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The $330 Billion Global Tax Break
December 22, 2014

Warren Buffett: The ultimate contrarian investor.In an October 2008 op-ed in the New York Times, Warren Buffett famously advised: “Be fearful when others are greedy, and be greedy when others are fearful.”

Whereas most investors during that time of financial panic were dumping their freefalling U.S. equities, Buffett was snatching them up at such great volume that he imagined his personal, non-Berkshire Hathaway portfolio would soon be composed only of domestic stocks.

“I haven’t the faintest idea as to whether stocks will be higher or lower a month—or a year—from now,” he continued. “What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up.”

The same is true for oil prices. I can’t say when oil will begin to recover or by how much. What I can say is this: For far too many investors, by the time they gain back the confidence to put money into oil stocks again, the rally might have already taken off, making it challenging to capture the full benefit of the upswing.

In the 1860s Central Pacific Railroad Employed Over 12000 Chinese LaborersThink of it this way. Every Black Friday, merchandise is discounted to such an extent that thousands of bargain shoppers are willing to camp overnight in parking lots to be the first inside. When the doors open, people literally get pushed, shoved, elbowed and trampled on.

But too often, the stock market works in a curiously opposite way. When certain stocks drop in price, investors scramble for the exit instead of picking up the bargains.

Oil Extremely Oversold

Oil tycoon T. Boone Pickens recently told Mad Money’s Jim Cramer that oil would return to $100 within 12 to 18 months. Again, there’s no guarantee that this will happen—and keep in mind that it’s in Pickens’ self-interest that oil reach these figures again—but if it does, the most opportune time to participate in the oil trade could be now when stocks are at a discount.

Pickens’ prediction aside, there are sound reasons to believe that oil prices will be normalizing sooner rather than later.

For one, oil prices are currently below many countries’ breakeven prices. This could finally encourage the Organization of the Petroleum Exporting Countries (OPEC) to cut production, so long as Saudi Arabia got assurances from fellow members that they would comply with the cuts. Where they are right now, prices simply aren’t sustainable. According to Business Insider, oil rigs in the Permian Basin have fallen by nine; those in Williston by seven; and those in Marcellus by one.

Brian Hicks, portfolio manager of our Global Resources Fund (PSPFX), believes that the bottom for oil prices might have already been reached.

“Aggressive capex cuts in the oil industry right now will lead to lower supply in 2015 and 2016, increasing demand and pushing up prices,” Brian says. “Plus, there might be a positive seasonal trading session over the next few weeks, with a possible laggard rebound in January.”

Although past performance is no guarantee of future results, the chart below, which takes into account 30, 15 and five years’ worth of seasonal data for oil prices, illustrates Brian’s point. In the 30-year range, a steady decline in prices began in October and bottomed in February. This was followed by a substantial rally that carried us through the first and second quarters of the year. It’s possible the same will happen again early next year.

West Texas Crude Oil Historical Pattern
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“The theme going into 2015 is mean reversion,” Brian said in a Frank Talk a couple of weeks ago. “Oil prices are below where they should be, and hopefully they’ll start gravitating back to the equilibrium price of between $80 and $85 a barrel.”

Bad News Is Good News

While we wait for oil to revert back to its mean, however, the world can enjoy and benefit from inexpensive gas. Call it the “oil peace dividend.” Here in the U.S., the current average for a gallon of gas is $2.45. Just one year ago, it was $3.21 per gallon, $0.76 higher. Over the course of a year, those extra cents add up.

But the U.S. isn’t the only country that benefits from affordable fuel.

In an article titled “The Saudi Stimulus,” Jon Markman writes that the global economy is looking to save hundreds of billions of dollars on an annual basis:

According to EIA [U.S. Energy Information Administration] data, consumption of crude oil during the latest 12 months was 6.9 billion barrels. So the price drop from $107/barrel at the June 2014 high to $59 today represents a total presumptive savings of $332 billion per year.

In a time when China, the European Union and other major markets are trying to jumpstart their economies, a $330 billion tax break can only come as good news. It should help in stimulating spending and driving global economic growth.

The Weakening Russian Bear

It’s impossible not to discuss falling oil prices without also touching on Russia, half of whose budget depends on $100-per-barrel oil exports. In the past month alone, the federation’s currency has plunged more than 30 percent to 60 rubles to the dollar as Brent oil has slipped nearly 25 percent.

Russian Currency's Tumble Tied to Falling Brent Oil Prices
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President Vladimir Putin couldn’t have chosen a worse time to annex the Crimean peninsula because now the region must be subsidized with money Russia doesn’t really have at the moment. (That’s not to say, of course, that there was ever a good time to invade Ukraine, or that Putin could have predicted the dramatic decline in Brent oil prices.) But even before the ruble began to unravel, stocks in Russia’s MICEX Index had already taken a hit in July and fallen out of lockstep with other emerging markets.

Russian Stocks Decoupling from Emerging Markets
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There’s no lack of commentators making comparisons between the Russian Federation’s current tailspin and the country’s 1998 debt crisis. But a more apt comparison might be the lead-up to the collapse of the Soviet Union in 1991, given the many uncanny parallels between then and now involving oil.

