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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.

A Massive Windfall for China's Fast-Growing Tech Giants
July 2, 2018

massive windfall china's fast growing tech giants

Stop buying Iranian oil or face the music.

That’s the message the U.S. government shared with the world last week, giving importers until November 4 to cut their consumption of Iran’s crude to zero—or expect sanctions. The threat comes a month after President Donald Trump withdrew the U.S. from the Obama-era nuclear deal.

West Texas Intermediate (WTI) responded by adding more than $6 to the price of a barrel last week alone, to end above $74.

U.S. toughness on iran pushes crude above $70 a barrel
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Other drivers included supply disruptions in Canada and Libya, as well as a sharp, more-than-expected decline in U.S. crude inventories. Nearly 10 million barrels were drawn in the week ended June 27, the most since September 2016. Crude is now up an eye-popping 70 percent from the same time last year, contributing to the inflationary pressure that’s pushed consumer price growth to a six-year high.

And there could be more upside, should supply crunches continue along with Trump’s ongoing geopolitical efforts to isolate Tehran. Ready to see $90-a-barrel oil? That’s the forecast from Bank of America Merrill Lynch analyst Hootan Yazhari.

“We are in a very attractive oil price environment,” Yazhari told CNBC this week, “and our house view is that oil will hit $90 by the end of the second quarter of next year,” or 12 months from now.

Even if this prediction ends up overshooting the mark, I believe there could still be money to be made in the energy space on tightening supply and strong global demand. For more, I urge you to watch this brief video outlining the six factors that matter when picking energy stocks.

Bull Market May Have Just Hit a Trade War Wall

The U.S. market is mere days from hitting a milestone that some investors might not have anticipated in the business-friendly era of Trump. Both the S&P 500 Index and Dow Jones Industrial Average have been stuck in correction mode since early February of this year, when inflation fears and concerns of a global trade war triggered a monster selloff.

Today marks the 100th day both indices have been in correction, and according to MarketWatch, if they stay sideways another nine trading days, it will become the longest such stretch since 1984.

Stocks managed to recover then, but as I see it, unless Trump softens his stance on trade, they will have a difficult time doing the same today. Stiff retaliatory barriers are scheduled to be raised by China, Canada and other key markets, and Canadian consumers have already started boycotting American-made goods. U.S. exports of steel, soybeans and other products are down from a year ago because of friction over the tariffs, which are essentially regulations that could jeopardize the positive work Trump has done in cutting red tape in other areas.

Below is the Dow’s performance so far this year, not including today, annotated with some key moments in the Trump trade war. I chose the Dow specifically because it includes the very largest U.S. exporters, some of which do tens of billions of dollars in sales in China alone. As the biggest U.S. exporter, Boeing delivered more than 200 aircraft to the Asian country last year, accounting for a quarter of the plane maker’s global sales. Apple generated around 20 percent of its revenue in China, or the equivalent of $44.7 billion.

key moments in trump trade war
click to enlarge

The question now is whether we’re headed for a recession, and how investors can prepare—though I believe the market is oversold, as I explain in the most recent edition of Frank Talk Live. The last nine years have been extraordinarily profitable, but every bull market must come to an end—not from age, remember, but from changes in monetary or fiscal policy.

Last week I offered one of my favorite strategies to face the next bear market with confidence. Discover what it is by clicking here.

Trade war friction has strained international relations in other ways than just trade, of course. Among those is foreign direct investment (FDI), essential for global economic growth.

Chinese FDI in the U.S. Just Fell 92 Percent

China’s tech industry is exploding. Last year, gross output value of Chinese tech firms hit 20 trillion yuan, or about $3 trillion, for the first time ever. Nine of the world’s 20 biggest tech firms now call China home, beginning with Alibaba, valued at half a trillion dollars. And for the past several years, China has filed far more patent applications than the U.S. on an annual basis. (I should point out, though, that the U.S. still has more patents overall, having just issued patent number 10 million.)

The Asian country, in fact, has more unicorns—or startups worth $1 billion or more—than any other nation on earth. Chinese unicorns account for more than half of the global total, and 66 percent in terms of valuation, according to the World Economic Forum (WEF).

