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Please note: The Frank Talk articles listed below contain historical material. The data provided was current at the time of publication. For current information regarding any of the funds mentioned in these presentations, please visit the appropriate fund performance page.

Why Argentina’s New Leader Is Good for Latin America and Global Investors
November 30, 2015

President-elect Mauricio Macri promises to bring market-friendly policies to Argentina.

It might be hard to believe now, but Argentina once ranked among the top 10 wealthiest nations in the world, following the United Kingdom, United States and Australia.

Today, however, it’s one of the most corrupt, according to Transparency International, a group that annually measures public sector corruption around the world. In 2014, Argentina ranked 107, sandwiched between Niger and Djibouti.

That’s largely because for more than half a century, Argentina has been led almost exclusively by the far-left Justicialist Party, based on the political thought of Juan Perón—an admirer of Mussolini—and his wife Evita.

But this week, Argentina said “no, gracias” to further leftist rule when it elected conservative businessman and two-term Buenos Aires mayor Mauricio Macri to succeed Cristina Fernández de Kirchner as president. It was an upset victory for the people of Argentina, who have seen their once-prosperous nation deteriorate under decades of Marxist policies.

It was also a strong win for investors around the globe. Not since Narendra Modi’s election last year has a leader’s entry on the world stage inspired such bullishness.

In the three months leading up to the November 22 election, Argentina’s Merval Index rose 30 percent as optimistic investors anticipated a win by Macri.

Argentina Presidential Election Drove Investor Confidence
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Last week I was in San Francisco speaking at the Silver Summit & Resource Expo, where many fund managers commented that their Argentine holdings had seen huge jumps recently. Many people I spoke with there were bullish on the country.

Latin America Veering Right to Escape Corruption

I join many others in expressing my belief that this change in leadership points to an ideological shift in Latin America and a rejection of the Peronism that has threatened to turn the region into an also-ran economy. I’m confident that once Argentina demonstrates to its neighbors that market-friendly policies stir economic growth and help lead to widespread prosperity, the people of Colombia, Brazil, Venezuela and others will demand similar corruption-free leadership.

Chavez's daughter, Maria Gabriela, is worth an estimated $4.2 billion.

In Venezuela—which is slightly less corrupt than the likes of Yemen, Libya and Iraq, according to Transparency International—the people are still reeling from Hugo Chávez’s disastrous administration. With food shortages and hunger worsening, the government implemented fingerprint scanners in grocery stores last year to limit purchases of basic goods.

This, despite Chávez—a leader who was supposed to be “for the people”—being worth an estimated $2 billion at the time of his death two years ago. It’s believed that he stole much of his wealth from the country’s oil industry. Today, his daughter Maria Gabriela is the wealthiest woman in Venezuela, worth double that.

In August, global intelligence company Stratfor conducted an analysis of satellite imagery taken of Puerto Cabello, Venezuela’s main port of entry for imports, between February 2012 and June 2015. The visible reduction in food container traffic is alarming.

Meanwhile, in Peru, First Lady Nadine Heredia is being investigated for money laundering and the usurpation of public functions. When I was in country earlier this month speaking at the Mining & Investment Latin America Summit, there was a lot of discussion on rule of law and corruption in Peru and surrounding South American countries. It’s estimated that stolen public money in Peru adds up to about 2 percent of GDP annually.

Latin Americans are increasingly saying enough is enough.

“What happened in Argentina was the first change in Latin America,” said former Brazil finance minister Maílson da Nóbrega, speaking to the Wall Street Journal. “It may be the start of a downfall in populist governments. I think the next one should be Venezuela. And I think Brazil will follow suit in 2018.”

Brazil President Dilma Rousseff, who won reelection last year, currently has an approval rating in the single digits. As I shared with you last month, her Marxist policies have suffocated business development. The country tumbled 18 points this year in the annual Global Competitiveness Index (GCI) and is now considered to be one of the worst in terms of burdensome government regulations and unethical business practices. The people of Brazil deserve better.