Yegor Gaidar, acting prime minister of Russia between 1991 and 1994, wrote in 2007:

The timeline of the collapse of the Soviet Union can be traced to September 13, 1985… The Saudis stopped protecting oil prices, and Saudi Arabia quickly regained its share in the world market. During the next six months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed by approximately the same amount in real terms.

As a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive.

Today, Russia is similarly hemorrhaging capital as a result of international sanctions and crashing oil prices, prompted by both the American shale oil boom and OPEC’s inaction in stabilizing the commodity at last month’s meeting.

It’s unclear for how long Russia’s government can support its oil-dependent budget. During his press conference last Thursday, President Putin conceded that spending cuts were unavoidable, but that “under the most unfavorable external economic scenario, this situation may go on for about two years.”

Some readers might find that prognosis a little too optimistic. It could be that Russia is in for a much lengthier period of damage control.

USGI’s Emerging Europe Fund Resilient to Russia’s Woes

It states in our prospectus that “government policy is a precursor to change.” As such, we believe Russia poses too great of a geopolitical risk for our investors. Because of nimble active management, our Emerging Europe Fund (EUROX) now has minimal exposure to Russia, thereby avoiding losses as significant as the Market Vectors Russia ETF (RSX).

Historic Cost Trends in Gold Production
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MSCI Emerging Markets Europe 10/40 Index Country WeightsThis decision has also enabled the fund to outperform its benchmark, the MSCI Emerging Markets Europe 10/40 Index, which still maintained a 46-percent weighting in Russia as of the end of November. The index has consequently fallen more than 30 percent year-to-date, compared to EUROX’s 22.5 percent.

Since trimming nearly all of our Russian holdings, Turkey has replaced the beleaguered federation as our largest weighting in EUROX. The Borsa Istanbul 100 Index is currently up 16 percent year-to-date.

As anyone who watches the news closely knows, the situation in Russia is evolving rapidly day-to-day. We will continue to monitor events that could trigger opportunities in the region. In the meantime, check out EUROX’s current regional breakdown.

I would like to conclude by wishing all of our loyal shareholders as well as Investor Alert and Frank Talk readers a Merry Christmas, Happy Hanukkah and Season’s Greetings!

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.

For information regarding the investment objectives, strategies, liquidity, risks, expenses and fees of the Market Vectors Russia ETF, please refer to that fund's prospectus.

 

Total Annualized Returns as of 09/30/2014
  One-Year Five-Year Ten-Year Gross Expense Ratio Expense Ratio After Waivers
Emerging Europe Fund -14.44% -1.61% 3.21% 2.13% n/a
Market Vectors Russia ETF (RSX) -18.53 -2.23 n/a 0.71% 0.63%
MSCI EM Europe 10/40 Index -13.19 1.04% 7.01% n/a n/a

Expense ratios as stated in the most recent prospectus. 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 at www.usfunds.com or 1-800-US-FUNDS.

EUROX vs. Market Vectors Russia ETF (RSX)

Investment Objective: The Emerging Europe Fund is an actively managed fund that takes a non-diversified approach to the Eastern European market. The fund invests in companies located in the emerging markets of Eastern Europe.

The Market Vectors Russia ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Russia Index. The Index includes companies that are incorporated in Russia or that generate at least 50% of their revenues (or, where applicable, have at least 50% of their assets) in Russia.

Liquidity: The Emerging Europe Fund can be purchased or sold at a net asset value (NAV) determined at the end of each trading day.

RSX issues and redeems shares at NAV only in a large specified number of shares, each called a “Creation Unit,” or multiples thereof. A Creation Unit consists of 50,000 shares. Individual shares of RSX may only be purchased and sold in secondary market transactions through brokers. Shares of RSX are listed on NYSE Arca Inc. (“NYSE Arca”) and because shares trade at market prices rather than NAV, shares of RSX may trade at a price greater than or less than NAV.

Safety/Fluctuations of principal/return: Loss of money is a risk of investing in the Emerging Europe Fund, as well as the Market Vectors Russia ETF. Shares of both of these securities are subject to sudden fluctuations in value, and when sold, may be worth more or less than their original cost.

Tax features: The Emerging Europe Fund may 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%.

RSX’s distributions are taxable and will generally be taxed as ordinary income or capital gains.

Past performance does not guarantee future results.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. Because the Global Resources Fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

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. 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.

The MICEX Index is the real-time cap-weighted Russian composite index.  It comprises 30 most liquid stocks of Russian largest and most developed companies from 10 main economy sectors.  The MICEX Index was launched on September 22, 1997, base value 100.  The MICEX Index is calculated and disseminated by the MICEX Stock Exchange, the main Russian stock exchange.

The MSCI Emerging Markets Europe 10/40 Index (Net Total Return) is a free float-adjusted market capitalization index that is designed to measure equity performance in the emerging market countries of Europe (Czech Republic, Greece, Hungary, Poland, Russia, and Turkey).  The index is calculated on a net return basis (i.e., reflects the minimum possible dividend reinvestment after deduction of the maximum rate withholding tax). The index is periodically rebalanced relative to the constituents' weights in the parent index.

The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.

The Borsa Istanbul Banks Index (XBANK) is a capitalization-weighted free float adjusted Industry Group Index composed of National Market listed companies in the banking industry. All members of the index are also constituents of the XUMAL Sector Index.