Just look at the top 10 Chinese unicorns. Ant Financial, formerly known as Alipay, ranks first with a valuation of $145 billion. That’s about twice the value of the number one U.S. unicorn, Uber.

top 10 china unicorns
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It’s very likely even more capital will flow into these firms this year and next. That’s because Chinese FDI in the U.S. fell an incredible 92 percent in the first half of 2018, as the government cracks down on capital flight. The decline is also likely in response to the U.S. government’s increased scrutiny of Chinese acquisitions.

chinese foreign direct investment (FDI) in the U.S. fell 90 percent in the first half of 2018
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According to economic research firm Rhodium, Chinese investors have sold $9.6 billion worth of U.S. assets, including office buildings in New York, San Francisco, Chicago and Los Angeles. That’s after making only $1.8 billion in investments. What this means is that the country’s net U.S. FDI is negative $7.8 billion so far this year.
And regarding a possible rebound in Chinese investment activity, “looming U.S. policies present substantial headwinds,” writes Rhodium’s director of research, Thilo Hanemann.

So where will all this capital go?

I don’t think anyone can say for sure, but my guess is that this will be a huge windfall for the already fast expanding Chinese tech industry.

Only Half of China Is Online

There are even more reasons to be optimistic about the Chinese tech industry, including the fact that only a little over half of the country’s population is online. At 772 million people, the user base is massive—more than twice the size of the entire U.S. population—but penetration is only 54.6 percent, according to UBS. That’s well behind the U.K. (94.8 percent), Japan (93.3 percent) and the U.S. (87.9 percent).

china's online universe still has room for growth
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This means, of course, that the country’s tech and internet industries still have much room to grow.

China is already number one in mobile payments, having surged to a whopping $9 trillion in 2016, compared to only $112 billion for the U.S. The Asian giant is rapidly becoming cashless—so much so that a friend of mine recently had a hard time using paper money to make a purchase in a Chinese convenience store. In fact, a number of unmanned, fully-automated stores—most notably BingoBox and Alibaba’s Tao Cafe—have sprung up all over the country. Transactions are made simply by scanning your smartphone on a designated counter or plate before leaving the store.

 

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 S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.

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 accounts managed by U.S. Global Investors as of 3/31/2018: The Boeing Co.

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Gold Love Trade Looks Promising in India and China
May 8, 2018

Gold was up half a percent year-to-date through last Friday. This doesn’t sound very exciting, but over the same period, the S&P 500 Index was in the red—the first time in nearly a decade that stocks have been negative for the year through the beginning of May. The yellow metal is doing the one thing for which many investors have it in their portfolio—namely, it’s trading inversely to the market. This highlights its longstanding role as an attractive diversifier and store of value.

Gold bullion has outperformed the market so far in 2018
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Gold has been under pressure from a strengthening U.S. dollar, and May has historically delivered lower prices. As I’ve pointed out before, this makes it an ideal entry point in anticipation of a late summer rally before Diwali and the Indian wedding season, during which gifts of gold jewelry are considered auspicious. Demand in China for the remainder of the year also looks promising.

India Gold Demand Weakened, but a Healthy Monsoon Could Help Reverse That

India’s demand for gold jewelry in the first quarter was down 12 percent from the same period last year, according to the latest report from the World Gold Council (WGC). Consumption fell to 87.7 metric tons, compared to 99.2 tons in the first three months of 2017. Contributing to this weakness was the fact that there were fewer auspicious days in the first quarter than in the same period of the past three years, according to the WGC.

However, this followed a monumental fourth quarter 2017, when gold demand in the world’s second-largest consumer was 189.6 metric tons—an all-time record—so a decline was expected.

Looking ahead, it’s estimated that India will have a “normal” monsoon season this summer. This is good news for gold’s Love Trade. A third of India’s gold demand comes from rural farmers, whose crop revenues depend on the rains from a healthy monsoon. When the subcontinent experiences a drought, as it did in 2014 and 2015, gold consumption suffers.

The India Meteorological Department (IMD) reports that its forecasts suggest “maximum probability for normal monsoon rainfall” and “low probability for deficient rainfall during the season.”  

Chinese Bullion Demand Off to a Good Start in 2018

In China, the world’s largest importer of gold, jewelry demand rose 7 percent in the first quarter to 187.7 metric tons, a three-year high. According to the WGC, Chinese retailers are working on improving the customer experience, providing consumers with “a more holistic retail solution.” The industry is expecting a strong 2018 after a relatively subdued 2017.

