Share this page with your friends:

Print

Readers’ Golden Nuggets Focused on Gold, Resources and Overcoming Negativity

December 28, 2012

By Frank Holmes
CEO and Chief Investment Officer

U.S. Global Investors

The past few days I’ve been counting down the most popular commentaries over the past year. China, commodities and bond fund popularity were big hits; so were the Surprises in Gasoline, Oil and Resources Stock Prices. Here are the top four.

4. Sell in May and Go Away? Not this Year
Sometimes it’s the headline that attracts readers, and this is definitely one that gained a great deal of attention. More than 7,000 Seeking Alpha readers checked out the commentary and many left some pretty energized comments—some agreeing with me, and others with a differing view.

I took on the old adage and argued that there were plenty of reasons for investors not to let their equity positions take a long summer vacation. So how did the S&P 500 Index perform? As shown in the chart below, stocks fell significantly in May, but then went on to have a fantastic summer, with June, July, August and September all remaining in positive territory.

Gold Near a Buy Signal?

One of the reasons I gave for sticking with stocks is the fact that it was the year of an election, which has historically produced positive returns. Since 1972, the stock market has rallied five of the eight election years, according to J.P. Morgan, with market gains of 12 to 26 percent. Only during recession years did the S&P 500 decline.


Not only did the summer of ’12 buck the trend, but take a look at the latest presidential election cycle. The performance of the S&P over the last four years under Obama has been one of the best over the past 50 years of any president, defying the odds of what many people thought about the market.

Gold Near a Buy Signal?

3. Love Trade Cools As Central Banks’ Gold Demand Heats Up
The third-most popular commentary generated a lot of attention because of the relatively new trend that I’ve highlighted a few times in 2012: Emerging markets’ central banks are diversifying away from the U.S. dollar and buying gold.

This trend could be potentially significant in the coming years. Last October, I highlighted Franco-Nevada’s Pierre Lassonde chart showing the potential increase in gold holdings. Based on the European Central Bank’s recommendation to hold 15 percent of reserves in gold, developing countries would have to accumulate 17,000 tons of gold. At a purchase of 1,000 tons a year (or about 40 percent of today’s production), these central banks would have to buy gold for the next 17 years!

XAU GOLD SILVER

Back in May, I spoke at the Hard Assets Investment Conference in New York. Business Insider posted my slides calling them the “ULTIMATE Bullish Presentation on Gold” and since then the presentation has received 233,141 views on their site, making it our most popular presentation of the year. In case you missed it, you can view all 88 slides.

2. Where’s the Beef for Gold Equities?
Our second-biggest story was also gold related, but this year, gold miners were top of mind for investors as gold stocks have remained undervalued compared to bullion. When I discussed the disconnect back in April I pointed out the spread between the NYSE Arca Gold Miners Index and gold bullion was at the same extreme level it was during the 2008 credit crisis despite an improving global economic outlook.

Last week Bloomberg’s “Chart of the Day” displayed the same ratio of gold miners vs. gold, going back to September 1993 when the industry gauge was created. As you can see in the chart below, yesterday’s ratio of 0.75 hasn’t moved much from the year’s low of 0.70 on May 15. We see this as a buying opportunity for quality companies as shares of gold miners are a relative bargain to the metal.

philadelphia stock exchange

One of our most popular publications of the year was the Special Gold Report: What’s Driving Gold Companies? I looked at the multiple forces squeezing the profits and earnings out of gold miners and highlighted the importance of selectively choosing companies that exhibit the best relative growth and momentum characteristics.

1. How to Look Past Negativity to See Opportunity
“Things are not always what they seem; the first appearance deceives many; the intelligence of a few perceives what has been carefully hidden.” These wise words from Plato reflect the theme of our readers’ favorite posting of 2012. Things are not always as they appear, especially in the media. At a natural resources conference I attended last summer, GMO’s Jerry Grantham made a compelling case for investment in resources but the CNN article on his speech was titled “Our planet will truly be toast.” When I was interviewed on CNBC a host who had hyped the initial public offerings of Facebook and Groupon to viewers scoffed at investing in gold. Since their IPOs, those two high tech companies had collectively lost more in value than all the money invested in gold funds. 

Many investors have been unable to recapture their lost confidence. Americans have missed out on almost $200 billion of stock gains as they pulled money from the markets in the past four years since the financial crisis, according to a story last week by Bloomberg. I believe this post proved popular because we could all use some good news and positive solutions. I reminded investors to look past the negativity to see the patterns and anomalies that will determine where opportunities and threats lie.