The Market Vectors Russia Index is a modified market cap weighted index that tracks the performance of the largest and most liquid companies in Russia. Its unique pure-play approach expands local exposure to include offshore companies that generate at least 50% of their revenues in Russia.

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

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Global Resources Fund and Emerging Europe Fund as a percentage of net assets as of 9/30/2014: Berkshire Hathaway 0.00%, Cubist Pharma 0.00%, Market Vectors Russia ETF 0.00%, Merck & Co., Inc. 0.00%. 

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. 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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A Little Pillow Talk Turned Her Husband On to Bonds
December 18, 2014

One study done by Wells Fargo earlier this year found that nearly half of Americans find it harder to discuss money than other touchy topics such as politics or religion. Even after being married to someone for years, talking about money isn’t always easy – especially if your views differ.

In this hypothetical story you’ll meet a couple who learned that when it comes to investing, verbalizing their concerns helped them find a balanced approach, one they are both thankful for today.

Meet George and Karen.

In 2014 George turned 67 years old and Karen turned 64. Each morning over breakfast George and Karen would watch the news. They liked to see what was going on around the world, and were particularly interested in economics. George had been retired for two years and Karen retired about six months ago.

“I’m sure glad you listened to me when I told you we’re too old to be so risky with our money,” Karen said as she nudged George and motioned her head to the news story on the television. Oil prices were plummeting and the stock market was feeling it. Global economies were all dealing with issues of their own.

ch to Asset Allocation“Seeing all of this market drama reminds me of the dotcom bubble, not to mention what happened to stocks when 9/11 happened,” she said.

George smiled and recalled his wife’s persistence in being extra cautious with their savings as they approached retirement. Fourteen years ago, back in 2000, they had finally sat down to decide where they would invest the $100,000 they had built up over the years and saved outside of their 401(k)s.

George had approached Karen with his plan for supplementing their retirement savings. They would take the $100,000 from their savings account and put it into an S&P 500 index fund, sit back and watch it grow. He knew this would allow them to retire even earlier than planned because the S&P had gone up with a compounded return of 18 percent per year for the decade of the roaring 90s. The two already had 401(k) and IRA accounts, but this money came from years of strict saving.

Karen hadn’t disregarded her husband’s fool-proof plan for their money; in fact she acknowledged the impressive performance the S&P had been delivering.  Investing would surely earn them more than their savings account would, but she was fearful of going “all in.”

Karen had told George she was worried about putting all of their hard-earned money into an S&P 500 index fund. She was aware that past performance was no guarantee of future results and had reminded George of this. Her husband, the more aggressive investor, still felt Karen would thank him if only she would follow his advice.

Uneasy about the situation, one night Karen spoke up again. She told George that since the savings account was a combination of their years of disciplined savings, they should compromise on how to invest the money. Somewhat reluctantly, he agreed.

The next day, George put 50 percent of the money into an S&P 500 fund, while Karen placed the other half into short-term, investment grade municipal bonds. They agreed to rebalance their allocations annually. As the decade progressed, the couple watched the ups and downs in the market.

In the end, their capital was nurtured.

Thinking back to that uncertain time, George scanned the negative headlines that flashed across the screen. After all these years, he finally found it within himself to express his gratitude that Karen had made the decision to place a part of their savings in a safer investment vehicle.

“It was a smart move, Karen,” he said with a smile. “Luckily we were able to avoid the stress of a lot of the dips. You know my buddy Will ended up losing 40 percent of all his money, right?”

George’s friend Will had sold out of equities on a dip during the 2008 financial crisis. He lost a large portion of his initial investment due to his 100-percent investment into an index fund.

Karen nodded because she remembered like it was yesterday. She remembered Will calling her husband completely destroyed. His years of hard work were gone at the hands of an all-in-one, risky investment allocation.

“That could have been us,” continued George. “Thank god it wasn’t.”

Take a look at the chart below. What would have been restless nights for George through those years were moderated by the effect of the short-term muni fund Karen chose. And the great leaps in the S&P 500 that Karen would have missed out on were captured by her husband’s 50-percent allocation.

Performance of S&P 500 versus 50/50 Bond and Equity Allocation
click to enlarge

Over 14 years, if Karen and George had put all of their money into an S&P 500 fund, they would have earned $185,290. But with the 50-percent allocation in a short-term municipal bond fund, such as the Near-Term Tax Free Fund (NEARX), they were around 6 percent short of the full returns from the S&P exposure, coming in at $173,925.

So was George right? Not necessarily.

Was the slight difference in returns worth the huge dips and pops experienced over time by a 100-percent allocation to the S&P 500, not to mention the added stress and anxiety? As you can see, the muni bond fund added a regulating effect, allowing the couple to sleep better at night during this time. Karen and George missed several massive drops along the way, no longer fearful that their years of savings would diminish before their eyes.

Although we cannot guarantee how the fund will perform in the future, NEARX has historically shown an ability to dodge the dramatic swings and volatility in the equity market, similar to the ones we experienced during the first decade of the century.

Of course there will be times when equities like an S&P 500 index fund will strongly outperform the 50/50 allocation to the S&P and NEARX combo, but George and Karen’s story is one example of how these two investment strategies have previously performed.

“I guess I owe you one, dear,” George told Karen as she offered to take his breakfast plate from the table.

