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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 “Oprah Effect” and Gold
October 22, 2015

Oprah bought 10 percent of weight watchersMany short sellers of Weight Watchers no doubt felt too down to look in the mirror this week after company stock unexpectedly ballooned nearly 170 percent.

You can thank (or blame) Oprah. The influential former talk show hostess bought a 10 percent stake in the weight management company, sending its shares up from $6.79 to $18.25 in as few as two trading sessions.

This is hardly the first time one of Oprah’s endorsements, whether verbal or monetary, has lifted a struggling business or product. There’s even a name for it: the Oprah Effect.

No matter your opinion of Oprah—her politics, her tastes—you have to admit that she’s a phenomenally savvy businesswoman, whose rags-to-riches success has helped make her one of the most powerful women in not just the U.S. but the world. As such, it’s important for investors to pay attention to her and other such “smart money” influencers. Their decisions often have the power to move markets.

So what’s moving gold right now?

Quite a lot, actually, from widespread doubts of a 2015 interest rate hike, to strong seasonal demand in India and China, to Russia’s military action in Syria. Gold also received a huge endorsement recently from billionaire Paul Singer, CEO of Elliott Management Corp., who said that the precious metal “should be a part of every investment portfolio, maybe five to 10 percent.”

(I always recommend 10 percent: 5 percent in gold stocks, 5 percent in bullion, then rebalance every year.)

But as I discuss in a previous Frank Talk, perhaps the most significant mover of gold right now is the weakening of the strong U.S. dollar against other world currencies. Gold and the dollar share an inverse relationship, and for the past year, the greenback has been putting pressure on the yellow metal, not to mention other commodities and natural resources.

Now that the dollar is showing signs that it’s starting to turn, however, gold is starting to turn heads.

Watch my video below for further insight into what’s moving gold.

None of U.S. Global Investors Funds held any of the securities mentioned in this article as of 9/30/2015. 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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Life Is Uncertain and So Are Interest Rates
September 14, 2015

US-Global-Will-Never-Forget 9-11

Last Friday was an emotional day for Americans. In an instant, on a beautiful blue sky morning 14 years ago, all of our lives changed forever. 

September 11 is a day when we pause and reflect on where we were when—when the towers came crumbling down, when our nation’s capital came under attack, when so many lives were cut short, when so many heroes rushed in. 

I was in Manhattan with colleagues that day, attending a financial industry conference uptown. At the time, we didn’t know how fortunate we were that our meeting had been changed from 9:00 a.m. to 11:00 a.m. I was en route when everything stopped, and soon after, I saw all the people covered in dust and walking home across the bridge. The cell phones in the city stopped working, but because mine had a San Antonio area code, I was able to get through to the office to let everyone know we were safe. 

Nancy-Holmes

I was there with two of my company executives and the magnificent Nancy Holmes (no relation, though she often joked that I was her adopted son), who was working with me as a marketing strategist, at the age of 82. Nancy led one of the most interesting and full lives I have ever known. A code clerk for the U.S. Army, a model in Paris for Balmain, a photojournalist for Columbia Pictures, a bestselling author and magazine editor, including editor-at-large for Worth magazine, which she retired from to move to San Antonio and spend time with her granddaughters and be a consultant to U.S. Global. In fact, she was larger than life and filled with enthusiasm for life. She was a fellow traveler of the world, but like the rest of us, in that dark hour we all just wanted to go home, to Texas.

The city was shut down that night. The cabs disappeared and the subways weren’t running. The airports would remain closed for many days.

But the next morning I found a driver to take us to New Jersey where I had reserved one of the last rental cars left in the area. The four of us loaded into a Ford Expedition and began the long ride home and an unforgettable bonding experience. My adrenaline rush enabled me to drive us straight through for 30 hours. Early on we turned off the car radio because the nonstop coverage of the tragedy was too much to take. Instead, Nancy entertained us with stories of her incredible trail blazing life including her close friendships with the rich and famous, from Joan Collins and Elizabeth Taylor to Sean Connery and former hedge fund manager Julian Robertson. Nancy was a bright light on that dark day.

For the last 14 years on this day, I remember all the people who didn’t get to return home that fateful day, and I give thanks that I did, along with these special colleagues and friends.

