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New Jobs Data: America off the Mat, Ready for the Next Round
October 21, 2014

Ninety years ago, President Calvin Coolidge stated before the American Society of Newspaper Editors: “The chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world.”

U.S. Ready for the next roundHe should know. One of our most successful presidents in terms of economic growth, Coolidge oversaw average annual stock market returns of 29.1 percent—higher than any other top executive since 1900.

Since that time, not much has changed. The U.S. is still just as committed to fostering business and innovation now as we were then.

The global market unequivocally agrees. For the second year in a row and beating out strong contenders such as China, Canada and the United Kingdom, the U.S. tops the A.T. Kearney Foreign Direct Investment Confidence Index, which ranks countries on how changes in political, economic and regulatory systems might affect foreign direct investment inflows.

A handful of other recently-released data and reports underscores Coolidge’s point that you need not look too far to find growth and opportunity. On the contrary, they can be found right here in the land of innovation.

The recession hit us hard, but like any iron-willed prizefighter, we rose off the mat, ready for the next round.

Americans Back to Work

For nearly 50 consecutive months, the private-sector jobs market has been in the black. This is the most robust pace in job creation since the late 1990s. According to the Bureau of Labor Statistics (BLS), the U.S. added 248,000 nonfarm payroll jobs to the economy in September, many of them in professional and business services, health care and retail. Among those jobs were 9,000 new positions in mining and logging, an indication that the resources sector is showing moderate growth within the States. This could be a tailwind for our Global Resources Fund (PSPFX).

The unemployment rate in September declined 0.2 percent to end at 5.9 percent, the first time it’s been below 6 percent since 2008.

Unemployment Rate Drops to Lowest Percentage Since Summer of 2008
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On the decline as well are initial jobless claims. According to the latest weekly data, new claims amounted to 264,000, a decrease of 23,000 from the previous week. Amazingly, this is the lowest level we’ve seen since April 2000.

This improvement is so dramatic, in fact, that initial claims are down more than four-and-a-half standard deviations from the mean, a move we haven’t seen since soon after the height of the 2008-2009 recession.

Initial Jobless Claims Down More Than 4.5 Standard Deviations
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Consumer confidence is also at pre-recession levels, up 9.2 percent in September from last year. Although new and existing home sales in the U.S. have remained tepid, strong auto sales suggest that Americans are feeling more comfortable about making large purchases. This is good for steel, aluminum, platinum, palladium and other resources used in manufacturing automobiles.

Vehicle Sales in the U.S. Have Accelerated Steadily Since 2009
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As always, you can find something to dampen welcome news, and in this case, it’s a steadily diminishing workforce. Since its peak in early 2002, the labor force participation rate, which measures the number of Americans who are either employed or actively seeking employment, has declined to a 36-year low of 62.7 percent. There are many potential combinations of social and economic factors that might explain why this is the case: discouragement finding steady work, family- or health-related issues, an aging population, and others.

Labor Force Participation Rate at Its Lowest Since 1977
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Bob and Weave

Regardless, Coolidge’s message that the United States, pound for pound, is the best place on earth to invest and produce is just as accurate today as it was then. Where, for instance, did recently-elected Indian Prime Minister Narendra Modi initially visit to broker new business opportunities and partnerships? Certainly not France.

Presidents Coolidge and Clinton both oversaw strong economic and employment growth Another former president, my friend Bill Clinton—whose economic performance nears, and in some areas surpasses, Coolidge’s—once perceptively observed: “There is nothing wrong with America that cannot be cured by what is right with America.”

I couldn’t agree more. Our nation isn’t perfect. Burdensome taxes and overreaching regulations continue to stand in the way of optimal economic conditions, a theme I touched upon most recently regarding our Global Competitiveness Index score.

Despite such missteps, America has shown time and again that even when we stumble, we quickly find our footing, wipe the sweat from our eyes and prepare for the next round.

Get in the ring by checking out our Near-Term Tax Free Fund (NEARX), which recently earned the coveted five-star rating from Morningstar* for the five-year performance period and four stars overall. You can see the fund’s performance 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/164
3-Year/164
5-Year/137
10-Year/103

Morningstar ratings based on risk-adjusted return and number of funds
Category: Municipal National Short-Term Funds
Through: 09/30/2014

Bond funds are subject to interest-rate risk; their value declines as interest rates rise. 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. 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 Near-Term Tax Free Fund 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.

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.

Morningstar Ratings are based on risk-adjusted return. The Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Ratingä based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)

The A.T. Kearney Foreign Direct Investment Confidence Index, establish in 1998, examines overarching trends and ranks countries on how changes in their political, economic, and regulatory systems are likely to affect foreign direct investment (FDI) inflows in the coming years.

The University of Michigan Confidence Index is a survey of consumer confidence conducted by the University of Michigan.  The report, released on the tenth of each month, gives a snapshot of whether or not consumers are willing to spend money.

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.

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. Past performance does not guarantee future results.

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What the Strong Dollar Does to Yellow and Black Gold and Why We’re Seeing Green
October 20, 2014

The United States is doing better than it has in years. Jobs growth is up, unemployment is down, our manufacturing sector carries the rest of the world on its shoulders like a wounded soldier and the World Economic Forum named the U.S. the third-most competitive nation, our highest ranking since before the recession.

