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6-10 of 17

Good Odds for a Commodities Rally This Fall

    August 19, 2009

I stopped by CNBC’s “Squawk on the Street” yesterday to talk commodities and emerging markets with hosts Erin Burnett and Mark Haines. Erin asked me where I stood on the inflation vs. deflation debate and I reiterated my longstanding position.

For eight years my thesis for gold has been gold will rise on deflation. Whenever you have extreme deflation or big inflation, gold rises. If there’s none like in ’97, ’98 and ’99 then gold is basically dormant as a monetary asset. We have deflation. Why do I say that? Because we have negative interest rates. Since 2001, 80 percent of the time we have had negative interest rates, that’s a deflationary cycle. Now we have deficit spending, so any country that has negative interest rates coupled with deficit spending, gold goes up in that currency.

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A Skewed Supply-Demand Situation

    August 14, 2009

Evan Smith, co-manager of the Global Resources Fund (PSPFX), appeared on Bloomberg News today to discuss his outlook for natural gas with host Mark Crumpton. Evan explained what concerns are giving him pause.

The commercial and industrial component of natural gas demand is still trending down roughly 12 percent year-on-year. That’s at a time when we’ve had a pretty big response over the past year in reducing natural gas production. That being said we’re 23 percent above where we were a year ago for storage levels. A lot of gas is in storage but we’re coming up on the end of the storage season. I think very near term we’re going to see some volatility, maybe lower gas prices but if you look past the next several weeks or maybe even month or so, I’m actually quite constructive on natural gas once we get beyond this weak period and things start to improve into the fall and into 2010.

Please consider carefully the fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. 09-563

 

 

Factors for Higher Oil in 2010

    July 31, 2009

Portfolio manager Brian Hicks appeared on Bloomberg TV this week to discuss his outlook for oil and natural gas. After the weekly inventory report from the Energy Information Administration (EIA) showed a build in oil inventories from the prior week, Hicks reminded viewers to keep the big picture in mind when it comes to oil.

What’s important is that if economic growth does return to prior levels, we will see a pickup in demand. We also have a situation where non-OPEC supply has been sluggish. We have oil investment in 2009 that’ll be down about 15-20 percent—that will weigh on oil supply going forward. We think the markets will start to tighten significantly in 2010 and that’s when oil, in our opinion, will average about $80 a barrel.

The following securities mentioned in the interview were held by one or more of U.S. Global Investors family of funds as of 6/30/09:  Whiting Petroleum, Concho Resources. 09-517

 

China’s Advantage—Focus

    July 15, 2009

I appeared on Bloomberg television last week to discuss China’s role in the copper market with host and fellow Canadian Matt Miller. We also discussed how China has benefited from a focused government stimulus.

“China’s policies are extremely focused, focused on condo building and housing. Two years ago, it was a slow-down policy. Now it is an accelerated buy-policy. Loans have accelerated, so you need copper for all those condos, and I think that these are very, very, direct, specific. Russia is still dysfunctional. They want to have lots of publicity in the global scene. China doesn’t, China just wants to make sure there is social stability and a means for people to have jobs.”

None of U.S. Global Investors family of funds held any of the securities mentioned in this interview as of 3/31/09. 09-482

 

Finding Global Growth in Commodities

    June 15, 2009

I ran into Marketwatch Editor Jonathon Burton following my presentation at the Schwab Conference in San Francisco last week. Jonathon was interested in what signs of a recovery I’m seeing for commodities markets.

“The interesting part is that the currencies—the Canadian dollar, in Brazil, the real—they’re all rising as commodity demand is picking up and their commodity prices so they’re getting a higher foreign exchange. So that’s an important factor to take a look at as a mutual fund investor, currency can have a big, important factor in your alpha creation. But the other part to take a look at is Russia, higher energy prices allows [Russia] to go on with their infrastructure building.”

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6-10 of 17

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