Except for a weak February, demand so far this year has been particularly strong, with monthly withdrawals from the Shanghai Gold Exchange (SGE) above the two-year average of 170 metric tons. April represented the third straight month of rising demand. Withdrawals were 28 percent higher than in the same month in 2017, according to veteran precious metals commentator Lawrie Williams.

China gol ddemand rose for the third straight month in April
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Williams writes that fears of a potential trade war with the U.S. could be driving Chinese investors into safe haven assets, including gold bars and coins. Indeed, the WGC reports that bullion demand in the first quarter finished at 78 metric tons, above the three- and five-year averages.

I believe this all bodes well for the Love Trade going forward, meaning it might be an opportune time for investors to consider increasing their exposure to gold and gold mining stocks. As always, I recommend a 10 percent weighting, with 5 percent in bars, coins and jewelry, and 5 percent in high-quality gold stocks, mutual funds and ETFs.

 

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

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South Korea Courts Investors with Unbelievable Payouts
May 7, 2018

South Korea ranks first in dividened growth with a 20 percent CAGR in 2018 2019

Call it the news of the year, perhaps even of the decade. For the first time since the Korean Peninsula was divided in 1948, leaders of the two warring nations met in what had the look and feel of a jovial reconciliation between two estranged family members. Kim Jong-un of North Korea and President Moon Kae-in of South Korea made a number of important, though tentative, breakthroughs, including an agreement to denuclearize the peninsula and a pledge to revisit several infrastructure projects that would help bring some economic unity to the two Koreas.

Which the North desperately needs, as anyone reading this knows.

Below is economic development, as measured in gross national income (GNI) per capita, for the two nations since division. The chart looks not unlike the one I shared comparing Cuba and Singapore since their founding in 1959.

Miracle on the Han River 70 years later
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Thanks to rapid growth spurred early on by business-friendly policies, South Korea is today the fourth largest economy in Asia—following China, Japan and India—and the 11th largest in the world. Most of its citizens enjoy a comfortable, middle-income lifestyle and can afford to own many of the popular consumer goods and vehicles manufactured by Samsung, LG, Hyundai and other Korean household name brands.

North Korea, on the other hand, has not advanced in any material way and today has an economy roughly 30 times smaller than its southern neighbor. Its inhabitants routinely suffer great hardship, from famines to a lack of adequate health care.

For now, many analysts are skeptical that this new development will have a huge impact on the surrounding Asian region—in the near term, at least—since North Korea’s economy is small and lacks the infrastructure necessary for rapid expansion. It’s unlikely we’ll see the sort of boom Vietnam experienced after opening its economy up to foreign direct investment (FDI) in the late 1980s. It’s just as unlikely we’ll see unification anytime soon, as that would require the presiding Kim to end the dynasty that began with his grandfather Il-sung.

Nevertheless, all good things must begin somehow, and this is as good a beginning as I can imagine.

 

South Korea Expected to Lead in Dividend Growth

Investors also seem to be taking in the news with a side of skepticism. The Korea Composite Stock Price Index (KOSPI) advanced a little under 3 percent in the three trading sessions following the summit, but since then it’s pared all of those gains.

South Korea is very attractive right now, with stocks trading at cheap valuation multiples relative to those in neighboring countries. Gross domestic product (GDP) growth remains robust, rising 2.8 percent in the first quarter.

The Korean market has a reputation for having a low payout ratio, despite many of its multinationals being flush with cash, but that looks set to change. Pressured by the government to do more to attract and keep foreign investors, the countries’ top 10 firms paid out a record 7 trillion won, or $6.46 billion, to offshore investors last year. Samsung Group ranked first, its payouts rising a massive 45.6 from the previous year to total 3.91 trillion won.

According to CLSA estimates, based on FactSet data, Korea tops the list for dividend growth this year and next. The investment bank is looking for a 20 percent compound annual growth rate (CAGR), which would be a huge improvement over other markets around the globe.

South Korea ranks first in dividened growth
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Will Korea Become the First Cashless Society?

Recently I asked the question: “How long till bitcoin replaces cold hard cash?” The answer is: Sooner than you might think, though I’m using “bitcoin” here as a proxy for all digital currencies.

Cointelegraph reports that the Bank of Korea (BOK) announced that it’s looking into using blockchain technology and cryptocurrencies for all transactions. Such a move, according to the bank, would improve customer convenience and eliminate the cost of producing physical bills and coins.

The BOK has already set up an organization to research digital currencies and the possible ramifications of transitioning to a completely cashless society—something the Korean government has had its eye on since at least 2016.