As heretical as it sounds, there’s a downside to America’s success, and that’s a stronger dollar. Although our currency has softened recently, it has put pressure on two commodities that we consider our lifeblood at U.S. Global Investors: gold and oil.

strong dollar has put pressure on both gold and oilIt’s worth noting that we’ve been here before. In October 2011, a similar correction occurred in energy, commodities and resources stocks based on European and Chinese growth fears. But international economic stimulus measures helped raise market confidence, and many of the companies we now own within these sectors benefited. Between October 2011 and January 2012, Anadarko Petroleum rose 58 percent; Canadian Natural Resources, 20 percent; Devon Energy, 15 percent; Cimarex Energy, 15 percent; Peyto Exploration & Development, 15 percent; and Suncor Energy, 10 percent.

Granted, we face new challenges this year that have caused market jitters—Ebola and ISIS, just to name a couple. But we’re confident that once the dollar begins to revert back to the mean, a rally in energy and resources stocks might soon follow. Brian Hicks, portfolio manager of our Global Resources Fund (PSPFX), notes that he’s been nibbling on cheap stocks ahead of a potential rally, one that, he hopes, mimics what we saw in late 2011 and early 2012.

A repeat of last year’s abnormally frigid winter, though unpleasant, might help heat up some of the sectors and companies that have underperformed lately.

September Was the Cruelest Month

On the left side of the chart below, you can see 45 years’ worth of data that show fairly subdued fluctuations in gold prices in relation to the dollar. On the right side, by contrast, you can see that the strong dollar pushed bullion prices down 6 percent in September, historically gold’s strongest month. This move is unusual also because gold has had a monthly standard deviation of ±5.5 percent based on the last 10 years’ worth of data.

Strong Contrast in 2014 Gold and Dollar Changes vs Historic Averages
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Here’s another way of looking at it. On October 3, bullion fell below $1,200 to prices we haven’t seen since 2010, but they quickly rebounded to the $1,240 range as the dollar index receded from its peak the same day.

A-Strong-US-Dollar-Keeps-Gold-and-Oil-Prices-Low
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There’s no need to worry just yet. This isn’t 2013, when the metal gave back 28 percent. And despite the correction, would it surprise you to learn that gold has actually outperformed several of the major stock indices this year?

Gold-is-Outperforming-All-but-the-SP-500-Index
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As for gold stocks, there’s no denying the facts: With few exceptions, they’ve been taken to the woodshed. September was demonstrably cruel. Based on the last five years’ worth of data, the NYSE Arca Gold BUGS Index has had a monthly standard deviation of ±9.4, but last month it plunged 20 percent. We haven’t seen such a one-month dip since April 2013. This volatility exemplifies why we always advocate for no more than a 10 percent combined allocation to gold and gold stocks in investor portfolios.

Oil’s slump is a little more complicated to explain.

Since the end of World War II, black gold has been priced in U.S. greenbacks. This means that when our currency fluctuates as dramatically as it has recently, it affects every other nation’s consumption of crude. Oil, then, has become much more expensive lately for the slowing European and Asian markets. Weaker purchasing power equals less overseas oil demand equals even lower prices.

What some people are calling the American energy renaissance has also led to lower oil prices. Spurred by more efficient extraction techniques such as fracking, the U.S. has been producing over 8.5 million barrels a day, the highest domestic production level since 1986. We’re awash in the stuff, with supply outpacing demand. Whereas the rest of the world has flat-lined in terms of oil production, the U.S. has zoomed to 30-year highs.

In a way, American shale oil has become a victim of its own success.

Domestic-Crude-Oil-Production-Riding-Sharply-as-the-Rest-of-the-World-Has-Flat-Lined
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At the end of next month, members of the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna. As Brian speculated during our most recent webcast, it would be surprising if we didn’t see another production cut. With Brent oil for November delivery at $83 a barrel—a four-year low—many oil-rich countries, including Iran, Iraq and Venezuela and Saudi Arabia, will have a hard time balancing their books. Venezuela, in fact, has been clamoring for an emergency meeting ahead of November to make a plea for production cuts.     

Producer-country-budget-breakeven-prices
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Although not an OPEC member, Russia, once the world’s largest producer of crude, is being squeezed by plunging oil prices on the left, international sanctions on the right. This might prompt President Vladimir Putin to scale back the country’s presence in Ukraine and delay a multibillion-dollar revamp of its armed forces. When the upgrade was approved in 2011, GDP growth was expected to hold at 6 percent. But now as a result of the sanctions and dropping oil prices, Russia faces a dismally flat 0.5 percent.

Volatility Has Returned

The current all-in sustaining cost to produce one ounce of gold is hovering between $1,000 and $1,200. With the price of bullion where it is, many miners can barely break even. Production has been down 10 percent because it’s become costlier to excavate. As I told Kitco News’ Daniela Cambone, we will probably start seeing supply shrinkage in North and South America and Africa.

The same could happen to oil production. Extraction of shale oil here in the U.S. costs companies between $50 and $100 a barrel, with producers able to break even at around $80 to $85. If prices slide even further, drillers might be forced to trim their capital budgets or even shelve new projects.

Michael Levi of the Council on Foreign Relations told NPR’s Audie Cornish that a decrease in drilling could hurt certain commodities:

“[I]f prices fall far enough for long enough, you’ll see a pullback in drilling. And shale drilling uses a lot of manufactured goods—20 percent of what people spend on a well is steel, 10 percent is cement, so less drilling means less manufacturing in those sectors.”