“You know, I would have to say the same,” Karen said. “We make a good team. I need a little risk in my life – otherwise, how boring would it be?” She winked at George.

Karen and George’s story is simply one allocation strategy to having a well-diversified portfolio: allocate 50 percent to equities like the S&P 500 stocks and 50 percent to a muni bond fund like NEARX. A short-term municipal bond fund, invested in high credit quality names, can act as a buffer for your riskier investment choices, no matter your age.

Our Near-Term Tax Free Fund could be what you’re looking for. NEARX has recently received the coveted 5-star overall rating from Morningstar, among 173 Municipal National Short-Term funds as of 11/30/2014, based on risk-adjusted return. To learn more about how the Near-Term Tax Free Fund might fit into your portfolio, request an information packet here.

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.

Morningstar Rating

Overall/173
3-Year/173
5-Year/142
10-Year/103

Morningstar ratings based on risk-adjusted return and number of funds
Category: Municipal National Short-term funds
Through: 11/30/2014

Total Annualized Returns as of 9/30/2014
Fund One-Year Five-Year Ten-Year Gross Expense Ratio Expense Ratio After Waivers
Near-Term Tax Free Fund 3.26% 2.59% 2.97% 1.21% 0.45%
S&P 500 Index 19.72% 15.68% 8.10% n/a n/a

Expense ratio as stated in the most recent prospectus. The expense ratio after waivers is a contractual limit through December 31, 2014, 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). After December 31, 2014, this arrangement will become a voluntary limitation that may be changed or terminated by U.S. Global Investors at any time, which may lower the fund’s yield or return. 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.

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.

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

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.)

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

Diversification does not protect an investor from market risks and does not assure a profit.

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UPDATE: China Wants to Conduct the World’s High-Speed Rail Market
December 15, 2014

The construction of the American transcontinental railroad in the 1860s, which cost upwards of $136 million and covered 1,800 miles over arduous terrain, could not have been as easily accomplished without the major influx of Chinese immigrants into California. Tens of thousands of Chinese laborers worked grueling 12-hour days, six days a week, often at paltry wages and with little or no accommodations. They gained a reputation as indefatigable and resilient workers because they rarely became ill, a result of boiling their drinking water and pasteurizing their food.

In the 1860s Central Pacific Railroad Employed Over 12000 Chinese LaborersNow, close to a century and a half later, the Chinese want to return to the railroad business. This time, however, they strive to become the world’s leading go-to provider of high-speed rail and exporter of mass transit technology.

They certainly have the credentials and experience to back up their ambitions. By the end of last year alone, more than 6,800 miles of high-speed rail spanned the fourth-largest country, with another 7,500 miles currently under construction. UBS’s research reports that “China has the largest high-speed rail network in the world, with a total of more than 20,000+ kilometers [12,400+ miles] high-speed passenger-dedicated lines scheduled to be operational by end-2015.”

ost-Cities-Network-Connected-Next-Five-Years
click to enlarge

A lot has changed with Chinese rail since I previously wrote about it in March 2012. Back then, the country was struggling to get new projects off the ground, one of the catalysts of which was a bullet train crash in 2011. At the time, out of five countries, including Australia, the U.S., Russia and China, the Asian giant came in last place for the total length of railway per capita.

Then, in August 2013, BCA Research highlighted the massive surge in the country’s urban subway systems, as the “length of light rail and metro will be extended by 40 percent in the next two years, and tripled by 2020.”

The Closer: Chinese Premier Li KeqiangWe’re currently seeing the boom of this Chinese railway Renaissance.

As I told Wall St for Main St a couple of days ago: “The [Chinese] government is promoting light rail train everywhere in the world, and it’s only accelerating.”

China Courting Buyers

In recent months, Chinese Premier Li Keqiang has emerged as the nation’s top salesman for what he calls the “New Silk Road”—miles upon miles of high-speed transportation connecting all corners of the world. His plan might very well become one of China’s most lucrative exports and culturally significant contributions to the world: fast, efficient and reliable railways.

Which many areas of the world sorely need.  

In numerous countries, including here in the U.S., rail systems are outmoded and deteriorating. Five years ago, the U.S. Department of Transportation’s Federal Transit Administration concluded that “more than one-third of [rail] agencies’ assets are either in marginal or poor condition, indicating that these assets are near or have already exceeded their expected useful life.” A whopping 92 percent of railroad ties in the U.S. are still made of wood and, in many cases, fall within a range of 15 to even 100 years old. A few lines, such as the one that connects Los Angeles and Las Vegas, no longer receive regular service.

In India, where thousands of citizens rely on mass transportation, railroads have been combating a years-long rash of onboard fires relating to aging equipment and poor electrical maintenance. Last month, the state-owned India Railways chalked out plans with China to improve its lines and begin construction on a $33 billion, 1,090-mile high-speed rail connecting Delhi and the southern coastal city of Chennai.

remier-Li-Keqlang-to-Indian-commuters-here-let-us-give-you-a-hand

In November, China Railway Construction Corp. (CRCC), which we own in our China Region Fund (USCOX), signed a contract with Nigeria to construct a $12 billion, 870-mile rail system from Lagos, the nation’s second-most populous city, to the seaport town of Calabar. In an effort to shed China’s reputation for using only Chinese workers in foreign projects, CRCC Chairman Meng Fengchao “pledged to hire at least several thousand workers from Nigeria,” according to Bloomberg Businessweek.