Cryptocurencies will be used extensively across South Korea by the end of the year

Adoption is happening much faster than expected. Last month, the country’s leading crypto exchange, Bithumb, and Korea Pay Services, a mobile payment service provider, said they would work together to make crypto transactions available at thousands of stores and outlets.

According to the Korea Times, virtual currency payments will be made available at as many as 6,000 store locations across the country in the first half of 2018. By the end of the year, 2,000 more locations will come online.

Chinese Equities Have Outperformed Since 2001

Morningstar reports that, from March 2001 to March 2018, China stocks had the strongest annualized growth among global markets. Over the 17-year period, the MSCI China Index delivered an amazing 12.2 percent in annualized total returns, compared to the MSCI Emerging Markets Index with 10.7 percent and the MSCI World Index with 6 percent.

China stocks beat all other markets
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What I find incredible is that, when the MSCI Emerging Markets Index was created in January 1988, China wasn’t even included. Today, the Asian giant has the heaviest weighting, representing nearly 30 percent of the index.

But the emerging markets index is changing yet again. Until now, the MSCI included only Chinese stocks that are traded on foreign exchanges—Hong Kong or New York, for instance. Starting June 1, domestic, Shanghai-listed Chinese stocks, known as A-shares, will be added for the first time ever. This will give foreign investors greater, and unprecedented, exposure to the world’s second-largest equities market.

The timing couldn’t have been better, as a huge number of Chinese unicorns—private firms with valuations exceeding $1 billion—are expected to raise capital this year through initial public offerings (IPOs), in Shanghai and elsewhere.

According to the Wall Street Journal, around a dozen Chinese companies, with a collective valuation of $500 billion, have been working with banks and investors to roll out an estimated $50 billion in new shares. Of those, the largest by far is smartphone-maker Xiaomi, which is expected to raise at least $10 billion in Hong Kong, the most ever for the exchange.

Manufacturing in China expanded again in April, posting either a 51.4 or 51.1, depending on which source you trust more—the Chinese government or financial media outlet Caixin.    

Chinese manufacturing continued its expansion in April
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The Month of May Has Been a Great Time to Buy Gold

On a final note, May is here, and that means we could see yet another excellent gold buying opportunity. In the chart below, you can see the yellow metal’s average monthly returns for the 30-year period and 10-year period. Although there are noticeable differences, in both cases, May was a great entry point ahead of the late summer rally in anticipation of Diwali and the Indian wedding season, when gifts of gold jewelry are considered auspicious.

Average monthly gold returns
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During this May in particular, the price of gold has been feeling the pressure of a stronger U.S. dollar, currently at a 2018 high, and rising Treasury yields.

But as I said in a recent Frank Talk, there are a number of reasons why you might want to consider adding gold stocks to your portfolio, including faster inflation and shrinking supply.

 

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

The KOSPI Index is comprised of 200 of the largest and most liquid issues traded on the Korean Stock Exchange. The index market capitalization is weighted, meaning that firms with the largest market value have the greatest influence on the KOSPI's returns. The MSCI China Index captures large and mid-cap representation across China H shares, B shares, Red chips, P chips and foreign listings (e.g. ADRs). With 153 constituents, the index covers about 85% of this China equity universe. The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries. With 1,649 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. The MSCI Emerging Markets Index captures large and mid-cap representation across 24Emerging Markets (EM) countries. With 846 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

The compound annual growth rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer than one year.

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.

The Caixin China Manufacturing PMI (Purchasing Managers' Index) is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private manufacturing sector companies.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. None of the securities mentioned in the article were held by any accounts managed by U.S. Global Investors as of 3/31/2018.

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Frank Talk Turns Eleven Years Old!
April 24, 2018

Eleven years ago, U.S. Global Investors launched the Frank Talk blog as a way to share my experiences traveling the world and the investment insights I pick up along the way. After thousands of blog posts, we continue to cover the latest market news and educate investors. We’re one of the few sources online today that strives to take a balanced approach on gold investing, emerging markets and a handful of other topics.

One of our values at U.S. Global is having a “curiosity to learn and improve” and I feel starting a blog was a great tool to help our shareholders understand the nuances of global investing. In fact, my CEO blog was one of the first produced by a mutual fund company. Since the first Frank Talk blog post was published in 2007, it’s now widely read around the world and regularly appears on a number of financial news outlets. Over the years the Frank Talk blog and our other educational content have won many STAR Awards from the Mutual Fund Education Alliance (MFEA).