This is part of the reason why I believe active management is so important. When I travel around the world and talk to different people, I obtain and return with tacit knowledge that can’t be found by simply reading Bloomberg.

Macri Bucks the Trend

In this troubling context, Mauricio Macri is a breath of fresh air. He’s not what most people envision when they’re asked to describe the stereotypical South American leader. Unlike Fidel Castro, Chávez, Rousseff and others, Macri never served as a Marxist guerilla in his youth. There are no pictures of him posing heroically in a steaming jungle, attired in military garb like fellow Argentine Che Guevara. Macri’s more likely to be found playing a friendly game of soccer than delivering a rousing hours-long speech from a balcony. By most accounts, he’s contemplative and soft-spoken.

But change is precisely what Argentina needs now. For the last 12 years, former President Néstor Kirchner and, following his death, wife Cristina managed only to cripple the country’s economy even further. The size of the state doubled in the last 10 years alone. Entire industries were nationalized, taxing and spending skyrocketed, foreign investment fled and inflation exploded at an average pace of 20 percent a year.

20 Years of Wild Inflation: Argentina vs. the United States
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Under these conditions, holding gold in Argentina pesos has been a good bet for investors.

Price of Gold Per Ounce in Argentina Pesos
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Realistic or not, Macri has vowed to roll back many policies from previous administrations. He also plans to cultivate a warmer business climate with Brazil, Argentina’s top trading partner, and staunch the outflow of foreign capital. Last year, $2 billion left the country, a 75 percent increase from 2013, according to the Organization for Economic Cooperation and Development (OECD).

Which is a shame. Argentina has a huge amount of untapped potential—a highly educated population, the fastest-growing middle class in Latin America and an abundance of natural resources.

Here’s hoping Macri’s administration can succeed at fostering a more welcome environment for business, one that might benefit the Argentine people and global investors alike.

From Pump to Plate: Low Fuel Costs Help Americans Spend Less on Thanksgiving Dinner

Argentina Presidential Election Drove Investor Confidence

As Argentina is facing steep inflation, American consumers today are spending a little less on essentials such as food—more specifically, Thanksgiving dinner.

According to the Texas Farm Bureau’s Thanksgiving Meal Report, a typical spread of turkey, stuffing, sweet potatoes, cranberry sauce and more cost $46.48 this year, down 31 cents from 2014.

(The one Thanksgiving staple we spent more on this year was pecans. They’re up 11 percent as China’s appetite for the nut has increased.)

The reason for the savings? Lower fuel and grain prices. As a whole, grains are down about 11.5 percent from a year ago, while crude oil is off more than 36 percent. According to AAA’s Fuel Gauge Report, gas averages $2.05 per gallon right now, a 27 percent decline from this time last year.

As I’ve been saying since last December, this “oil peace dividend” is helping us save not only at the gas pump but also the grocery store and elsewhere.

Additionally, AAA estimates that 46.9 million Americans travelled 50 or more miles this Thanksgiving holiday, the highest travel volume since 2007. Because of lower fuel costs, more Americans evidently felt as if they could afford to travel longer distances to visit Grandma and Grandpa. A spokesman for AAA says that motorists are currently saving about $11 on every full tank of gas compared to this time last year.

What Is Janet Yellen Thinking?

Speaking of saving, Americans are saving at the highest levels since 2012. At the same time, personal spending is slowing GDP growth.

That’s according to a new report by investment advisor Strategic International Securities (SIS), which writes that it believes a rate hike next month is unlikely.

“The Federal Reserve needs to keep real interest rates at zero to set the equilibrium between the demand and supply for money in the economy,” SIS strategist Philip L. Miller says. “This further implies in order to keep investment where it is already making up for nearly 30 percent in the trend GDP shortfall, the Fed believes it needs to keep real rates at zero to sustain the current anemic levels of private investment or they may falter even more.”