At the same time, Levi places oil prices in a long-term context, reminding listeners that we’ve become accustomed to unusually high prices for the last three years.

“People were starting to believe that this was permanent, and they were wrong,” he said. “So the big news is that volatility is back.”

On this note, be sure to visit our interactive and perennially popular Periodic Table of Commodities, which you can modify to view gold and oil’s performance going back ten years.

A Penny Saved Is a Billion Dollars To Spend and Invest

With fresh volatility in oil production comes the fear that the most price-sensitive states will be hurt the most. Exceptionally vulnerable states include Oklahoma, Wyoming and North Dakota. Texas, the nation’s leading oil producer—one of the world’s top producers, in fact—is diversified well enough to not feel the pain as much.

What’s bad for oil producers, though, turns out to be good for American consumers, who are already benefiting from lower gasoline prices. As of this writing, the national average for a gallon of gas is $3.10, down from $3.35 a year ago, according to AAA’s Daily Fuel Gauge Report.

As a result, American consumers are looking at huge savings—$40 billion this year alone. According to Deutsche Bank’s Joe LaVogna, every penny that’s saved at the pump equates to a billion dollars in household energy consumption that can be put back into the economy in other ways.        

Lower Gas Prices Will Save the U.S. $40 Billion in Annual Energy Costs
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I like to think of this as an unexpected and very welcome tax break. Automobile sales are already up from 2009. Lower gas prices might encourage some families to spring for that Suburban instead of a Prius.

Vehicle-Sales-in-the-US-Have-Accelerated-Steadily-Since-2009
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Klondex Turning Heads and Profits

As I said earlier, gold stocks have been hurting lately. One mining company that’s managed to not only survive in this uncertain climate but actually thrive is Klondex Mines, our largest holding in both our Gold and Precious Metals Fund (USERX) and World Precious Minerals Fund (UNWPX), with additional exposure in our Global Resources Fund (PSPFX). Headquartered in Vancouver, Klondex has complete ownership and control of the Fire Creek Project and Midas Mine, both in Nevada.

The chart below, based on our own research, shows Klondex’s relative strength to its peers and why we find the company so attractive in the long term. The y-axis indicates profit margin, the x-axis, enterprise value. The size of the spheres represents the amount of revenue generated by each one of these companies in the second quarter of 2014, Klondex’s first quarter of full commercial production.

Klondex-mines-looks-attractive-against-peers-in-second-quarter
click to enlarge

What the chart conveys is that, in relation to its peers, Klondex has a significantly higher profit margin than companies with a market cap two to three times its size.

“This is going to be very positive for Klondex shareholders as we go into the year-end,” portfolio manager Ralph Aldis said during our webcast. “The third quarter should be another great quarter, and that’s when people will say, ‘Hey, that second quarter report wasn’t a fluke.’ They’re going to start buying the stock and get it moving.”

Indeed, Klondex has managed to stay above the Market Vectors Junior Gold Miners ETF for the 12-month period, delivering a positive return of 7 percent versus the index’s -7.5 percent.

Klondex-Mines-Outperforms-the-market-Vectors-Junior-Gold-Miners-ETF
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On numerous occasions I’ve written about our research on the typical lifecycle of a mine, most recently in my whitepaper “Managing Expectations: Anticipate Before You Participate in the Market.” Below you can see the relationship between a mine’s lifecycle and the company’s share price.  

Life-cycle-of-a-mine
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As experts in mining stocks, it’s imperative for us to know which production stage the mine is in to manage our exposure to the company.

In the case of Klondex, its price action mimics the movements in share price based on the chart above, confirming our research.

Klondex-Mine-Moves-in-Tandem-with-Mine-Life-Cycle
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It also supports the benefits of active management.

“When you buy an indexed fund, you’re basically just buying the market capitalization of those companies,” Ralph said. “You’re not getting the benefit of active management where we go out, meet the company’s management team and know its history. We’re familiar with the lifecycle of the mine in question, the money, the burn rate and the minerals the company is involved in.”

I couldn’t have said it better myself.

Speaking of Active Management…

John-Derrick-Spurs-game-Istanbul-Turkey-Greece Last week I expressed my concerns disapproval of how the European Union is handling (or not handling) its fiscal and monetary mess. Because the EU is such an important region for the global economy, investors have become impatient with the bickering that’s stalled any clear solution to its slowdown.

Last week I was in Italy meeting with other global business leaders, while U.S. Global’s Director of Research John Derrick was visiting and assessing Greek and Turkish companies such as Tsakos Energy Navigation, JUMBO, Türk Telekom and Turkcell.

Watch for our firsthand accounts of and insights on the European situation this week.

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. 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. 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 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 Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. 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. The Market Vectors Junior Gold Miners Index is a market-capitalization-weighted index. It covers the largest and most liquid companies that derive at least 50 percent from gold or silver mining or have properties to do so. The NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) Index (HUI) is a modified equal dollar weighted index of companies involved in gold mining. The HUI Index was designed to provide significant exposure to near term movements in gold prices by including companies that do not hedge their gold production beyond 1.5 years.