China at the starting gates

But China’s most ambitious plan to date comes in the form of a proposed $230 billion high-speed rail system linking Beijing and Moscow, which will largely replace the storied 100-year-old Trans-Siberian Railway. Whereas the Trans-Siberian takes about six days one-way, the new high-speed line will cut travel time down to only two days. The estimated distance is 4,350 miles, “more than three times the world’s current longest high-speed line, from the Chinese capital to the southern city of Guangzhou,” according to Business Insider.

Following the announcement, the market handsomely rewarded CRCC. Since the end of October, its stock has gained 16 percent, beating for the first time this year the Hang Seng Composite Index, the benchmark for USCOX.

China-Railway-Construction-Corporation-CRCC-LEaps-Ahead-of-Hang-Seng-Index
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Just as significant as the proposed line itself is what it symbolizes: a strengthening relationship between Beijing and Moscow. Already Russia has signed a multibillion-dollar gas and oil export deal with its southern neighbor, a clear snub at the European market.

In any case, China’s goal is to do for other countries what it has done for its own. In only ten years’ time, China has amassed an impressive network of rails that helps citizens from all corners of the nation—from the rural to urban—stay connected. Modern rail makes the nation more energy- and time-efficient, and concentrates real estate development.

Emerging-High-Speed-Rail-Hub-Cities
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Unfathomable Amounts of Resources Will Be Needed

As impressive as the Beijing-Moscow project is, it only begins to touch on the large host of jobs China has lined up, which will require untold amounts of raw materials.

In the map below, each shaded country denotes the location of current or pending Chinese projects, with many more possibly to come. UBS reports that 64 new projects have been signed in 2014 alone, with the months of October and November seeing a huge spike in approvals.

Countries-That-Have-Either-Already-Signed-Contracts-or-Are-Negotiating-with-Chinese-Infrastructure-Complex
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A few highlights are worth mentioning. Last March, CNR Dalian Locomotive and Rolling Stock Company signed a $17.6 million contract with Ethiopia to provide 41 modern tramcars. Around the same time, South Africa ordered 232 diesel locomotives from CNR, a job worth $930 million. In July, China, Peru and Brazil agreed to cooperate on the construction of a railway that would connect the Peruvian Pacific coast to the Brazilian Atlantic coast. And in October, the Massachusetts Department of Transportation awarded a $567 million contract to CNR to build 284 train cars for Boston’s subway system.

Frank Holmes - High-Speed Train, ChinaThese projects will require astronomical amounts of resources and raw materials, including heavy-duty steel, carbon fiber, aircraft-grade aluminum, copper and concrete—all of which should bode well for our Global Resources Fund (PSPFX).

As for concrete, would it surprise you to learn that China has used more of it in the last three years than the U.S. used during the entire 20th century? “Where there’s cement consumption, there’s growth,” reports Business Insider, “and there’s never been anything like what’s happening in China.”

Missing in action in the map above is California, but perhaps not for long. Next year, the California High Speed Railroad Authority will begin accepting bids on what will eventually be the U.S.’s first high-speed rail system. Right now a bidding war for the estimated $566 million contract is brewing between China’s CSR Corporation Limited and China CNR Corporation.

Also missing is Mexico. Early last month, CSR won the bid to manufacture train cars while CRCC arranged to build the Latin American country’s first-ever high-speed railroad. Costing $4.3 billion, the line would have spanned 130 miles, from Mexico City to Queretaro. But just days after the contract was signed, Mexico canceled the deal “amid new reports that one of the bid partners built a home for [Mexican] first lady Angelica Rivera,” according to Bloomberg. CRCC has since threatened legal action.

Still, there are numerous investment opportunities in Premier Li’s “New Silk Road” initiative, as you can see below.

Chinese-Railway-Infrastructure-Investment
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And the opportunities don’t stop there. Along with a greater number of domestic Chinese rail lines comes an explosion in service industries catering to weary travelers, including restaurants, hotels, car rentals, discretionary goods, property and more.

Many of these companies, in fact, hail from the U.S. Fast food restaurants such as McDonald’s, KFC, Pizza Hut and Starbucks—which we own in both our All American Equity Fund (GBTFX) and Holmes Macro Trends Fund (MEGAX)—have lately taken aggressive positions in and around China’s growing number of depots.

American hotels have also seized on the opportunity to service Chinese travelers making overnight stays along the way, with massive growth down the road.

Hotel-Operators-Current-Market-Share-Pipeline
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In a recent Barron’s piece, emerging markets analyst Shuli Ren highlighted the attractiveness of investing in China rail stocks, especially in light of the People’s Bank of China’s (PBoC’s) recent interest rate cut, which will help railroad companies deleverage:

While China Railway Construction Corp. [which we own in USCOX] and China Railway Group both are major winners, given their 40 to 45 percent market share each in railway construction in China, CRCC currently has only a small exposure overseas, which means more upside. About 25 percent of CRCC’s new contracts come from overseas markets, the highest among its peers. CRCC is also less indebted, with “only” 94 percent net gearing.

Chinese banks’ recent decision to lower financing costs and increase lending has helped railroad companies, both state-owned and listed, gain a market advantage throughout the world.