In addition, BCA Research reports that the Fed is no closer to achieving its key 2 percent inflation goal than it was at the beginning of the year. Inflation expectations, in fact, are shifting down. The Fed’s preferred measure of inflation, core PCE, has remained stuck at 1.3 percent all year.

We won’t know what Yellen’s thinking until December 15, but whether or not she decides to raise rates, it might be a good time to consider tax-free, short-term municipal bonds. Shorter-term, quality munis are less sensitive to rate increase than longer-term bonds that are locked into rates for greater periods of time.

Past performance does not guarantee future results.

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

The MERVAL Index is the most important index of the Buenos Aires Stock Exchange. It is a price-weighted index, calculated as the market value of a portfolio of stocks selected based on their market share, number of transactions and quotation price. The Mexican IPC index (Indice de Precios y Cotizaciones) is a capitalization weighted index of the leading stocks traded on the Mexican Stock Exchange. The Santiago Stock Exchange IPSA Index is a total return index and is composed of the 40 stocks with the highest average annual trading volume in the Santiago Stock Exchange (Bolsa de Comercio de Santiago). The index has been calculated since 1977 and is revised on a quarterly basis. The Bovespa Index is an index of about 50 stocks that are traded on the São Paulo Stock, Mercantile & Futures Exchange. It is composed by a theoretical portfolio with the stocks that accounted for 80% of the volume traded in the last 12 months and that were traded at least on 80% of the trading days. It's revised quarterly, in order to keep its representativeness of the volume traded and in average the components of Ibovespa represent 70% of the all the stock value traded.

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What We’re Paying Attention to Following the Paris Attacks
November 23, 2015

Ten days ago, 129 lives were brutally cut short when assailants affiliated with the terrorist group ISIS, also known as the Islamic State, stormed Paris in a series of coordinated attacks. Along with the rest of the world, we were shocked and saddened as the tragic news unfolded, worsening as the night progressed. Our thoughts are with the victims’ families and friends.

For us, the atrocity struck especially close to home, as one of our portfolio managers, Xian Liang, was in the city at the time of the attacks. We’re extremely grateful he and his wife returned home safe and sound. I wish the same could be said for the victims in Paris that day, the 224 on the Russian jet brought down by an ISIS-built bomb, the hostages in Mali Friday, and many others whose lives have been affected by the global scourge of terrorism.

We Take Our Role as Fiduciaries Seriously

As money managers, it’s our duty and responsibility to be cognizant of such geopolitical events—large and small, good and bad—and to consider all of the possible ramifications. The consequences often reach far and wide, and can be felt in the short-term (changes in investor confidence) as well as the long-term (changes in government policy).

Early last year, for instance, we were quick to adjust asset allocations when Russia invaded and annexed Crimea. We anticipated that sanctions would be imposed on the country, and indeed they were, by the U.S., European Union, Australia and other international organizations. These sanctions, coupled with falling oil prices, contributed to the Russian ruble’s dramatic breakdown.

Diesel, the seven-year-old belgian shepherd who was killed recently during a French SWAT raid

Against these challenges, I’m impressed by how strongly Russian stocks have performed lately. Last Tuesday, the Micex Index jumped to an eight-month high in ruble terms. This is especially interesting since both Brent oil and the ruble are way down. It suggests that investors are showing approval of President Vladimir Putin’s involvement in Syria.

Putin is also benefiting from a strong public relations push. The Daily Mail writes: “Russia has shown its solidarity with the people of France in an unusual way—by donating a new puppy to carry on the memory of Diesel, the police dog killed by a suicide bomber.”

It should come as a surprise to no one that, following the tragedy in Paris, defense spending will likely increase. French President François Hollande has already told Parliament that France is at war and will “be merciless” in its pursuit of justice. The country wasted no time in striking back against ISIS and has begun bombing raids in Syria.

As early as last Monday, stocks of companies that manufacture weapons and fighter jets traded up.