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 09/04/2014: Alamos Gold, Inc. (0.04% World Precious Minerals Fund); Anadarko Petroleum Corp. (2.11% Global Resources Fund); Argonaut Gold (0.00%); AuRico Gold, Inc. (1.85% in Gold and Precious Metals Fund, 0.41% World Precious Minerals Fund); B2Gold Corp. (0.00%); Canadian Natural Resources, Ltd. (1.59% Global Resources Fund); Cimarex Energy Co. (1.80% Global Resources Fund); Detour Gold Corp. (0.00%); Deutsche Bank (0.00%); Devon Energy Corp. (1.82% Global Resources Fund); JUMBO S.A. (0.00%); Klondex Mines, Ltd. (7.76% Gold and Precious Metals Fund, 7.51% World Precious Minerals Fund, 1.22% Global Resources Fund); Market Vectors Junior Gold Miners ETF (0.16% Gold and Precious Metals Fund, 0.17% World Precious Minerals Fund); Peyto Exploration & Development Corp. (1.31% Global Resources Fund); Primero Mining Corp. (0.05% Gold and Precious Metals Fund, 0.02% World Precious Minerals Fund); Suncor Energy, Inc. (2.13% Global Resources Fund); Tsakos Energy Navigation, Ltd. (0.00%); Türk Telekom (0.00%); Turkcell (1.79% Emerging Europe Fund).

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.

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.

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. Past performance does not guarantee future results.

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New Economic Report Card Shows that the U.S. Still Has the Competitive Edge
October 16, 2014

America’s still got it.

That’s according to the latest Global Competitiveness Report, which names the U.S. the third-most competitive nation in the world, our highest ranking since 2008.

For 10 years now the World Economic Forum (WEF) has published its annual competitiveness report, which assesses the strength of 144 countries’ 12 “pillars,” including institutions, infrastructure, health and primary education and higher education. It then ranks these countries based on their overall ability to promote prosperity for their citizens.

Singapore retains its number two spot for the fourth straight year, while Switzerland leads for the sixth year in a row.

Top 20 Countries in 2013 - 2014 Global Competiveness Index
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From 2006 until 2008, the U.S. held the top position, but following the financial crisis, our ranking slipped to number seven in 2012.

This year, the WEF notes:

“U.S. companies are highly sophisticated and innovative, and they are supported by an excellent university system... Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the world’s largest by far—these qualities make the United States very competitive.”

You might be thinking: But wait, didn’t China’s economy just exceed our own?

Yes and no.

It’s true that, when U.S. and China’s economies are not adjusted for costs of living, the U.S. is still “the world’s largest by far.” Our GDP stands at around $16.8 trillion whereas China’s is $9.3 trillion.

But based on purchasing power parity (PPP), a calculation that factors in relative costs of living to make comparisons between and among countries “fairer,” China has indeed caught up with and surpassed the U.S.

China's Economy Surpasses the U.S.'s Based on Purchasing Power Parity
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This news might bruise some readers’ egos, but it’s actually a tailwind for both commodities and our China Region Fund (USCOX). China is such an important player in the global economy that it’s nearly impossible for any serious investor to see China’s ascent as anything but positive.

Below are some of the key takeaways from the Global Competitiveness Report.

Strengths

The economic report card gives the U.S. many accolades, including its capacity to attract and retain talented people from abroad. I always say that when people want to innovate and start businesses, they typically come here to the United States. The report reveals it’s relatively easy in the U.S. for “entrepreneurs with innovative but risky projects to find venture capital.” Our financial services are strong, and we have ready access to bank loans for sound business plans. When it comes to the ease of raising money by issuing shares on the stock market, we come in at sixth place, following Hong Kong, Taiwan, South Africa, New Zealand and Qatar.

The United States ranks high in company spending on research and development.Only Switzerland beats us in our capacity for innovation.

We score very well in our availability and corporate adoption of the latest technologies, as well as availability of scientists and engineers, quality of scientific research institutions and company spending on R&D. We rank eleventh in the number of patent applications filed under the Patent Cooperation Treaty (PCT), amounting to 149.8 per one million U.S. citizens.

In the business sophistication pillar, we excel above all other countries in our use of sophisticated marketing tools and techniques.

Areas for Improvement

It comes as no surprise that the top three most problematic factors for doing business in the U.S., according to the report, are tax rates, tax regulations and inefficient government bureaucracy. It’s for these reasons that some businesses, including Burger King, Medtronic and Chiquita, are in the process of moving their corporate headquarters to countries with friendlier tax rates—Ireland, Canada and Singapore, among others.

High tax rates, burdensome regulations and inefficient government bureaucracy are all cited as "problematic factors" for doing business in the U.S.To prevent such tax inversions from occurring, our tax code sorely needs amending. Our 35-percent corporate income tax rate is the highest among the 34 member nations of the Organisation for Economic Co-operation and Development (OECD), and we actually rank 32 out of 34 in the 2014 International Tax Competitiveness Index. Only Portugal and France fare worse.

Indeed, the Global Competitiveness Report shows that, to a large extent, taxes reduce the incentive to work: in this department we come in at number 37, just between China and Ghana. As for wastefulness of government spending, we rank number 73, trailing France by one point and China by 49 points. The report also shows that it can often be difficult for some businesses to comply with U.S. government regulations.

If our government were to simplify the tax code and ease regulations, there’s no doubt that the U.S. could once again claim top honor.