I found myself back in New York on Friday, an unplanned diversion when my flight out of Portland, Maine was cancelled. And once again, I was trying to get home. Rain grounded the midsize regional plane I was scheduled to take, an effective reminder that no matter how well you think you’re in control, uncertainty has a habit of stepping in the way.

Will They or Won't They?

Right now, a lot of investors are wondering about the uncertainty of rising interest rates—the causes, effects and possible ramifications. Many people have been saying for weeks and months now that a rate hike is imminent and that September is the anticipated takeoff.

I’ve been skeptical of this, and now a chart from highly-respected market analyst Jeff deGraaf confirms my skepticism. In his words, “the market anticipates >70 percent probability of the Fed NOT raising rates.”

SP500-Index-vs-Probability-25-bps-Fed-Funds-through-September-Meeting click to enlarge

The Fed will convene this Thursday, and according to deGraaf, the most bullish outcome would be if Chair Janet Yellen held off raising rates and also took a more dovish tone. A more bearish outcome would be if she announced a rate hike and assumed a hawkish tone. I could see a rate hike fast-tracking QE4.

Indeed, if rates were allowed to stay where they are, the bond market could very well see a rally, which would be a boon for our Near-Term Tax Free Fund (NEARX). Another beneficiary would be dividend-paying stocks, such as those found in our All American Equity Fund (GBTFX).

Low Energy Prices Offer Companies Delayed Gratification

Speaking of the S&P 500, many investors might worry that falling energy stocks are creating havoc for the index. In reality, the S&P isn’t affected by a drop in energy as much as some believe. Currently, energy is only 7 percent of the index, and its position is dropping. As recently as December 2014, it was 9 percent.

Part of the reason it’s falling is because the market cap for energy stocks has collectively declined 32 percent for the 12-month period. Do the math. The point is that, as the fourth-smallest sector in the S&P following telecommunications services (2.4 percent), materials (2.9 percent) and utilities (3 percent), energy has a minimal impact on the overall index.

Everyone knows that when energy prices drop, oil specifically, companies within the sector are hurt, including producers, refiners and the like. The winners are consumers, who save at the pump and benefit when companies pass along energy savings.

What many people might not know, however, is that it often takes a few quarters before these benefits are realized. Take the airline industry. Domestic carriers reported their first-ever $5-billion quarter in July, which is exactly a year after oil prices started to plummet from more than $90 per barrel.

The longer fuel prices stay low, the more likely it is that airlines will continue to perform beyond expectations. Irish low-cost carrier Ryanair, for instance, recently hit a 52-week high. If prices were to plunge to $20 per barrel, as Goldman Sachs claim is a possibility, the savings would be even larger.

However, with a growing global population over seven billion people, , it will not be much longer before the oil supply at these prices tightens and prices rise to the $60-per-barrel level. This will have many benefits for both consumers as well as the energy space.

As always, investors should consider their tolerance level based on risk and age to help balance their investments between short-term bonds and equities.

Manufacturing and the Velocity of Money

Here’s a final thought I want to leave you with. According to new data released by the Bureau of Labor Statistics, government employees outnumber workers in the manufacturing sector 1.8 to 1—nearly double. What if it were the other way around? The economy would likely be stronger and more vibrant, as I see it.

Think of home construction. When a house is built, money touches so many people, from surveyors to architects, from plumbers to landscapers, from lawyers to accountants. All of these people are creating wealth for themselves and for others. For every dollar invested, housing returns between $12 and $14.

That’s not the case with government workers, for whom taxes must be raised to pay for their wellbeing. Don’t get me wrong. We need such people to run the government. But the ratio between the two types of workers is out-of-balance for a vibrant economy.

It’s classic macroeconomics on money supply growth and velocity. Different industries and sectors have different values for each dollar spent. The private sector is higher than the public sector, and housing is highest. 

To my Jewish friends, L'shanah tovah! For a good year!

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.

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. Stock markets can be volatile and share prices can fluctuate in response to sector-related and other risks as described in the fund prospectus.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Near-Term Tax Free Fund and the All American Equity Fund as a percentage of net assets as of 06/30/2015: Ryanair Ltd 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.

The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.

There is no guarantee that the issuers of any securities will declare dividends in the future or that, if declared, will remain at current levels or increase over time.