War Stocks Rally Following Attacks in Paris
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We own Lockheed Martin, manufacturer of the F-35, F-22 and F-16 fighters; Boeing, manufacturer of the Tomahawk cruise missile, F-18 fighter and more; and Northrop Grumman, which was recently awarded the contract to build America’s next generation of long-range strike bombers. Raytheon develops and manufactures guided missiles.

The U.S. Navy plans to buy more Boeing F/A-18E/F Super Hornets in the coming years.

International Travel to Be Hit

Understandably so, the terrorist attacks will have an impact on international travel, immigration and border security. France immediately tightened its borders, and other European countries quickly followed suit. Meanwhile, Poland’s newly-elected government rejected the European Union’s quotas for accepting refugees from Syria, an attitude that’s echoed by more than 30 U.S. states. The House of Representatives just passed legislation to suspend the admittance of 10,000 Syrian refugees, though it’s likely to be vetoed.

This is the climate we find ourselves in right now. It has a huge effect, at least in the near-term, on perceptions of international travel.

“Most people are risk-averse,” Xian says. “When my wife and I left for the airport by taxi the morning after the Paris attacks, we agreed not to travel to Europe again any time soon.”

Others share Xian’s attitude. Paris has for years been the world’s top tourist destination, but the City of Lights has already seen a huge drop-off in tourists as people have delayed or cancelled travel plans. Hotel stocks were up 10 percent in October but will likely face headwinds as a result of Paris and Mali.

Gold, Diamond and Oil Declines Good for Manufacturers

Xian stresses the importance of having gold exposure as diversification. A good diversifier is any investment that’s expected to have a low correlation with the rest of your portfolio, and gold historically has little to no correlation with equities.

The yellow metal has traditionally been seen as a safe haven in times of war, but so far we’ve seen little movement. Year-to-date, gold is down nearly 9 percent, and it could possibly end 2015 in negative territory for the third straight year.

Even so, the yellow metal has performed better than other select world currencies for the year, including the Russian ruble (-10 percent), Australian dollar (-11 percent), euro (-12 percent) and Canadian dollar (-13 percent).

Gold and Diamonds Follow the Same Downtrend
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Diamonds have likewise struggled over the past four years, but with the recent news that Canadian miner Lucara discovered the largest diamond in 100 years, investors might show renewed interest. The massive 1,111-carat diamond was unearthed in Lucara’s Botswana project. Although the stone has yet to be assessed, it’s worth noting for comparison that a 100-carat diamond sold at Sotheby’s in April for $22 million.   

Gold and Diamonds Follow the Same Downward Trend
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These declines over the past three and four years have been good for jewelry companies such as Tiffany, which I wrote about last December. Gold and diamond supply is now less expensive, so the company has margin expansion.

The same can be said of oil. Low prices have hurt South Texas, the Middle East, Russia and Colombia, not to mention drillers and explorers, but they’ve been a windfall for the end consumer, including manufacturers and airlines. Falling energy prices are finding their way into the global engine of growth.

$500 Billion Peace Dividend for Global Consumers and Businesses
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Many analysts expect to see crude oil prices tick up on mounting tension in the Middle East. During past military engagements, oil has typically performed well since a lot is required to fight a war. We haven’t seen prices move just yet—oil still sits at $40 per barrel—but it’s something we’ll monitor closely. As I said earlier this month, the global purchasing managers’ index (PMI) turned up in October after bottoming in September, and in the past this has been followed by a jump in oil prices.

Oil Trends Typically Drive by Global Economic Activity
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Inflation Rousing from Sleep

We learned this week that the consumer price index (CPI) rose 0.2 percent in October, suggesting that inflation is finally picking up steam in the U.S. and giving the Federal Reserve further excuses to raise rates next month.

Based on the 2-year Treasury yield (0.89 percent) and the headline CPI (0.20 percent), real rates now stand at 0.69 percent. (Real interest rates are what you get when you subtract the CPI from the Federal funds rate.) I’ve often explained that gold responds positively when real rates turn negative, as you can clearly see in the chart below, so we’re eagerly awaiting stronger inflation.