Other crucial areas for improvement include quality of electrical supply (we come in at number 24, following Barbados), soundness of banks (number 49), gross domestic secondary enrollment rate (59) and quality of math and science education (51).

Emerging Countries 

Some of the emerging markets that we track at U.S. Global Investors either made gains this year or maintained their positions.

Poland, for instance, held on to its rank of 43. The WEF noted the country’s “improvements… in institutions, infrastructure and education,” its “increased flexibility in labor market efficiency” and its “[c]ontinued structural reforms geared toward strengthening its innovation and knowledge-driven economy.” A well-educated population and secure financial market make Poland globally competitive, but to truly boost its innovative capacity, it needs to improve its infrastructure, soften regulations and make settling business disputes more efficient.

Greece jumped 10 spots to reach the rank of 81. Despite its high levels of government debt, the Mediterranean country has managed to improve the functioning of its goods and labor markets and reduce its budget deficit. However, its government is still inefficient and its financial market has yet to recover from the recent crisis that hit parts of Europe. A lack of access to financing is the most problematic factor for doing business in Greece.

Other key emerging markets that rose up the list were China, Malaysia, Thailand, Indonesia and the Philippines.

Keep Investing in America

Despite a few areas for improvement, the United States is still the preeminent place on earth to invest, with plenty of openings for growth. As we continue to recover from the recession, now is the most opportune time in years to place your trust in America’s future.

Our two U.S. equity funds, All American Equity Fund (GBTFX) and Holmes Macro Trends Fund (MEGAX), have been impacted by the global economic slowdown and growth scare. Cyclical stocks—the kind we focus on in these two funds—have lagged defensive stocks, by about 6 percent in the last month and a half.

Cyclicals are those types of goods and services consumers can afford to purchase when the economy is performing well. Examples include discretionary-type companies such as Apple, Priceline and Tesla Motors. Defensives, on the other hand, typically remain stable, even in times of market downturns. Examples include electricity, gas and food.

Cyclical Stocks Have Dropped 6 Percent in Last Month-and-a-Half Compared to Defensive Stocks
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This might sound like troubling news, but we view it as an opportunity. As you can see, a similar discrepancy between cyclical and defensive stocks occurred in April and May of last year, and yet mean reversion corrected it. We’re optimistic that such a turn will occur again, which means that now might be an ideal time to accumulate cyclicals.

Our Near-Term Tax Free Fund invests in the schools that keep America competitive.Another way to potentially capitalize on our nation’s successes is U.S. Global Investors’ Near-Term Tax Free Fund (NEARX), which invests in high-quality, U.S. municipal bonds. A significant portion of the fund is invested in health services, public schools and higher education, three of the 12 pillars that the WEF assesses. To keep these services operational and efficient, state and local governments rely on funding from the very bonds we invest in, which in turn improves Americans’ livelihood as well as the businesses they run.

Although past performance is no guarantee of future results, NEARX has delivered positive tax-free income for the past 13 years. The fund seeks preservation of capital and has an attractive floating $2 net asset value (NAV) that has demonstrated minimal fluctuation in its share price.

Near-Term Tax Free Fund Annual Total Return
click to enlarge

Because of its risk-adjusted returns, NEARX has earned the coveted five-star rating from Morningstar* for the five-year performance period and four stars overall. Check out its performance here.

To learn more about how you can help keep the United States competitive, I encourage you to request an information packet.

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/164
3-Year/164
5-Year/137
10-Year/103

Morningstar ratings based on risk-adjusted return and number of funds
Category: Municipal National Short-Term Funds
Through: 09/30/2014

Bond funds are subject to interest-rate risk; their value declines as interest rates rise. 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. 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 Near-Term Tax Free Fund 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. Though the Near-Term Tax Free Fund seeks minimal fluctuations in share price, it is subject to the risk that a decline in the credit quality of a portfolio holding could cause a fund’s share price to decline. Stock markets can be volatile and can fluctuate in response to sector-related or foreign-market developments. For details about these and other risks the Holmes Macro Trends Fund may face, please refer to the fund’s prospectus. 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.

Morningstar Ratings are based on risk-adjusted return. The Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Ratingä based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)

The Global Competitiveness Index, developed for the World Economic Forum, is used to assess competitiveness of nations. The Index is made up of over 113 variables, organized into 12 pillars, with each pillar representing an area considered as an important determinant of competitiveness: institutions, infrastructure, macroeconomic stability, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market sophistication, technological readiness, market size, business sophistication and innovation.

The Tax Foundation’s International Tax Competitiveness Index (ITCI) measures the degree to which the 34 OECD countries’ tax systems promote competitiveness through low tax burdens on business investment and neutrality through a well-structured tax code. The ITCI considers more than forty variables across five categories: Corporate Taxes, Consumption Taxes, Property Taxes, Individual Taxes, and International Tax Rules.

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 funds mentioned as a percentage of net assets as of 09/30/2014: Burger King (0.00%), Medtronic (0.00%), Chiquita (0.00%), Apple, Inc. (4.35% in All American Equity Fund, 4.56% in Holmes Macro Trends Fund), The Priceline Group, Inc. (3.00% in All American Equity Fund, 3.03% in Holmes Macro Trends Fund), Tesla Motors, Inc. (2.09% in All American Equity Fund, 2.93% in Holmes Macro Trends Fund).  