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Feeling Old Yet? Incoming College Freshmen Have Always Known Google
August 27, 2015

I use Google every day, and yet I still marvel at how amazing a tool it is. Part of this amazement stems from the fact that most of my life was spent in the dark ages before the search giant changed human knowledge forever. I appreciate it in a way 19th-century, transcontinental travelers must have appreciated steam locomotives’ ability to shave days and weeks from their covered-wagon travel time. Except Google is more like a rocket ship than a locomotive.

This year’s incoming college freshmen, on the other hand, have never not known the wonders of Google. To them, all human thought—whether in words, images or videos—has always been easily and instantaneously accessible. They’ve only ever known the rocket ship, never the covered wagon.

Google-Original-Homepage

This factoid is just one among many that appear on Beloit College’s latest Mindset List.

Published each August since 1998, the Mindset List was initially designed to provide professors with a snapshot of incoming freshmen and help them understand new students’ beliefs and values. It also inadvertently challenges the idea behind the encouraging expression “You’re only as old as you feel.”

Below are a few of my favorites from the list. They say a lot about how this particular cohort, the graduating class of 2019, perceives the world:

Hybrid automobiles have always been mass produced.

The therapeutic use of marijuana has always been legal in a growing number of American states.

They have grown up treating Wi-Fi as an entitlement.

Hong Kong has always been under Chinese rule.

Cell phones have become so ubiquitous in class that teachers don’t know which students are using them to take notes and which ones are planning a party.

TV has always been in such high definition that they could see the pores of actors and the grimace of quarterbacks.

They’re such simple facts, but they help us understand the behaviors and thought patterns of our future business leaders, politicians and investors. Being familiar with the world they grew up in sheds light on why they invest in, or will eventually invest in, certain companies and industries.

College-Graduating-Calls-2019-Hong-Kong-Always-Under-Chinese-Rule

Millennials, as you might imagine, are more likely to put their money in companies and brands that are important to their particular lifestyles. According to TD Ameritrade, some of the hottest companies for younger investors include Apple (an average 11.4 percent of their equity portfolios), Facebook (2.6 percent), Alibaba (1.5 percent) and Tesla (1.3 percent). Apple represents 6.3 percent of millennials’ first stock trade after opening a new account with the broker; Google is 1.2 percent.

Baby boomers, of course, invest heavily in these companies as well, but they tend to place more emphasis on tried-and-true stalwarts such as AT&T, Exxon Mobil, and Johnson & Johnson—what some millennials might describe as “boring.”

Young investors are also more likely to be attracted to “socially responsible” companies, as well as mutual funds that invest in such companies—those that treat not just their shareholders well but also employees, suppliers, customers and local communities. Between 1995 and 2014, total assets invested in these companies increased 11-fold, from $0.6 trillion to $6.6 trillion, according to the Forum for Sustainable and Responsible Investment. Millennial investors are largely to thank for this.

Finally, this group is surprisingly more willing to work with a financial advisor than boomers and more accepting of nontraditional asset categories, including exchange-traded funds (ETFs), hedge funds and commodities. That’s according to Natixis Global Asset Management, which conducted a survey earlier this year of 750 Americans with more than $200,000 in investible assets.

Check out the entire Mindset List, then take the poll below.

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 6/30/2015: Apple Inc., AT&T Inc., Exxon Mobil Corp., Facebook Inc., Johnson & Johnson.

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These Self-Made Billionaires Prove Piketty Wrong about Wealth
June 3, 2015

Capital in the Twenty-First CenturyMany of us are aware that 400 billionaires appear on Forbes’ list of the wealthiest Americans. But if you had to guess what percentage of them is self-made, what would you say? A quarter? A third?

Before I give you the answer, let me posit which way Thomas Piketty might lean.

If you’re unfamiliar with the name, Piketty is the socialist economist whose book Capital in the Twenty-First Century was published a little over a year ago. It was an instant bestseller and elicited much debate not just in academic circles but also the popular media.

In the book, Piketty argues that capitalist societies naturally incubate wealth inequality, leading to a scenario in which a small minority of the population owns most of the wealth. Because rich families can assume a greater amount of investment risk, their return on capital multiplies at a much faster clip than the general economic growth rate. To offset the effects of what he sees as rising inequality around the globe, Piketty—in typical socialist fashion—therefore prescribes a global wealth tax, with rates as steep as 80 percent.