Real Interest Rates and Gold Share an Inverse Relationship
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In a note this week, Drew Matus, an economist at UBS, wrote that inflation in the U.S. is poised to jump in the next couple of months. The CPI measures the price of a basket of goods to the price of the same goods a year ago, so inflation fell dramatically between November 2014 and January 2015 as energy prices plunged.

But “absent a similar move this year, those sharp price declines will drop out of the year-over-year data, resulting in a rapid, technical acceleration in overall inflation measure,” Matus says.

If such inflation occurs—possibly as soon as January or February, Matus points out—real rates could have a better chance of dipping into negative territory, which would be constructive for gold prices.

Thanksgiving is this week, and in light of recent events, I think we all have ample reason to express gratitude to friends and loved ones. Everyone have a blessed week!  

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more of U.S. Global Investors Funds as of 9/30/2015: Lockheed Martin Corp., The Boeing Co., Northrop Grumman Corp., Lucara Diamond Corp.

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 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.

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5 World Currencies That Are Closely Tied to Commodities
November 18, 2015

5 World Currencies That Are Closely Tied to Commodities

For more than a year now, commodity prices have been under pressure from the strong U.S. dollar and slowing global demand. This has made a huge dent in the balance sheet of many net exporters of resources, in turn weakening their currencies.

This should come as a shock to no one, but what most people don’t realize is just how closely some currencies track certain commodities. When I presented at the International Mining and Resources Conference in Melbourne, Australia, earlier this month, I shared several charts that show this correlation. Many attendees were astounded—and we’re talking professional economists, money managers and CEOs here.

With that said, I think it’s important that you see this correlation as well. Below are five world currencies that have been impacted by lower commodity prices.

1. Australian Dollar

Australia now accounts for around a third of global iron ore production, according to the country’s budgetary office. This means that its income is very sensitive to price changes. As demand from China, the world’s largest consumer of iron ore, has softened, so too has the Australian dollar.

Australian Dollar Tracks Iron Ore Prices
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2. Canadian Dollar

The sixth-largest oil producer in the world is Canada, about a quarter of whose exports is oil. The Conference Board of Canada, a not-for-profit economic research group, estimates that sales for the country’s energy sector will recede a sizable 22 percent this year. In Alberta, where revenue from oil sand exports had until recently helped the province become the fastest-growing in Canada, GDP is expected to contract 1 percent. And in September, the country’s economy shrank for the second straight quarter. As for the Canadian dollar, it’s fallen around 15 percent against the dollar for the one-year period.

Canadian Dollar Tracks Oil Prices
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3. Russian Ruble

Compared to Canada and Australia, Russia’s export mix isn’t nearly as diversified: About half of its exports in terms of value are a combination of oil and natural gas. (Russia sits atop the third-largest oil reserves in the world, the number one natural gas reserves.) It should come as no surprise, then, that its currency is highly influenced by Brent oil. Where oil went starting in July 2014, so went the ruble.

Russian Ruble Tracks Oil Prices
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4. Colombian Peso

The same story can be found in Colombia, where oil exports are responsible for about 20 percent of government revenue. Officials estimate, however, that oil sales will total $1.1 billion in 2016, compared to $6.7 billion in 2014. With prices lingering just above $41 per barrel, the Colombian peso has retreated 30 percent against the U.S. dollar for the one-year period.

Colombian Peso tracks Oil Prices
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5. Peruvian Sol

Besides gold, copper is Peru’s most important mineral export by value. With around 13 percent of the world’s copper reserves, it’s the third-largest producer after Chile and China. As such, the Peruvian sol has declined in tandem with the red metal.

The Peruvian Sol Tracks Copper Prices
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For weekly insight and analysis on commodities, currencies and world markets, subscribe to our award-winning Investor Alert. It’s free!