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. Past performance does not guarantee future results.

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Warning: Market Correction Last Week… Did You See the Opportunity?
October 13, 2014

While stocks fell around the world last week amid growing concerns over global economic growth, Europe’s slowdown can’t stop emerging market population growth that drives long-term commodity demand. If the short-term market volatility concerns you, a solution is short-term tax-free municipal bonds. Check out the 5 Reasons Why.

Last week we saw a continued selloff in energy stocks and a slump in commodity prices, specifically oil. In light of this, I've highlighted some key points portfolio manager Brian Hicks and I made during our latest webcast that might offer investors some clarity and insight into our management strategy when such market nervousness occurs.

Everything that appears in italics is commentary from the webcast.

PMI: Commodities’ Crystal Ball

You look at the stock market as a precursor to economic activity six months out. If you’re looking at commodities, you must be looking at PMIs.

JP Morgan Global Manufacturing Purchasing Managers' Index
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What our research has shown is that there is a 60- to 80-percent probability of commodities and commodity stocks rising when the global PMI’s one-month reading is above the three-month trend. When its one-month is below the three-months, there is a high probability of these sectors and stocks falling over the next six months.

Commodities and Commodity Stocks Historically Rose Six Months After PMI CrossOver
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The global PMI reading is a composite of each country’s unique PMI. So we look at individual countries and try to gauge what their monetary and fiscal policies are going to be. These government policies have a high correlation to commodity demand, which is significant to resource investments.

Brian Hicks

Brian HicksBrian Hicks, portfolio manager of our Global Resources Fund (PSPFX), stepped in to share his thoughts on the resources sector, devoting special attention to the recent performance of crude oil.

Despite the recent selloff, I believe it’s actually an excellent time to be looking at resource stocks and energy stocks in particular.

 

 

The Polarity of the Dollar and Crude Oil

The following chart mathematically depicts the oversold nature of crude oil:

Year-Over-Year Percent Change Oscillator: S&P 1500 Energy vs. U.S. Dollar
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The dollar is significantly overbought relative to crude oil. The dollar is up almost two standard deviations, crude oil down almost one standard deviation. History has shown, whether it’s in 2011 or 2012, that this has been a good time to buy crude oil.

Natural Resources Stocks Priced to Move

Another factor that gets me excited about these energy stocks and natural resource stocks is the metrics that we’re seeing from a fundamental standpoint. Looking at the top 50 holdings for our Global Resources Fund, what jumps out immediately is just how cheap these stocks are relative to their growth rate, trading at 20 times in the last quarter earnings. Sales were growing at over 20 percent.

Global-Resources-Fund-Portfolio-Construction
click to enlarge

These companies are very profitable, generating return on equity of 25 percent, paying a dividend yield on average—about 2.7 percent—and growing that dividend at about a 30-percent click. And as you can see, these stocks have outperformed the S&P 500 Index so far year-to-date (YTD), even with this pullback.

A Thirst for Oil

Looking at global oil demand, you can see it’s been unrelenting through recessions, through bull markets, bear markets, and it looks like it’s going to continue to go up at a fairly steady level based on latest data from the U.S. Energy Information Administration (EIA).

Global Oil Demand Reaching New Highs
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Below is a very important point to consider. Where oil prices are now, we’re getting to the area where production could be cut off because prices are not high enough to incentivize new development, new production and new drilling.

2015 U.S. Tight Oil Production by Incentive Price
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If you look at crude oil price somewhere in the area of $80 to $90, we have about 650,000 barrels per day of production that need to be supported at that particular level. So we really can’t go too much lower in terms of pricing. Otherwise, we would see a significant drop in the supply of oil.

Just to give you a sense of the scale here, we’re expected to grow demand by one million barrels per day, and we have 650,000 barrels that need an oil price north of $80.

Pricing Black Gold to Stay in the Black

Another significant factor is the price that’s necessary for countries that produce crude oil or export crude oil out of the Organization of the Petroleum Exporting Countries (OPEC) or non-OPEC.

Producer Country Budget Breakeven Prices
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On average, you need to see $95-per-barrel prices in order for these countries to balance their budgets—their fiscal budgets. What really sticks out is Russia and Saudi Arabia. They’re the two largest exporters of crude oil and, as you can see above, Russia requires an oil price north of $100, Saudi Arabia right at about $95 per barrel on a Brent basis, and we’re below that number now.

The next OPEC meeting is in November. I would be surprised if we did not see another production cut if oil prices remain at these levels. I think that OPEC and the Saudis need to come in and support prices even more so than they already have following the cut in August.

U.S. Gushing Oil

One area that’s been very topical and interesting as of late is the growth in U.S. crude oil production. It’s at a new 25-year high.

U.S. Crude Oil Production at a 25-Year High
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We’ve gone from basically 4.5 million barrels in 2008 to 8.5 million barrels. Energy stocks are no longer just the commodity play. They’re also a volume growth play.

You can see this paradigm shift in that many of these shale producers have gone out and invested a lot of capital over the years and now, over the next two years or so, we’re going to start to see a free cash flow payback on that initial investment and infrastructure in fracking and developing their resource.

U.S. Oilfield Cash Flow and Capital Expenditure
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Because they’re going to start seeing free cash flow, I think there’s the potential we could get a rerating in multiples to that cash flow. Instead of trading four to six times, maybe we trade higher, somewhere between seven or eight times due to that positive free cash flow metric.