In the eleventh year of Frank Talk, we decided to challenge ourselves and develop a supplemental video series for our readers. This video series, appropriately named Frank Talk Live, allows me to dig even deeper into the material I write about and connect with viewers on a personal level. In this digital age, we believe it’s important to educate our viewers using a variety of mediums, such as video.

In case you haven’t seen a Frank Talk Live yet, I’d like to share with you the most viewed ones so far:

  • Understated Inflation Could Be Good for Gold – At the beginning of the year I like to give my price forecast for gold, in addition to updating it throughout the rest of the year. In this video I talk about gold and its relationship with inflation.
  • Electric Car Demand Set to Drive Copper Sky High – My good friend Robert Friedland, founder and CEO of Ivanhoe Mines, visited the U.S. Global offices and I shared with viewers his insights on the copper market and how electric car demand might send copper prices soaring.
  • Chinese New Year and Gold’s Love Trade – I like to talk about Chinese New Year every year, since it’s a big contributor to gold’s seasonal trading patterns, which I call the Love Trade.

I invite you to subscribe to our YouTube page to receive notifications when a new Frank Talk Live is released.

Thank you to my loyal Frank Talk subscribers, and welcome to those of you who are new. If there is ever a topic you’re curious to learn more about, please drop a note to editor@usfunds.com.

Happy Investing!

 

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 links above, you may be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for 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 3/31/2018: Ivanhoe Mines Ltd.

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These Two Funds Offer an Attractive Risk/Reward Profile
April 20, 2018

These Two Funds Offer an Attractive Risk/Reward Profile

Two of our mutual funds, the China Region Fund (USCOX) and Global Resources Fund (PSPFX), offered investors very attractive risk/reward profiles compared to their respective peer groups for the 12-month period ended March 31. I believe this is the result of our unique, actively-managed quant models and nimbleness to act based on market volatility, money flows and other factors.

Look at the scatterplot graph below. The y-axis measures the 12-month return, while the x-axis measures monthly standard deviation, or, more generally, risk. Ideally, for any given time period, you want your investment to appear in the upper-left quadrant, as this indicates you’ve received higher returns for a relatively low amount of risk.

For the 12-month period ended March 31, the China Region Fund (USCOX) delivered a noteworthy return of 37.06 percent, compared to its benchmark, the Hang Seng Composite Index, which rose 24.40 percent. Its return was also higher than the average for the China peer group. At the same time, USCOX had relatively lower risk than many of its peers, with a monthly standard deviation of between 3 and 4 percent.

Risk return analysis for the China region fund USCOX
click to enlarge

In USCOX we maintain overweight positions in consumer discretionary and technology. As we see it, these sectors are where the growth is, driven by innovative tech firms, from Sunny Optical to Tencent; automakers such as Geely Automotive; and casino names like Galaxy Entertainment and Wynn Macau.

Explore the China Region Fund (USCOX) by clicking here!

A Look at the Global Resources Fund (PSPFX)

Our Global Resources Fund (PSPFX) similarly had an attractive risk/reward profile for the one-year period ended in March. The fund returned 11 percent, well above many of its peers in energy and materials, and it was less risky than the group’s average.

Risk return analysis for the Global Resources fund PSPFX
click to enlarge

For PSPFX, our rigorous quant research process begins with 1,600 possible names in the energy and materials space. We immediately whittle this number down to around 700 or 800 after screening for net debt-to-enterprise value—we don’t want overly-leveraged companies—as well as liquidity and free cash flow growth.

Next, we look at enterprise value-to-EBITDA—or earnings before interest, taxes, depreciation, and amortization—meaning we seek companies that offer greater value in their sector relative to their peers. In other words, we compare oil producers to oil producers, not oil producers to, say, logging and timber companies.

Finally, we screen for return on invested capital (ROIC), one of the most widely-used factors, and free cash flow yield. We like to invest in companies that we anticipate will reward us.

This gives us the 50 or so names that eventually make it into PSPFX. It’s a process that we’re committed to and that we believe delivers highly competitive results.

Commodities on Sale

Another reason investors might want to consider commodities is that they’ve rarely been this cheap relative to stocks. The equities-to-commodities ratio, as measured by the S&P 500 Index and the S&P GSCI Index, is at its lowest level in nearly 50 years. This means that materials could be ripe for mean reversion, representing one of the most attractive entry points in recent memory.