So back to the initial question: What percentage of American billionaires are self-made? Piketty might guess only a very small fraction, pointing to the progenies of vast family fortunes—the Waltons, the Koch brothers, the Mars family. With so much wealth accumulated at the very top of the pyramid, he might say, there’s no room left for new money.

He would be sorely mistaken.

On the contrary, 70 percent of those who show up on Forbes’ 2014 list created their own wealth. Nearly three out of every four billionaires, then, are self-made entrepreneurs and innovators, far from being born with a silver spoon in their mouths.

What’s more, this figure is actually up from 1984, when fewer than half were self-made. If Piketty’s theory held any water, we would expect to see the same powerful families dominating the Forbes 400 decade after decade—the Rockefellers, the Carnegies, the Vanderbilts—with few new entrants.

But that’s not the case. Among the most recent newcomers is 31-year-old Elizabeth Holmes, CEO of Theranos, a health care technology company she founded at the age of only 19. The tenth-wealthiest person is cofounder and CEO of Facebook Mark Zuckerberg, also age 31.

Seventy percent of the people on the Forbes 400 are self-made, including Facebook CEO Mark Zuckerberg and Theranos CEO Elizabeth Holmes

Indeed, success in America is an equal opportunity player, blind to gender, race, age and background. Some of the wealthiest, most powerful people come from poverty and overwhelming hardships. Think Starbucks CEO Howard Schultz, who grew up poor in the Brooklyn projects. Think investor George Soros, who emigrated from war-torn Hungary as a penniless young man. Think media mogul Oprah Winfrey, who was raised in such dire impoverishment that she often had to wear a potato sack to school. Like countless others, they proved socialist thinkers like Piketty wrong and attained the American Dream.

But how?

High performers seek to strenghten their networks with other successful peopleIt’s not just about intelligence, not just about unique talents, not just about luck—though these certainly help. Instead, as Richard Koch and Greg Lockwood point out in their 2010 book Superconnect: Harnessing the Power of Networks and the Strength of Weak Links, what high performers share above all else is a relentless propensity to connect with others in high places and foster such relationships. Pursuing the attention of and surrounding yourself with successful people helps build the scaffolds that can raise you up to the next level. Today, this is made even more achievable with social networking platforms such as Facebook and LinkedIn.

None of this is to take away from the fact that many people in the U.S. and elsewhere continue to struggle in poverty. Piketty is commended for trying to address this problem, but his solution doesn’t square with reality. No country has ever succeeded at taxing itself into prosperity. As Winston Churchill observed, that would be like a man standing in a bucket and trying to lift himself up by the handle.

Instead, it should be part of the role of business to drive prosperity, as it did for 70 percent of the Forbes 400. Doing so is not only morally right, but it also represents a huge opportunity to build a new demographic of consumers and investors.          

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 3/31/2015: Facebook Inc., Starbucks Corp.

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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These Are the 8 Busiest Airports in the World
May 28, 2015

I spend a lot of time in airports as I travel to and from speaking engagements and other events. Recently I spoke at the Asia Mining Congress in Singapore, and next week I’ll be in Vancouver to speak at the Canadian Investor Conference.

As bustling as airports already are, they’re about to get a whole lot busier, if the analysts are correct.

Industry trade group Airlines for America estimates that 222 million passengers will fly on U.S. carriers between June 1 and August 31, surpassing the previous record set in 2007. Among those passengers will be an unheard-of 31 million people on international flights. This will push up the number of travelers passing through airports all over the world.

With that in mind, I highlighted the eight busiest airports around the globe in terms of total passenger traffic, according to the latest data from Airports Council International. Together, they serviced over 603 million people in 2014, with many more expected this year.

Charles de Gaulle Airport

8. Charles de Gaulle Airport (CDG)

No. of Passengers (2014): 63.8 million

Owner & Operator: Aéroports de Paris

Named for the former French general and president, Charles de Gaulle Airport was completed in 1974 after eight years of construction and is now the second-busiest airport in Europe. Terminal 1 is known for its unique rotunda design, encircled by seven satellite buildings. The airport serves as the principal hub for Air France and is a major European hub for Delta Air Lines.