Though our political leaders are not instilling much confidence in their dealings with the fiscal cliff and recent tragic events have broken our hearts and weigh on our minds as we wrap up the year, I believe that 2013 will bring renewed hope, optimism and opportunity.

I wish you and your loved ones joy, peace and prosperity in the New Year.

Happy Holidays

Index Summary

  • The major market indices all finished lower this week.  The Dow Jones Industrial Average fell 1.92 percent. The S&P 500 Stock Index decreased 1.94 percent, while the Nasdaq Composite lost 2.01 percent. The Russell 2000 small capitalization index closed the week with a 1.87 percent loss.
  • The Hang Seng Composite gained 0.95 percent; Taiwan rose 2.39 percent, while the KOSPI increased by 0.84 percent.
  • The 10-year Treasury bond yield fell 6 basis points this week, to 1.70 percent.

Outlook 2013 Sign Up for Our Webcast Today!

Domestic Equity Market

Even with all of the holiday cheer, the fiscal cliff Grinch had the upper hand this week as the S&P 500 Index declined 1.94 percent amid the failure to come to a resolution on the fiscal cliff.

Domestic Equity Market - U.S. Global Investors

Strengths

  • Every sector in the S&P 500 fell this week and positive industry groups were few and far between. There were a few auto-related stocks in particular that stood out this week. The best performing stock in the S&P 500 this week was Ford, which rose 8.5 percent on a broker recommendation, declining gasoline prices and continuing positive industry dynamics.   
  • Goodyear Tire rose 1.6 percent this week in what appears to be related positive sentiment in the auto space.
  • In the auto parts space BorgWarner and Delphi Automotive were also higher for the week, completing the auto-related hat trick in the S&P 500.

Weaknesses

  • Energy was the worst performing sector this week, even as oil rose and natural gas was flat.
  • Utilities were also a relatively poor performer this week on dividend tax fears related to the fiscal cliff.
  • Advanced Micro Devices was the worst performer in the S&P 500 this week losing 12 percent. Semiconductor sales growth estimates for 2012 and 2013 were cut significantly at market research firm IDC, citing a weak global economy and weak PC sales.

Opportunity

  • If no deal is reached in time to overcome the fiscal cliff, the Federal Reserve may be forced to introduce more easing measures to at least partly offset the negative impact on the economy from fiscal stringency.

Threat

  • Regardless of the eventual outcome from the fiscal cliff negotiations, dysfunctional political process brings little hope for the U.S. to regain its AAA credit rating and more downgrades may not appeal to domestic equity investors if 2011 was a guide.

Worried About Higher Taxes?

The Economy and Bond Market

Treasury bond yields fell modestly this week as the country prepares to go over the fiscal cliff, barring a last minute reprieve. It was a holiday-shortened week and everyone’s attention was focused on a resolution to the fiscal cliff that never materialized. Housing data continues to indicate consistent improvement. The S&P/Case-Shiller Composite 20 Index rose 4.3 percent year-over-year in October, which is the best growth since 2010, as can be seen in the chart below.

Massive Expansion of Federal Reserve Balance Sheet

Strengths

  • The S&P/Case-Shiller Composite 20 Index rose 4.3 percent year-over-year in October, which is the best growth since 2010. New home sales rose 4.4 percent in November and are up 15.3 percent from a year ago.
  • Initial jobless claims fell to 350,000; the four-week average fell to the lowest level since March 2008.
  • The Shanghai Composite has risen by more than 12 percent in December which indicates local investors believe recently announced reforms and central bank policy will be successful in propelling the economy forward.

Weaknesses

  • Holiday retail sales were disappointing, with the worst showing since 2008.  
  • The Conference Board’s Consumer Confidence Index unexpectedly fell sharply; the fiscal cliff was cited as the driver.
  • Semiconductor sales growth estimates for 2012 and 2013 were cut significantly at market research firm IDC, citing a weak global economy and weak PC sales.

Opportunity

  • The Fed remains committed to an extremely accommodative policy until the economy improves.
  • Homebuilding is expected to add to gross domestic product growth this year for the first time since 2005. Though home construction accounts for only about 2.5 percent of GDP, but economists estimate that for every new house built, at least three new jobs are created.

Threat

  • The fiscal cliff is front and center on investors’ radars and if a compromise cannot be reached, that would be a negative for the market and economy.
  • Europe appears to be on the verge of another crisis but policy makers continue to bicker, just adding to the uncertainty.

