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