Mcdonalds-presence-in-ChinaBCA Research has additionally cited the PBoC’s rate cuts and the Chinese leadership’s efforts to lower the cost of borrowing as further enticing reasons to consider Chinese rail: “interest rate sensitive sectors such as… ‘asset-heavy’ industries such as materials, industrials and energy” all benefit. As these industries are directly and indirectly related to the construction and maintenance of railroads, they are also clear beneficiaries.

Expressing positivity in “Chinese growth, especially on stocks, going into the New Year,” BCA encourages readers “to be invested in Chinese shares and overweight Chinese equities in managed global and EM [emerging market] portfolios.”

One such EM portfolio that investors can take advantage of to catch opportunity is our very own China Region Fund (USCOX).

On Our A-Game

One final note I want to leave you with is the strong performance of Chinese A-shares lately. Even though they tend to be volatile, they’ve been climbing pretty steeply since the summer.

Shanghai Composite Index
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The financial sector has been the clear winner, which USCOX maintains significant exposure to. And as I’ve previously said, materials, utilities and industrials all have residual benefits to the railway industry.

Rally-Leaders-China-Domestic-A-Shares-6-Month-Return
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As I told CNBC Asia’s Squawk Box regarding China A-shares:

I think people finally woke up to the breakout that took place in the summer. You saw that reversal, those long-term moving averages and it was defying all the negativity. We went long A-shares starting in September and being overweighted in our China opportunity fund.

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.

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.

Because the Global Resources Fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

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

The Hang Seng Composite Index is a market-cap weighted index that covers about 95% of the total market capitalization of companies listed on the Main Board of the Hong Kong Stock Exchange.

The Shanghai Composite Index (SSE) is an index of all stocks that trade on the Shanghai Stock Exchange.

The Shanghai A-Share Stock Price Index is a capitalization-weighted index.  The index tracks the daily price performance of all A-shares listed on the Shanghai Stock Exchange that are restricted to local investors and qualified institutional foreign investors.  The index was developed with a base value of 100 on December 19, 1990.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the funds mentioned as a percentage of net assets as of 9/30/2014: Accor 0.00%, China CNR Corporation 0.00%, China Railway Construction Corp. in China Region Fund 1.05%, CNR Dalian Locomotive and Rolling Stock Company 0.00%, CSR Corp. Ltd. 0.00%, China Railway Group 0.00%, Hilton Worldwide 0.00% Hyatt Hotels Corp. 0.00%, InterContinental Hotels Group 0.00%, Marriott International Inc. 0.00%, McDonald’s 0.00%, Shangri-La Asia 0.00%, Starbucks Corp. 0.00%, Starwood Hotels and Resorts Worldwide 0.00%, Wyndham Worldwide Corp. 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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Don’t Let Fear of Motion Sickness Keep You from Missing the Boat
December 8, 2014

By most accounts, major U.S. markets have performed positively this year, generating significant wealth for many investors. The S&P 500 Index has made fresh highs pretty regularly and is currently up 12 percent, and so far the Nasdaq Composite Index has returned 14 percent.

The upside to falling oil prices is consumers are heading in to the holiday shopping season with extra money in their pockets. At a handful of stations in Oklahoma and Texas, gas prices fell below $2 last week. Consumer airlines are also benefitting from the “tax break” of low fuel prices. Year-to-date, the NYSE Arca Airline Index has delivered a stellar 43 percent and the benefit is not limited to the U.S.  China Airlines is up 31.5 percent.

Airline Stocks Soar High as a Result of Declining Fuel Prices
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The most welcome news coming out of Europe is that although its central bank did not take concrete action this week, European Central Bank (ECB) president Mario Draghi offered assurances that more aggressive stimulus to help jumpstart the eurozone’s flagging economy is just around the corner. The plan is called—deep breath—Targeted Long-Term Repo Operation (TLTRO) and will allow the ECB to purchase covered bonds and asset-backed securities over the next two years. Such a plan will hopefully stimulate bank lending to non-financial corporations.

Below are some of the other programs in the ECB’s arsenal, courtesy of Visual Capitalist:  

TLTRO Compared to other ECB programs
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While Europe is seeking stimulus, Russia is staring down a recession next quarter because of international sanctions, declining oil prices and a weakening ruble. The combined costs of these setbacks are expected to reach a stunning $140 billion a year. Our Emerging Europe Fund (EUROX) has  benefited  from our decision to pull out of Russia last year.

And we must not forget the positive U.S. jobs data, released Friday. Last month payrolls grew an astounding 321,000, exceeding market-watchers’ expectations, while the jobless rate holds at 5.8 percent. As many commentators have pointed out, this year has shaped up to be the strongest for job creation since President Clinton resided in the White House.

U.S. Jobs Data Continues to Improve
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But Many Investors Stymied by Uncertainty

Despite all of the good news, the recent threat of market volatility, which we’ve seen plenty of in commodities and emerging markets, seems to have pushed close-to-retirement folks away from equity securities. The August and October downturns, not to mention the decline in gold and oil prices, have understandably heightened consumer fears.

Sways and Surges in the Russell 2000 Are Enough to Make Many Investors Peakish
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Fair enough. I’ve spoken with a lot of people who have shown the symptoms of seasickness from the dips and swings in the market.