Worried About Higher Taxes?

World Precious Minerals Fund - UNWPX • Gold and Precious Metals Fund - USERX

Gold Market

For the week, spot gold closed at $1,655.85, down $1.4 per ounce, or -.08 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, fell .57 percent. The U.S. Trade-Weighted Dollar Index gained 0.16 percent for the week.

Strengths

  • Gold traders are the most bullish in four months. Fifteen of 19 analysts surveyed by Bloomberg expect the price of gold to rise next week and bullion is heading for its twelfth consecutive annual gain. The U.S. Dollar Index, as measured against six currencies, is headed for the first annual drop in three years.
  • According to Metals Channel, Silver Wheaton is the number one broker- analyst pick. On average, out of fifty global-leader mining stocks making up the Metals Channel Global Mining Titans Index, Silver Wheaton is the most popular.
  • Anita Soni, analyst with Credit Suisse First Boston, favors Yamana Gold for an attractive growth profile (60 percent over three years) and strong free-cash flow (FCF) for 2013 (6 percent vs. 2 percent peer average). She believes investors will continue to debate growth vs. FCF for gold equities, and Yamana is well positioned to provide both.

Weaknesses

  • Gold prices are heading towards their smallest annual percentage increase in five years as demand growth in China and India, the world’s top buyers, slows.
  • CICC broker, in their recent publication, explained that weaker gold price could be explained by gold investors closing their long positions. Weak gold price can partially be explained by the year-end effect; the profit taking at year end. The performance of macro hedge funds was not good during the year, and there is high pressure for redemption.
  • CICC remains positive on gold for the first half of 2013, but they revised down their 3-months, 6-months and 12-months gold price forecasts to $1,810/oz, $1,780/oz and $1,770/oz.

Opportunities

  • India’s community of high-net-worth individuals (HNWI) is growing fast, and for them the most favored form of investment is gold. The HNWI population in India rose by around 20.86 percent in 2010, and their wealth is estimated to have grown by more than 11 percent, to $530 billion.
  • Private investors in Switzerland, Austria and Germany are lining up to buy gold bars the size of credit cards that can easily be broken into one-gram pieces and used as payment in an emergency. Swiss refinery Valcambi, a unit of U.S. mining company Newmont, wants to bring in CombiBars to market in the Unites States next year and build up its sales presence in India. In Japan, it wants to focus on CombiBars made of platinum and palladium.
  • Japan’s Prime Minister Shinzo Abe said that his government mission is to restore a strong economy. Minutes of the Bank of Japan’s November meeting show that a board member suggested conducting open-ended asset purchases. Gold prices are heading for a twelfth- straight annual gain as governments and central banks in Japan, Europe and the United States boosted measures to shore up growth.

Threats

  • Rohit Savant, senior commodity analyst at the CPM Group, believes all of the positive gold fundamentals such as global turmoil, are already factored into the gold price. In 2013, he sees gold being flat or down a bit.
  • Savant has more bearish views in the case of silver. Silver prices are going to be negatively effected by increase in supply. Today silver prices are significantly higher than the average cash cost for producing silver. He expects a lot of fresh supply to come on-stream.
  • Gold miner Randgold Resources has cut its guidance for output at its Tangon mine in the Ivory Coast after a fire started in the mill section of the plant during a planned maintenance shutdown. The gold miner now expects full-year production of about 208,000 ounces compared with analysts’ expectations of 230,000 ounces.

Orlando world money show

Energy and Natural Resources Market

Energy and Natural Resources Market

Strengths

  • As we wrap up 2012, the Global Resources Fund is on track to finish the year in positive territory above its benchmark and in the top third of its peer group.
  • Copper prices gained 1.4 percent this week to close around $3.60 per pound on data showing signs of economic recovery in the world's top copper consumer China.
  • Meanwhile, iron ore continued to rally with the latest 62 percent Fe fines CFR China market assessment by The Steel Index rising $4 per ton to $139.40 per ton. This is the highest level since May 9 and represents a 21 percent rise over the price at the start of December. 