Chicago O'Hare International Airport

7. Chicago O’Hare International Airport (ORD)

No. of Passengers (2014): 69.9 million

Owner/Operator: City of Chicago/Chicago Department of Aviation

The hometown hub for United Airlines, Chicago O’Hare is actually the busiest airport in the world in terms of takeoffs and landings; over 888,000 aircraft movements took place during the 12-month period ending April 21. Chicago O’Hare has consistently been one of the busiest passenger hubs in the world after opening in 1955. It serves close to 40 different airlines and provides direct flights to more than 60 international destinations.

Dubai International Airport

6. Dubai International Airport (DXB)

No. of Passengers (2014): 70.4 million

Owner/Operator: Government of Dubai/Dubai Airports Company

As the premier airport in the United Arab Emirates, Dubai International enjoys many impressive distinctions. For starters, it’s the world’s busiest airport in terms of international passengers; in 2014 it served nearly 70 million travelers from abroad, surpassing London Heathrow’s 68 million. Dubai Duty Free, which operates out of DXB, is the most successful airport retailer in the world, generating sales of $1.8 billion in 2013 alone. And when Terminal 3 was completed in 2008, it was the world’s largest building at 18.4 million square feet, an honor it held until 2013 when the New Century Global Center in Chengdu, China was built.

Los Angeles International Airport

5. Los Angeles International Airport (LAX)

No. of Passengers (2014): 70.6 million

Owner/Operator: City of Los Angeles/Los Angeles World Airports

Not only is LAX the fifth-busiest airport in the world, but it’s also the busiest origin and destination airport. This means that, relative to other airports, many more travelers begin or end their trips in Los Angeles than use it as a connection. With a 6-percent year-over-year increase in passengers between 2013 and 2014, LAX has one of the strongest traffic growth rates in the world.

Haneda International Airport

4. Haneda International Airport (HND)

No. of Passengers (2014): 72.8 million

Operators: Japan Civil Aviation Bureau, Japan Airport Terminal Co., Tokyo International Air Terminal Corp.

Also known as Tokyo International, Haneda Airport is the second-busiest in Asia, able to handle 90 million passengers a year. It might soon reach that level, as it saw a remarkable 5.7-percent year-over-year growth in passenger traffic between 2013 and 2014. Having won the bid for the 2020 Summer Olympics, the Japanese government plans to increase airport capacity even further. Haneda is the primary base for Japan Airlines and All Nippon Airways, among others.

London Heathrow Airport

3. London Heathrow Airport (LHR)

No. of Passengers (2014): 73.4 million

Owner/Operator: Heathrow Airport Holdings/Heathrow Airport Limited

For years, London Heathrow was the world’s busiest airport in terms of international passenger traffic, a distinction that Dubai International finally claimed last year. Serving 185 destinations in 84 countries on 80 different airlines, the British airport sees a high rate of international travelers—93 percent in 2014. Formerly called London Airport, it received the name “Heathrow” in 1966, after the medieval hamlet that was demolished in 1944 to make room for the airport.

London Heathrow Airport

2. Beijing Capital International Airport (PEK)

No. of Passengers (2014): 86.1 million

Operator: Beijing Capital International Airport Company Limited

Beijing Capital is easily Asia’s busiest airport, serving 13 million more people than Tokyo International in 2014. To prepare for the 2008 Summer Olympics, Beijing Capital added the mammoth Terminal 3, currently the sixth-largest building in the world. The airport serves as the main hub for Air China, which flies out of Beijing to more than 120 destinations.

Hartfield-Jackson Atlanta International Airport

1. Hartsfield-Jackson Atlanta International Airport (ATL)

No. of Passengers (2014): 96.1 million

Owner/Operator: City of Atlanta/Atlanta Department of Aviation

Almost 100 million domestic and international flyers passed through Atlanta last year. Opened in September 1980, Hartsfield-Jackson has remained the world’s busiest passenger airport since 1998; in terms of takeoffs and landings, it’s the second-busiest. Contributing to the airport’s prominence is Atlanta’s convenient location, a mere two-hour flight from 80 percent of the U.S. population. With Hartfield-Jackson as its main hub, Delta currently operates nonstop flights to more than 150 cities, 62 of those being international destinations in 42 countries.

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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 3/31/2015: Delta Air Lines Inc., Air China Ltd.,

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