A new study, in fact, highlights the growing number of green-faced investors who may be missing out on the long-term wealth creating opportunities of the market.

Allianz Life recently polled close to 800 Americans, none of them retired yet, and found that a vast majority—78 percent—said they “preferred financial products with guarantees over products with higher growth potential but the possibility of losing value.”

Also interesting, when Allianz asked them what they would do if they had extra money to invest, too many people chose inaction.

Surprisingly, over 30 percent said they would either put the cash in a savings account earning next-to-zero interest or keep waiting for the market to correct before investing. Caution is one thing, paralysis is another altogether.  As President George H. W. Bush once said: “If Columbus had waited until all the problems of his time were solved, the timbers of the Santa Maria would be rotting on the Spanish coast to this day.”

Another block of respondents, nearly 40 percent, said they preferred some balance. That is to say, they would invest in a product that provided a little growth and a little protection.

In other words, they’re perfectly willing to embark on what could be a rewarding voyage, so long as they have some Dramamine on hand—you know, the stuff that treats motion sickness.

As you shall see, a portfolio that strategically balanced both stocks and municipal bonds for the long term historically gave back healthy returns while protecting against some loss.

Balancing Act

Take a look at the chart below. What it shows are the risks and rewards of holding various instruments for one, five, 10 and 20 years.

Range of Stock, Bond and Blended Total Returns
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Based on annual returns from 1950 to 2013, the rewards were huge when securities were held for one year—but so were the risks. While stocks could have netted up to 51 percent, they could also have taken back as much as 37 percent. Bonds returned a little less, up to 43 percent, but the average loss was only 8 percent—a 29-point spread from stocks. A 50/50 portfolio, held for only a year, trailed both, returning up to 32 percent.

But a funny thing happened if you extended the holdings out. The blended portfolio began to play catchup not only on the upside but also the downside. Held for 10 years, such a portfolio outperformed bonds and was only two percentage points shy of matching stocks. It was also less risky.

Twenty years out, a 50/50 portfolio handily beat bonds and had an approximate amount of risk as stocks.

Investors who blended their portfolios might have made out with a little less than those who held only equity securities, but they also underwent a lot less stress and fewer sleepless nights—especially if they invested during the first decade of the century, when there were not one but three major financial crises.

Near-term tax free fund NEARX - Dramamine

14 Years of Positive Returns

For those investors who know that life offers few guarantees and appreciate balance in their life and investments, we have a product that has worked similarly to offset, but not entirely eliminate, the volatility you might experience in the major markets: the Near-Term Tax Free Fund (NEARX).

Many of you have no doubt seen the following chart, but it’s worth sharing again. Whereas the S&P 500 showed extreme volatility last decade because of the dotcom bubble, 9/11 and the financial crisis, NEARX climbed modestly upward, oblivious to the ups and downs that created so much heartache and anxiety for stockholders.

I shared a story about a couple of weeks back that dramatizes this very point, and already I’ve received quite a lot of positive feedback. You can read it here if you haven’t already done so. It’s not to be missed!

Near-Term Tax Free Fund vs. S&P 500 Index
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What’s most striking about this chart is that, following a hypothetical investment of $100,000 in 2000, it took the S&P 500 nearly 14 years to catch up with NEARX.

Naturally, past performance doesn’t guarantee future results, and you shouldn’t reasonably expect the fund to keep pace with an index of equity securities like the S&P 500 over the next 10, 15 and 20 years. However, NEARX has historically shown a greater likelihood of dodging the dramatic swings the equity market has often experienced in times of uncommonly high volatility, such as we saw in the first decade of the century.

I’ve just returned from London where I spoke at the Mines and Money Conference and I’ll share insights from that event soon. In the meantime, you can catch my interview with Bloomberg TV while I was there.

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.

Total Annualized Returns as of 9/30/2014
Fund One-Year Five-Year Ten-Year Gross Expense Ratio Expense Ratio After Waivers
Near-Term Tax Free Fund 3.26% 2.59% 2.97% 1.21% 0.45%
S&P 500 Index 19.72% 15.68% 8.10% n/a n/a

Expense ratio as stated in the most recent prospectus. The expense ratio after waivers is a contractual limit through December 31, 2014, 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). After December 31, 2014, this arrangement will become a voluntary limitation that may be changed or terminated by U.S. Global Investors at any time, which may lower the fund’s yield or return. 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.

Past performance does not guarantee future results.

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.

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. 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.

The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The NYSE Arca Airline Index is designed to measure the performance of highly capitalized and liquid U.S. and international passenger airline companies identified as being in the airline industry and listed on developed and emerging global market exchanges. The Russell 2000 Index is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000. The Russell 3000 Index consists of the 3,000 largest U.S. companies as determined by total market capitalization.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the funds mentioned as a percentage of net assets as of 9/30/2014: Allianz Life Insurance Company of North America 0.00%, China Airlines 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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Are Oil Prices Ready to Break out of the Trough?
December 4, 2014

American business holds up the rest of the world.In ancient Greek mythology, the Titan Atlas was charged with holding up the world. Today, that task largely falls on the shoulders of American businesses.

For the month of November, the Manufacturing Institute for Supply Management (ISM) reading was 58.7, marking the 18th consecutive month of manufacturing expansion in the U.S. Anything above 50.0 denotes growth, anything below, contraction. Among the areas that showed particularly strong growth were new orders and exports.