Weaknesses

  • China’s benchmark price for thermal coal fell to the lowest level in four months as imports and domestic supplies increased. Spot coal, with an energy value of 5,500 kilocalories per kilogram, dropped to a range of 620 Yuan ($99.44) to 630 Yuan a metric ton as of yesterday at the port of Qinhuangdao. This is down 0.8 percent on average from a week earlier, according to data today from the China Coal Transport 

Opportunities

  • Cheap resources are fueling an industrial recovery in the U.S.  A Wall Street Journal “Heard on the Street” column this week noted that Austrian steelmaker Voestalpine plans to invest $659 million into a new steel facility in the U.S. or Canada that runs on natural gas instead of metallurgical coal. Nucor Steel is also building a steel plant that runs on natural gas, and just recently inked deal with EnCana to buy stakes in gas fields. The article also goes on to say how cheap natural gas in North America is a threat for Gazprom as well as American coal miners.
  • McCloskey’s has reported that China’s State Grid expects the country’s power demand to grow 7 to 9 percent in 2013, slightly higher than the State Electricity Regulatory Commission’s forecast of 6 percent.
  • Raymond James highlighted that after four controversial years, the administrator of the Environmental Protection Agency, Lisa Jackson, announced that she will be leaving her post in January after having run the EPA for all of President Obama's first term. The analysis notes that essentially all of the Obama administration's initiatives on the environmental front have been pursued via EPA regulations. This included (1) the first-ever federal caps on carbon emissions from new power plants, following a 2007 Supreme Court ruling on the Clean Air Act; (2) the first-ever federal caps on mercury and other toxic emissions, the so-called MATS rules; and (3) more aggressive vehicle fuel economy standards through 2025. All of this, not surprisingly, created plenty of political controversy, with Jackson frequently summoned to Capitol Hill for heated hearings. Her replacement has not yet been announced.

Threats

  • U.S. regulators have delayed a ruling on BlackRock Inc.'s plan by two months to launch a copper exchange-traded fund backed by physical metal, a week after giving the go-ahead to a similar product proposed by JPMorgan Chase & Co. The U.S. Securities and Exchange Commission set a new and final deadline of February 22 to rule on the BlackRock fund. It said it needed more time to consider the issues surrounding the iShares Copper Trust, which along with JPMorgan's fund, has ignited fears among copper fabricators about their impact on prices and supplies.
  • Capital costs continue to plague capacity expansions.  Antofagasta announced that it has temporarily suspended development work on its Antucoya greenfield copper project in Chile to provide time for a review of its future potential in light of risks of cost escalation. The Antucoya project was planned to produce around 80,000 tons per annum of copper cathodes through a standard heap leach process over a mine life of about 20 years, starting in late 2014. The latest reported development cost is around $1.7 billion, up from an original estimate of around $1.3 billion published a year ago, of which around one-quarter has already been spent.
Frank Talk Insight for Investors
[thumb]
December 27, 2012
The Year's Surprises in Gasoline, Oil and Resources Stock Prices
[thumb]
December 26, 2012
Reader Favorites: A Countdown
[thumb]
December 24, 2012
Light at the End of the Tunnel for Gold
A Blog by Frank Holmes, C.E.O. and Chief Investment Officer

China Region Fund - USCOX  •  Eastern European Fund - EUROX
Global Emerging Markets Fund - GEMFX

Emerging Markets
 

Strengths

  • The Shanghai Composite Index (A shares) crossed above the 200 days moving average, which likely indicates domestic investors are finally confident in China-growth recovery.
  • China’s industrial state-owned enterprises (SOE’s) November profits grew 22 percent on a year-over-year basis, accelerating from 20 percent in October, which was also reflected by rising stock prices of H share industrial names.
  • China plans to increase the budget deficit by 50 percent to Rmb 1.2 trillion in 2013, according to the China Securities Journal. This is consistent with “active fiscal policies” proposed at the China Central Work Conference held in mid-December in Beijing.
  • China’s State Council and National Development and Reform Commission (NDRC) announced to cancel the coal contract and price regulation on contract coal price, which is positive to miners who can sell at a price decided by the market.
  • Thailand and Myanmar announced that the construction of the Dawei Special Economic Zone (DSZ) will start in the first quarter of 2013. DSZ is an $80 billion project, the key components of which are a sea port, a road link to Thailand, industrial estate, petrochemical, electricity generation and a new township. This project will drive up income for companies specializing in construction engineering and materials. Also in Thailand, the government surprisingly cut the personal income tax by 2 -5 percent starting in 2013 after it had lowered corporate tax to 20 percent.
  • Singapore’s November inflation moderated to 3.6 percent versus market estimate 3.8 percent, down from 4 percent in October.

