officers from the Texas Teacher Retirement System (TRS). Jase Auby, Lee Partridge and Tom Tull discussed potential shifts in asset allocation under a rising interest rate environment, among other topics.

The TRS, one of the largest pension funds in the U.S., makes significant use of gold in its investment strategy, holding the yellow metal in many forms over the years. The same is true for the $20 billion University of Texas endowment fund.

Bruce Zimmerman, chief investment officer for UTIMCO, told CNBC in 2011 that the $20 billion endowment holds gold as a diversifier and hedge against currencies. This is precisely what we tell investors, and it’s validating to see such huge funds put it in practice.

During the ETF panel, I asked Jase, Lee, Tom and moderator Ronnie Jung about their thoughts on real interest rates and their relationship with gold. Everyone’s speculating on when the Federal Reserve will hike interest rates, but real interest rates, as I shared with you this week, appear to have already risen. (As a reminder, real interest rates are what you get when you deduct the monthly rate of inflation from the 10-year Treasury yield.) A 10 percent upswing in the U.S. dollar is equivalent to the federal funds rate being hiked 100 basis points.

This has had a huge effect on the yellow metal. When real rates are negative, gold has tended to do well. Conversely, when they’re positive—and rising, as they are now—it’s been a headwind for gold. This relationship was confirmed by the research of Barry Bannister, chief equity strategist for Stifel, who visited our office last week.

I also appreciated the TRS group’s bullishness on China. Their position is that, because everyone is negative on China right now, all sorts of investment opportunities open up from a contrarian point of view.

The World’s Second-Largest Economy in Flux

I’ve commented before that China has been moving away from a manufacturing-based economy and instead focusing more on services—financials, real estate, insurance, ecommerce and the like.

China's Services Industry Surpasses 50 Pecent GDP
click to enlarge

While the country’s purchasing managers’ index (PMI) reading has been in contraction mode since March of this year, these service industries are ever-expanding. The problem is that the transformation has not been fast enough to offset the massive size of the manufacturing sector.

But investment opportunities in this sector still exist. Anyone who’s traveled more than 100 miles inland knows that China is under-urbanized. Ever since Deng Xiaoping created special tax-free zones along the eastern Chinese coastline in 1978, most of the country’s growth has been concentrated in these few regions and municipalities. The interior provinces, on the other hand, have remained largely rural.

You can see this for yourself in the chart below, provided by Marko Papic, chief geopolitical strategist for BCA Research, who briefed our investments team this week. BCA is an influential, independent investment strategy firm with more than 65 years of experience conducting excellent macroeconomic research.

Chinese Interior Provinces Still Need Investment-Led Growth
click to enlarge

We just learned that the People’s Bank of China cut both lending and saving rates 0.25 percent, to 4.35 percent and 1.50 percent respectively. This will cause negative real rates in China to fall even lower, which is good for gold demand.

It will also likely add to the Fed’s list of doubts about raising its own rates. In a world where every other major country is stimulating its economy by cutting rates and devaluing its currency, it makes less and less sense for the U.S. to hike rates.

BCA’s Marko Papic stressed the need to see further stimulus in China. Without it, commodities and global growth in general are at risk. Some economists believe we might be headed for a global recession.

Difference of Opinion When It Comes to Defining Global Recession

Depending on who you ask, there are different ideas of what global recession looks like. The generally accepted one in the U.S. is two consecutive quarterly declines in real GDP. The International Monetary Fund (IMF), however, uses a different measure. Among other economic conditions, annual GDP must fall below 3 percent, a high benchmark and one that requires much stimulus.

Global growth for 2015 is at 3.3 percent, the IMF calculates, precariously close to the 3 percent threshold. 

BCA Research: The Trans-Pacific Partnership Is Needed to Fast-Track Global Growth

This is where the Trans-Pacific Partnership (TPP) comes into play, which is the stance BCA also takes. The landmark trade agreement, involving 12 nations, was signed earlier this month. Although it still requires ratification, the TPP could boost the world economy by an incredible $223 billion by 2025, according to the Peterson Institute for International Economics.

The 12 Apostles of the Historic Trans-Pacific Partnership
click to enlarge

Like Father, Like Son: Canada Elects a New Leader

I feel blessed to have had the chance to meet Prime Minister Pierre Trudeau in 1978. I'm second from the right.

One of the TPP’s biggest supporters was outgoing Canadian Prime Minister Stephen Harper. But the newly elected Justin Trudeau, member of the Liberal party, has also come out in support of free trade agreements. The hope is that he will continue to take this position where the TPP is concerned.

Although Trudeau earned his degree in education from the University of British Columbia and taught as a school teacher for many years, he is by no means a stranger to politics. He’s served as a Member of Parliament since 2008, and his father, Pierre Trudeau, served as Canada’s prime minister for 15 years.

Back in the 1970s, in fact, I campaigned for Pierre Trudeau alongside Dr. John Evans, a Rhodes Scholar. This was during Trudeau’s first stint in office, before being voted out in 1979 and then returning to serve again in 1984.

His son, only 43, ran on a campaign of hope and change—sound familiar?—and promised that, if elected, he would help the economy by increasing infrastructure spending. Unlike some other world leaders, he wants to put people to work instead of establishing a welfare state. Trudeau plans to raise revenue by taxing recreational marijuana—if he succeeds at legalizing it, that is.

Justin Trudeau boxes his way to center stage

One of the main criticisms of Trudeau the Younger is that he’s inexperienced politically. But here in the U.S., take a look at who’s currently topping the polls in the Republican field: business magnate Donald Trump, neurosurgeon Dr. Ben Carson and former Hewlett-Packard CEO Carly Fiorina. Accomplished though they are, none of them has been elected to office. This goes to show that voters have grown fed up with career politicians who lack accountability.

 

Next Stop, the Big Easy

Former Federal Reserve Chair Alan Greenspan one of the many distinguished speakers at the New Orleans Investment ConferenceThis week will kick off my short conference road trip, beginning with the 2015 New Orleans Investment Conference, happening October 28 – 31. For 41 years, this event has attracted some of the world’s most distinguished speakers—from Margaret Thatcher to Steve Forbes to Norman Schwarzkopf—and this year’s no exception. I look forward to speaking again this year alongside some of the brightest minds in the industry at what some call the “World’s Greatest Investment Event.”

After that, I’ll head to Peru for the Mining & Investment Latin America Summit, November 4 – 5, and wrap things up in Melbourne, Australia, at the International Mining and Resources Conference.

I hope you’ll join me!

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.

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 9/30/2015: Hewlett-Packard Co. 0.00%.

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