Commodities: A Value Play

Commodities have way underperformed other asset classes, bonds, U.S. equity, and we feel like this is where the value is at. This is the area where you can put capital to work for the long term and outperform, whereas some of the other areas such as in bonds or U.S. stocks may not perform as well.

Class Returns
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There are pockets of strength within the commodity sector where I think we will see companies profit and do well. On the whole, given this pullback, I’m very optimistic about resources going forward.


No Faith in the G20 Central Bankers

G20 finance ministers and central bank governors meeting in WashingtonLast weekend the finance ministers and central bank governors of the world’s top 20 economies met in Washington to discuss, among other issues, solutions to Europe’s weak economic performance. The region, whose sluggishness has negatively affected the global market, is at risk of dipping into its third recession since 2008.

I have no confidence that this body can persuade Europe to act sooner rather than later to dig itself out of further economic hardship. As I’ve observed in my global travels, the G20 central bankers are not interested in promoting and facilitating trade among nations. Instead, they’re interested foremost in levying more taxes and imposing more regulations that actually impede international trade.

It’s Economics 101: Capital cannot be spurred or created with high taxes and strangulating regulations.

European Central Bank President Mario Draghi assures the media that the eurozone will recover soon, but as we wait, the region continues to underperform and drag the rest of the markets down with it. European growth in the second quarter was flat, and this quarter doesn’t look as if it will fare much better. France’s manufacturing sector has steadily contracted. Over the last 12 months, it’s seen only two PMI scores above 50, which would indicate expansion. Even usually-reliable Germany, the eurozone’s largest economy, is in the midst of a downturn.

The U.S. has been gradually recovering from its worst economic period since the Great Depression, and to continue this progress, we need strong trading partners. Investors have become impatient waiting for Europe to get its fiscal act together and stop trying to rationalize even more taxes and regulations.

If it weren’t for the U.S. and Canada propping up the rest of the world, Europe would likely be in a more depressed state than it already is. 

Again, you can still catch the replay of last week’s webcast, which includes more on macroeconomics and a timely discussion of gold and gold stocks with portfolio manager Ralph Aldis.

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. 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 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 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. 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. The S&P 1500 Energy Index is an unmanaged market capitalization index that tracks the companies in the energy sector as a subset of the S&P 1500.

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. Note that stocks and Treasury bonds differ in investment objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, and tax features.

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.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. Past performance does not guarantee future results. This news release may include certain “forward-looking statements” including statements relating to revenues, expenses, and expectations regarding market conditions. These statements involve certain risks and uncertainties. There can be no assurance that such statements will prove accurate and actual results and future events could differ materially from those anticipated in such statements.

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How Alibaba Could Capitalize on the EBay-PayPal Split
October 7, 2014

Ebay and Paypal Split - U.S. Global InvestorsInternet auctioneer and retailer eBay announced last week that it will be spinning off its online payment service PayPal into two listed companies. This decision, heralded by activist shareholder Carl Icahn, among other investors, will allegedly enable both companies to focus exclusively on what they do best.

The split makes a lot of sense. PayPal’s non-eBay business is growing three times faster than eBay-related transactions. Freeing itself from its parent company will strengthen its brand and marshal its troops under one banner. It will also enable PayPal to allocate more intellectual bandwidth toward improving its mobile payment services in order to stay ahead of serious competitors such as Square Cash, Google Wallet and newcomer Apple Pay, which launched with the iPhone 6. Facebook might also be looking into mobile payment services soon, as a recent hack revealed that Facebook Messenger contains hidden code to accommodate friend-to-friend payments.

But another repercussion of the split is that eBay will give up much of its market value. The company is currently valued at roughly $70 billion, and of that amount, PayPal might be entitled to $47 billion. When the two go their separate ways, eBay will then be worth $23 billion.

Which is very close to the amount Alibaba Group raised on the first day of its historic IPO.

Alibaba Tops the List of the 10 Largest U.S. IPOs to Date
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Even though eBay CEO John Donahoe, who will be stepping down once the spinoff is complete, has roundly denied rumors that the company is for sale, Alibaba founder and chairman Jack Ma is in the buying mood.

Alibaba is a company founded by Chinese people but that belongs to the world - Jack MaAlibaba, which we now own in our China Region Fund (USCOX), has already made several recent high-profile investments and acquisitions. It currently owns about 30 percent of Weibo, China’s answer to Twitter; 26 percent of Intime Retail, a Chinese department store; 16.5 percent of Youku Tudou, a Chinese Internet video company; UCWeb, a Chinese mobile e-commerce firm; and even 50 percent of the Guangzhou Evergrande Football Club.

In his letter to investors, Ma hinted that Alibaba is now looking beyond China’s borders:

From the very beginning our founders have aspired to create a company founded by Chinese people but that belongs to the world. In the past decade, we measured ourselves by how much we changed China. In the future, we will be judged by how much progress we bring to the world.

There was a time when eBay appeared likely to dominate not just the American market but the Chinese market as well. Then-CEO Meg Whitman stated in 2004: “Ten to 15 years from now, I think China can be eBay’s largest market on a global basis… We think China has tremendous long-term potential and we want to do everything we can to maintain our number one position.”

Whitman was certainly right about China’s tremendous potential.