Weaknesses

  • Citic Trust, a unit of China’s biggest state-owned investment company, missed annual payment to investors in one of its products after a steel company, Yichang Three Gorges, missed interest payments on the underlying loan due to a sustained fall in steel prices. This event tells the risk in trust products in China.
  • Thailand’s government cabinet approved increase in dioxide emission-based excise tariff for vehicles to begin in 2016.
  • In China, online distribution channels have seen sales increases, which will suppress the profit margin of traditional brick-and-mortar stores.
  • The S&P cut the long-term sovereign rating to B- from B due to political tension, and warned of another downgrade if continued turmoil threatens Egypt’s economy and public finances. Cairo reached a deal with the IMF in November for $4.8 billion in aid, but protests have delayed austerity measures to secure the loan.

Opportunities

China Recovering Land Market

  • The chart above shows November economic activity data, IP and PMI confirmed a continued recovery in China’s economic growth. Other important data, such as power-production growth, housing sales and fixed asset investments (FAI), also confirmed what Bank of America Merrill Lynch said, that China is a sweet spot for the first half of 2013.
  • NDRC approved 73 projects during the first 20 days in December. Investment boom may be coming up again in 2013.
  • Increased focus on yield among equity investors is likely to drive outperformance of the small to mid-cap universe of emerging market stocks, as large caps are either heavily influenced by government or have reached price levels where dividend yields are low.

Threats

  • The rumor is that government officials in China are selling off apartments. Since the new leadership took power a month ago, China has accelerated paces of anti-corruption policies, one of which can be the disclosure of government officials’ personal properties. The selling-off could put pressure on the housing price in the short term. 
  • The Indonesian government has issued a decree to increase the electricity tariff by 15 percent during 2013. The increase will add pressure to the nation’s rising inflation when businesses are still coping with wage inflation.
  • The Central Bank of Turkey, with the objective of reducing macro risks arising from the banking sector, introduced additional reserve requirements tied to individual bank leverage ratios.

Russia One of Cheapest Emerging Markets

Where Oil Squeezes Through Straits and Canals: See the interactives

Leaders and Laggards

The tables show the performance of major equity and commodity market benchmarks of our family of funds.

Weekly Performance
Index Close Weekly
Change($)
Weekly
Change(%)
DJIA 12,938.11 -252.73 -1.92%
S&P 500 1,402.43 -27.72 -1.94%
S&P Energy 522.03 -16.00 -2.97%
S&P Basic Materials 232.93 -1.42 -0.61%
Nasdaq 2,960.31 -60.69 -2.01%
Russell 2000 832.10 -15.82 -1.87%
Hang Seng Composite Index 3,110.05 +29.39 +0.95%
Korean KOSPI Index 1,997.05 +16.63 +0.84%
S&P/TSX Canadian Gold Index 294.60 +2.15 +0.74%
XAU 160.62 +0.32 +0.20%
Gold Futures 1,656.00 -4.10 -0.25%
Oil Futures 90.72 +2.06 +2.32%
Natural Gas Futures 3.46 +0.01 +0.35%
10-Yr Treasury Bond 1.70 -0.06 -3.51%

Monthly Performance
Index Close Monthly
Change($)
Monthly
Change(%)
DJIA 12,938.11 -47.00 -0.36%
S&P 500 1,402.43 -7.50 -0.53%
S&P Energy 522.03 -7.85 -1.48%
S&P Basic Materials 232.93 +3.69 +1.61%
Nasdaq 2,960.31 -31.47 -1.05%
Russell 2000 832.10 +18.60 +2.29%
Hang Seng Composite Index 3,110.05 -332.01 -14.83%
Korean KOSPI Index 1,997.05 +84.27 +4.41%
S&P/TSX Canadian Gold Index 294.60 -17.75 -5.68%
XAU 160.62 -10.77 -6.28%
Gold Futures 1,656.00 -62.80 -3.65%
Oil Futures 90.72 +4.23 +4.89%
Natural Gas Futures 3.46 -0.23 -6.30%
10-Yr Treasury Bond 1.70 +0.07 +4.48%

Quarterly Performance
Index Close Quarterly
Change($)
Quarterly
Change(%)
DJIA 12,938.11 -547.86 -4.06%
S&P 500 1,402.43 -44.72 -3.09%
S&P Energy 522.03 -31.90 -5.76%
S&P Basic Materials 232.93 -1.33 -0.57%
Nasdaq 2,960.31 -176.29 -5.62%
Russell 2000 832.10 -11.44 -1.36%
Hang Seng Composite Index 3,110.05 +325.10 +11.67%
Korean KOSPI Index 1,997.05 +8.35 +0.42%
S&P/TSX Canadian Gold Index 294.60 -54.37 -15.58%
XAU 160.62 -31.56 -16.42%
Gold Futures 1,656.00 -126.60 -7.10%
Oil Futures 90.72 -1.13 -1.23%
Natural Gas Futures 3.46 +0.17 +5.03%
10-Yr Treasury Bond 1.70 +0.05 +2.84%

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.