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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The Bullish Case for Aussie Gold
November 16, 2015

A Qantas A380 in flight

On Thursday of last week, I arrived back in the States after spending two weeks globetrotting and attending international investing conferences, first in New Orleans, then in Lima, Peru.

Most recently I was in Melbourne, Australia, for the International Mining and Resources Conference, one of the largest and most distinguished in the world, attended by not only top economists, geologists and CEOs of mining companies but also mining ministers from all corners of the globe.  

I was encouraged to see that sentiment for gold was very positive. There’s a gold bear market here in North America, where the yellow metal has plunged to a six-year low of $1,083 per ounce on the strong U.S. dollar. But when priced in the weaker Aussie dollar, the precious metal is sitting at $1,520. As recently as last month, it touched $1,642.

This, combined with lower fuel costs, has been a huge boon to many gold companies in the world’s second-largest gold-producing nation after China. The country has excellent sponsorship by both the Australian and state government of Victoria, where Melbourne was built like San Francisco in a Gold Rush.

Strong Gross Margins and Cash Flow Returns

For the one-year period, the Australian dollar has fallen about 20 percent against the U.S. greenback, so gold looks very attractive—especially compared to iron ore and copper—and has lots of upside potential.

Iron Ore vs Gold vs Copper in Australian Dollar
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As a result, if you look at the top Aussie gold producers by gross margin, they all beat the median for world gold producers, currently at 15.9 percent. We own the names with a star next to them. Also note the total returns for the one-year period, shown in Aussie dollars.

Top Australian Gold Producers by Gross Margin
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A similar story emerges when you look at the top Aussie gold producers by cash flow return on invested capital (CFROIC).

Top 10 Australian Gold Producers by Cash Flow Return on Invested Capital (CFROIC)
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We like to focus on stocks that offer high reserves per share, growth in sales, low debt to equity and high returns on invested capital. Australia has many outstanding companies whose financial fortunes have improved with a decline in the Aussie dollar. There’s little hope for iron ore to outperform due to China’s slowdown in mega-infrastructure projects, which means fewer imports.

St. Barbara, one of our holdings, is up 1,120 percent for the 12-month period. The company operates in Western Australia and has a project in the New Zealand province of Papua New Guinea.

St. Barbara Is up 1,1120% for the 12-Month Period
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But gold companies aren’t the only ones reaping the benefits of a weak Aussie dollar and low fuel prices. Qantas Airways, Australia’s flagship airline, was up nearly 150 percent for the 12-month period.

Qantas vs Crude Oil vs Australian Stock Market
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Sights and Sounds of the International Mining and Resources Conference

During the conference, I had the pleasure to meet Bernard Salt, a columnist for The Australian and a popular social commentator who has written widely on changes in demographics and social behaviors. His presentation focused on how shifting demographic trends are shaping the demand for commodities.

Top 10 Australian Gold Producers by Gross Margin

In a fascinating article published last month in The Australian, Bernard shows that there’s a “tectonic shift in corporate power” happening right now, from New York City to Beijing. The number of head offices of Fortune 500 companies in New York has dropped from 36 to 25 between 2005 and 2015, while the number has risen in Beijing during the same time period, from just 12 to 51.

What’s going on? It’s not that the U.S. economy is struggling, Bernard argues. It’s that China grew more rapidly over these 10 years—especially its middle class, a topic I’ve written and spoken about numerous times.

In any case, it appears as if Greater Beijing is now the world’s most powerful corporate city.

Capital Flows from New York City to Beijing
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S2 Resources CEO Mark Bennett

I also had the chance to hear Mark Bennett, managing director and CEO of S2 Resources, on the ingredients of a successful mining entrepreneur. The two-time recipient of the AMEC Prospector of the Year Award, he once served as chief geologist for LionOre Mining, which we used to own.

He’s also just as capable in a New York boardroom as he is in the Australian Outback. In 2009, Mark seeded gold and nickel miner Sirius Resources with $5 million, and soon before it merged with Independence Group this year, it was valued at $1.5 billion. You expect to see this kind of growth with a tech startup, not a mining company! This is just further proof of how exceptional Mark is.