But while the U.S. continues to expand, the rest of the world cools or, at best, remains in a holding pattern. The J.P.Morgan Global Manufacturing Purchasing Manager’s Index (PMI), released Monday, registered a 14-month low of 51.8.

Had the U.S.’s individual score not been as strong, the global PMI number might not have exceeded the expansion threshold.

JP Morgan Global Manufacturing PMI One-Month Reading Still Trails the Three-Month Reading
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The eurozone and China were the largest drags on global manufacturing. Whereas Europe registered a 50.1 for November—even usually dependable Germany scored a 17-month low of 49.5—China remained flat with a 50.0, the country’s lowest reading since May.

You might wonder how this relates to oil prices. The answer: Quite a lot, actually. Just as the U.S. is the standout in manufacturing growth, it's also now the world leader in oil production, thanks largely to hydraulic fracturing. The two combined—global slowdown and abundant oil—have prompted the rapid decline in prices.

Slow Global Manufacturing Growth Contributes to Slump in Oil Prices

Not only is the global PMI at a 14-month low, but it also marks the fourth-consecutive month that the one-month reading has stayed below the three-month.

Regular readers might recall seeing the following chart, which helps explain why oil prices are so depressed:

Commodities and Commodity Stocks Historically Rose Six Months After PMI "Cross-Over"
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When global manufacturing has slowed in the past, so too has oil demand, driving prices down 7 percent 100 percent of the time. Today, crude has fallen much more steeply than that—35 percent since June—but other factors have contributed to the recent slump, from the strong U.S. dollar to oversupply fears.

The chart also shows that when manufacturing activity has ramped up, prices have jumped over 16 percent 100 percent of the time three months later.

Oil in Oversold Territory

So short of an unexpected jumpstart to global manufacturing, how else might oil break out of its trough?

“The theme going into 2015 is mean reversion,” says Brian Hicks, portfolio manager of our Global Resources Fund (PSPFX). “Oil prices are below where they should be, and hopefully they’ll start gravitating back to the equilibrium price of between $80 and $85 a barrel.”

Crude oil is currently down 1.2 standard deviations for the 10-year period. This might not sound like much, but as you can see, oil has rarely gone above or below one standard deviation during this time. Plus, its wild volatility during the financial crisis rejiggered the commodity’s mean.

Year-Over-Year Percent Change Oscillator: WTI Crude Oil
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What the oscillator above also shows is that oil has eventually returned to where it should be, as it did not only after the financial crisis but also in the third quarters of 2011 and 2012. Barron’s pointed out in a piece published this week that “prior price slides lasted roughly 20 weeks. The current slide is already at week 24. History suggests the panic… is near its end.”

Indeed, oil markets have historically been quick to recover because exploration and production become unsustainable otherwise. Several shale regions in Texas were already unprofitable at $75 per barrel. At $70, expect more companies, especially those involved in fracking and deepwater drilling, to cut production even further. The problem is, they really can’t afford to do so. It currently takes output from four or five new wells to replace the cost of one previously drilled unconventional well, which is why companies must keep up with exploration and production.

And that’s just in the U.S. Many countries whose economies rely on oil exports, including Russia, Venezuela and Nigeria, will be unable to balance their budgets with $65-per-barrel oil. Though not yet underwater, Saudi Arabia might soon begin to feel the pinch, as Brent is getting treacherously close to the Kingdom’s breakeven price, which has risen about $10 per barrel in only five years.

Price of Brent Oil vs. Current Account Breakeven Estimate for Saudi Arabia
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At the same time, many of Saudi Arabia’s traditional vertical wells can continue to operate at less than $10 per barrel. A production cut, then, is not as imperative to the Kingdom’s budget as it is to Russia’s or Venezuela’s. However, Prince Turki bin Faisal, former Saudi ambassador to the United States, stated on Tuesday that Saudi Arabia would agree to cuts only if other countries, including non-Organization of the Petroleum Exporting Countries (OPEC), participated. This indicates that, while the Kingdom doesn’t want to lose market share, it realizes action must be taken to prop up prices.

And herein lies the opportunity.

“Oil is way oversold right now on a relative strength basis,” Brian says.

With the commodity at a five-year low, oil stocks are on sale, just in time for holiday shopping.

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.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. Because the Global Resources Fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

The ISM manufacturing composite index is a diffusion index calculated from five of the eight sub-components of a monthly survey of purchasing managers at roughly 300 manufacturing firms from 21 industries in all 50 states.

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

The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500.

Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Global Resources Fund as a percentage of net assets as of 9/30/2014: Transocean 0.00%, Oasis Petroleum 0.00%, Exxon Mobil 0.00%, Chevron Corp. 1.90%.

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 12/19/2014

Global Resources Fund PSPFX $6.85 0.08 Gold and Precious Metals Fund USERX $5.09 -0.09 World Precious Minerals Fund UNWPX $4.62 -0.06 China Region Fund USCOX $8.03 No Change Emerging Europe Fund EUROX $6.84 -0.03 All American Equity Fund GBTFX $33.16 0.26 Holmes Macro Trends Fund MEGAX $22.74 -0.12 Near-Term Tax Free Fund NEARX $2.25 No Change China Region Fund USCOX $8.03 No Change