An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

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

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 Eastern European Fund invests more than 25 percent of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

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

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

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 percent to 10 percent of your portfolio in these sectors. Investing in real estate securities involves risks including the potential loss of principal resulting from changes in property value, interest rates, taxes and changes in regulatory requirements.

Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. Each tax free fund may invest up to 20 percent of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. Bond funds are subject to interest-rate risk; their value declines as interest rates rise. The tax free funds may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer.

Past performance does not guarantee future results.

These market comments were compiled using Bloomberg and Reuters financial news.

Holdings as a percentage of net assets as of 9/30/12:

Ford Motor Co.: 0.0%
The Goodyear Tire & Rubber Co.: 0.0%
BorgWarner Inc.: 0.00%
Delphi Automotive plc: 0.0%
Advanced Micro Devices, Inc.: 0.0%
Silver Wheaton Corp.: Gold and Precious Metals Fund, 3.15%; World Precious Minerals Fund, 2.85%
Yamana Gold, Inc.: Gold and Precious Metals Fund, 3.44%; World Precious Minerals Fund, 3.39%; Global Resources Fund, 2.23%
Newmont Mining Corp.: Gold and Precious Metals Fund, 5.92%; World Precious Minerals Fund, 1.79%
Randgold Resources Ltd.: 0.0%
Voestalpine AG: 0.0%
Nucor Corp.: 0.0%
EnCana Corp.: 0.0%
Gazprom OAO: Eastern European Fund, 7.16%
BlackRock Inc.: 0.0%
JPMorgan Chase & Co.: 0.0%
Antofagasta plc: 0.0%
Franco-Nevada Corp.: Gold and Precious Metals Fund, 2.15%; World Precious Minerals Fund, 1.09%; Global Resources Fund, 0.08%
Facebook Inc.: 0.0%
Groupon, Inc.: 0.0%

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.


The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.
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 S&P BARRA Growth Index is a capitalization-weighted index of all stocks in the S&P 500 that have high price-to-book ratios.
The S&P BARRA Value Index is a capitalization-weighted index of all stocks in the S&P 500 that have low price-to-book ratios.
The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.
The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months.
The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange.
The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.
The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver.
The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar.
The MSCI Russia Index is a free-float weighted equity index developed in 1994 to track major equities traded in the Russian market.
The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks.
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 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 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period.
The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500.
The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500.
The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500.
The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500.
The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500.
The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500.
The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.
The Bloomberg Gold Bear/Bull Sentiment Indicator charts the percent of respondents in a weekly Bloomberg News survey of traders, investors, and analysts predicting gold prices will rise the following week. The number of participants in the survey, which is completed every Friday, may vary.
The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver.
The S&P/TSX Global Gold Index is an international benchmark tracking the world's leading gold companies with the intent to provide an investable representative index of publicly-traded international gold companies.
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.
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.
The Producer Price Index (PPI) measures prices received by producers at the first commercial sale. The index measures goods at three stages of production: finished, intermediate and crude. CLSA China PMI is based upon monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies in China and measures China’s manufacturing activity.
The S&P/Case-Shiller Index tracks changes in home prices throughout the United States by following price movements in the value of homes in 20 major metropolitan areas.
The Consumer Confidence Index (CCI) is an indicator which measures consumer confidence in the Economy.
The Shanghai Stock Exchange Composite Index is a capitalization-weighted index that tracks the daily price performance of all A-shares and B-shares listed on the Shanghai 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.
These market comments were compiled using Bloomberg and Reuters financial news.

 

 

Net Asset Value
as of 12/18/2014

Global Resources Fund PSPFX $6.77 0.06 Gold and Precious Metals Fund USERX $5.18 0.21 World Precious Minerals Fund UNWPX $4.68 0.19 China Region Fund USCOX $8.03 0.07 Emerging Europe Fund EUROX $6.87 0.11 All American Equity Fund GBTFX $32.90 0.68 Holmes Macro Trends Fund MEGAX $22.86 0.51 Near-Term Tax Free Fund NEARX $2.25 -0.01 China Region Fund USCOX $8.03 0.07