Commodities at most undervalued level in decades
click to enlarge

Commodities are also responding to geopolitical jitters. With oil, aluminum and other materials making multiyear highs because of Russian sanctions and military action in Syria, Goldman Sachs recently issued a bullish statement, writing that “the strategic case for owning commodities has rarely been stronger.”

Of course, this is only one investment bank’s opinion, and there’s no guarantee that past events will end up being repeated. It’s possible a full recovery is still months or even years away. Proceed with caution, but I think it’s worth your time to at least consider adding to your commodities exposure.

Interested in gaining exposure to commodities and raw materials? Visit the Global Resources Fund (PSPFX) page!

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. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

Past performance does not guarantee future results.

Total Annualized Returns as of 3/31/2018:

Fund One-Year Five-Year Ten-Year Gross Expense
China Region Fund 37.06% 8.99% 1.80% 2.76%
Hang Seng Composite Index 24.40% 6.00% 2.48% n/a
Global Resources Fund 11.00% -8.30% -5.91% 1.85%

The Adviser of the China Region Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses of 0.02%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments) to not exceed 2.55%. With the voluntary expense waiver amount of 0.38%, total annual expenses after reimbursement were 2.36%. U.S. Global Investors, Inc. can modify or terminate the voluntary limit at any time, which may lower a fund’s yield or return. Expense ratio as stated in the most recent prospectus. Performance data quoted above is historical. Past performance is no guarantee of future results. Results reflect the reinvestment of dividends and other earnings. For a portion of periods, the fund had expense limitations, without which returns would have been lower. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance does not include the effect of any direct fees described in the fund’s prospectus which, if applicable, would lower your total returns. Performance quoted for periods of one year or less is cumulative and not annualized. Obtain performance data current to the most recent month-end at www.usfunds.com or 1-800-US-FUNDS.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. Because the Global Resources Fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

The S&P 500 is a stock market index that tracks the stocks of 500 large-cap U.S. companies. It represents the stock market's performance by reporting the risks and returns of the biggest companies. The S&P GSCI (formerly the Goldman Sachs Commodity Index) serves as a benchmark for investment in the commodity markets and as a measure of commodity performance over time. The Hang Seng Composite Index is a stock market index of the Stock Exchange of Hong Kong that has components of 200 companies.

Debt-to-enterprise value measures how much debt a company carries relative to its total value. Free cash flow (FCF) is a measure of a company's financial performance, calculated as operating cash flow minus capital expenditures. FCF represents the cash that a company is able to generate after spending the money required to maintain or expand its asset base. Enterprise value-to-EBITDA, or EV/EDITDA, equals a company's enterprise value divided by earnings before interest, tax, depreciation, and amortization. Return on invested capital(ROIC) is a profitability ratio that measures the return an investment generates for those who have provided capital. ROIC tells us how good a company is at turning capital into profits. Free cash flow yield is an overall return evaluation ratio of a stock, which standardizes the free cash flow per share a company is expected to earn against its market price per share. The ratio is calculated by taking the free cash flow per share divided by the share price.

You cannot invest directly in an index.

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

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the China Region Fund and Global Resources Fund as a percentage of net assets as of 3/31/2018: Sunny Optical Technology Group Co. Ltd. 10.62% in China Region Fund, 0.00% in Global Resources Fund; Tencent Holdings Ltd. 10.41% in China Region Fund, 0.00% in Global Resources Fund; Geely Automotive Holdings Ltd. 9.84% in China Region Fund, 0.00% in Global Resources Fund; Galaxy Entertainment Group Ltd. 2.67% in China Region Fund, 0.00% in Global Resources Fund; Wynn Macau Ltd. 2.05% in China Region Fund, 0.00% in Global Resources Fund.

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

 

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Net Asset Value
as of 05/20/2019

Global Resources Fund PSPFX $4.32 -0.01 Gold and Precious Metals Fund USERX $6.59 -0.02 World Precious Minerals Fund UNWPX $2.51 No Change China Region Fund USCOX $7.95 -0.12 Emerging Europe Fund EUROX $6.45 No Change All American Equity Fund GBTFX $24.23 -0.12 Holmes Macro Trends Fund MEGAX $16.51 -0.11 Near-Term Tax Free Fund NEARX $2.21 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change