S2 Resources CEO Mark Bennett

Also presenting was Jim Askew, Chairman of the Board of Directors of OceanaGold. Jim is a mining engineer with over 40 years of international experience as a director and CEO. He also serves on the Board of Evolution Mining, one of Australia’s leading mining companies.

Another notable speaker was Dr. Mehdi Karbasian, Iran’s deputy minister for industry, mining and trade, whose presentation on investment opportunities in the country’s mining sector drew a packed house. (Iran is seeking $29 billion of investment, following the lifting of sanctions.) To me, what really stood out was how inexpensive labor and energy in Iran were. According to Karbasian, skilled labor costs about $300 per month, whereas in Australia it’s closer to $300 per day. And as for energy, a kilowatt hour (kWh) will set you back only a penny and a half. (In the U.S., it’s between 5 and 15 cents on average.) Meanwhile, Iran sits atop the second-largest natural gas reserves in the world, following Russia.

My question, then, is this: If energy is already so cheap and abundant, what does Iran possibly want with a nuclear power plant? It makes you wonder.

Central Banks and Retail Consumers Gobble Gold at Near-Record Pace

I want to end by sharing with you some good news. Judging from a new report from the World Gold Council (WGC), global central banks’ appetite for gold remains insatiable. In the third quarter, net purchases rose to 175 tonnes. This is the second-highest level ever recorded, nearly equaling the all-time high of 179.5 tonnes in the same period last year.

Third-Quarter Gold Purchases by Central Banks Was Second-Highest on Record
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Russia and China were the top buyers, but we also saw some central banks return to the list of those that hold gold. The United Arab Emirates (UAE), for instance, reports that it now has 5 tonnes of the yellow metal, after holding none since 2003. The only net-seller for the quarter was Colombia.

Relatively low prices no doubt factored into the buying spree, but more than that, central banks recognize gold’s ability to hedge against inflation and monetary instability. It’s probably not appropriate to have 72 percent of your portfolio in gold, as the Federal Reserve does, but investors should nonetheless take note of what the banks are doing.

In fact, this might be what was on U.S. investors’ minds in the third quarter. Sales of American gold eagle coins shot up a whopping 200 percent year-over-year to 32.7 tonnes, a five-year record. I always recommend having around 10 percent: 5 percent in gold stocks, the other 5 percent in bullion or gold jewelry.

This never changes, whether we’re in a bear market or, in the case of Australia, a bull market.

Finally, just a reminder that on November 23, I’ll be giving the keynote address at the Silver Summit and Resource Expo in San Francisco. I invited you once before to attend the conference as my guest, and the response was very positive. But there’s still room for more! If you’d like a complimentary registration, send me an email.  

Past performance does not guarantee future results.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more of U.S. Global Investors Funds as of 9/30/3015: Doray Minerals Ltd., St. Barbara Ltd., Northern Star Resources Ltd.    

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

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

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

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

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

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

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

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

China's Singles Day Bigger Than Black Friday and Cyber MOnday Combined
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$12 Billion
What many analysts predict Alibaba will generate this Singles Day.

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

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

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

6 Million
The number of items to choose from.

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

The average amount each shopper is expected to spend.

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

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

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

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

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Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more of U.S. Global Investors Funds as of 9/30/2015: Inc., Apple Inc, Wal-Mart Stores Inc.

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Net Asset Value
as of 11/24/2015

Global Resources Fund PSPFX $4.94 0.05 Gold and Precious Metals Fund USERX $4.76 0.05 World Precious Minerals Fund UNWPX $3.90 0.07 China Region Fund USCOX $7.77 0.01 Emerging Europe Fund EUROX $5.60 -0.11 All American Equity Fund GBTFX $27.22 0.06 Holmes Macro Trends Fund MEGAX $20.68 -0.03 Near-Term Tax Free Fund NEARX $2.25 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change