Today, Taobao, Alibaba Group’s eBay-like consumer-to-consumer marketplace, does more business and moves more inventory annually than eBay does in China alone. If Ma were interested in reaching American consumers, eBay could very possibly be his entry point.

“The only way Alibaba can break into the American market is to have an American company like eBay,” Marth Stokes, CEO of TechniTrader, told International Business Times. “Otherwise, they’re going to have a really tough sell.”

Asian E-Commerce Companies Making Huge Strides

Led by giants such as Google, Facebook and Amazon.com, U.S. Internet companies maintain a firm upper hand over the rest of the world. Of the $1.5 trillion represented below, American companies control close to $1 trillion.

But Asian Internet companies, Chinese in particular, are gradually gaining ground.

The World's Largest Publically Listed Internet Companies by Market Capitalization
click to enlarge

Alibaba, fueled by its record IPO, has already surpassed Facebook in market cap. It’s now the second-largest company in the Nasdaq Internet Index behind Google, and were it in the S&P 500 Index, it would be the 11th largest company.

Alibaba’s hypothetical acquisition of eBay would be a major tipping point, further tilting e-commerce in China’s direction. Not only would the auction site fall under the umbrella of the Alibaba Group, but much of PayPal’s business might also drift to Alipay Wallet, which handles much of the transactions made through Alibaba’s many marketplaces. Although Alibaba no longer has ownership of Alipay, it’s already the world’s leading mobile payment service. Last year alone, 2.78 billion transactions were made using Alipay, amounting to $150 billion—far exceeding PayPal and Square’s combined $50 billion in volume.

Competition Mounting

Despite the success of digital behemoths such as Google, Facebook and Amazon.com, American Internet stocks are actually lagging behind their Asian counterparts. Whereas the former have returned only 0.55 percent, the latter have delivered 2.59 percent year-to-date (YTD).

Asian Internet Stocks Are Outperforming U.S. Internet Stocks year-to-date
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This might very well persist as more and more people in the Asia region gain connectivity and spend their money online. According to the International Telecommunication Union (ITU), around 45 percent of the world’s Internet users will be from the Asia-Pacific region by the end of this year. In China alone, there are 618 million Internet users. Of those, 302 million—nearly the population of the United States—shop online.

Again, Donahoe claims neither eBay nor PayPal is for sale. But this is the same man who on numerous occasions opposed Icahn’s suggestion to split the two. With Internet company mergers and acquisitions accelerating—Facebook, for instance, just closed on a deal to acquire popular instant messaging service WhatsApp for $22 billion—it’s not out of the realm of possibility that eBay might one day be subsumed by Alibaba Group.

U.S. Global Investors analysts and investment team stay current on global e-commerce companies “EBay may be a shark in the ocean, but I am a crocodile in the Yangtze River,” Ma stated in 2005. “If we fight in the ocean, we lose—but if we fight in the river, we win.”

We at U.S. Global Investors are curious to see how a growing Chinese middle-class will shift the global online marketplace ecosystem and payment service industry. The winners will likely be Asian companies such as Alibaba. Smartphones such as the Apple 6 will also benefit, as more and more people will use them to make transactions. The losers could possibly be cash and second-tier credit cards such as Discover.

But like a weathervane, our investment team will be sensitive to the direction Internet companies take—on both sides of the Pacific Ocean.

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.

The NASDAQ Internet Index is a modified market capitalization-weighted index designed to track the performance of the largest and most liquid U.S.-listed companies engaged in internet-related businesses and that are listed on the NASDAQ Stock Market, the New York Stock Exchange (NYSE) or NYSE Amex. The Bloomberg Asia Pacific Internet Index is a capitalization-weighted index of internet companies from the Asia Pacific Region. 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 China Region Fund as a percentage of net assets as of 6/30/2014: EBay (0.00%), PayPal (0.00%), Square, Inc. (0.00%), Google (0.00%), Apple (0.00%), Facebook (0.00%), Alibaba Group (0.00%), Visa (0.00%), General Motors (0.00%), Kraft (0.00%), UPS (0.00%), CIT (0.00%), Travelers Group (0.00%), HCA (0.00%), Goldman Sachs (0.00%), Weibo (0.00%), Twitter (0.00%), Intime Retail (0.00%), Youku Tudou (0.25%), Amazon.com (0.00%), TechniTrader (0.00%), Tencent Holdings (4.55%), Baidu (0.00%), Priceline Group (0.00%), Yahoo! (0.00%), JD.com (0.00%), Netflix (0.00%), LinkedIn (0.00%), Naver (0.00%), Yahoo! Japan (0.00%), Rakuten (0.00%), WhatsApp (0.00%), Venmo (0.00%), MasterCard (0.00%), Discover (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. Past performance does not guarantee future results.

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Net Asset Value
as of 10/22/2014

Global Resources Fund PSPFX $8.31 -0.24 Gold and Precious Metals Fund USERX $6.10 -0.14 World Precious Minerals Fund UNWPX $5.51 -0.17 China Region Fund USCOX $7.82 -0.03 Emerging Europe Fund EUROX $7.30 -0.07 All American Equity Fund GBTFX $31.75 -0.34 Holmes Macro Trends Fund MEGAX $22.52 -0.38 Near-Term Tax Free Fund NEARX $2.26 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.01 No Change