Second Quarter 2016

For the quarter ended June 30, 2016, the World Precious Minerals Fund rose 52.26 percent, outperforming the fund's benchmark, the NYSE Arca Gold Miners Index, which rose 38.49 percent. The Gold and Precious Metals returned 40.64 percent, compared to its benchmark, the FTSE Gold Mines Index, which rose 38.08 percent. See complete fund performance here.


  • Market turmoil following the U.K.'s decision to leave the Europe Union is causing more investors to turn to gold and Treasuries, reports Bloomberg. Gold bullion rallied more in the first half of the year than in any other year since 1974, with prices pushed up 24 percent.
  • ICBC Standard, China's biggest bank, has agreed to buy one of Europe's largest gold vaults from Barclays, reports Bloomberg. Just a week prior to this announcement, the bank won classification as a market maker by the London Bullion Market Association. "This enables us to better execute on our strategy to become one of the largest Chinese banks in the precious metals market," Mark Buncombe, head of commodities at ICBC, said. According to the South China Morning Post, the Chinese Gold and Silver Exchange Society plans to set up a gold vault and office in Qianhai. This will be the biggest in Hong Kong investment in the special economic zone in Shenzhen, reports Bloomberg.
  • Central banks are buying gold, according to Wealth Daily, which reports that banks added 483 tons of gold in net purchases. That is the second-largest accumulation of gold by central banks in a year since the end of the gold standard era. The article points out that buying U.S. Treasuries or other sovereign debt from Western countries has also become a "less attractive option for central banks because of their low yields."


  • A surge in gold prices could cut Indian demand for the precious metal to the lowest in seven years, reports Bloomberg. "Price is a very important factor for Indians and if it remains at these levels then I don't see much recovery in demand," said Bachhraj Bamalwa, a director at the All India Gems & Jewelry Trade Federation. Weak demand since the start of 2016 has forced dealers to sell gold at a discount to clear inventories.
  • India's inbound shipments of gold during the month of May are said to have dropped 51 percent from a year earlier. The provisional import numbers show that May shipments declined to around 31 metric tons from 63 metric tons during the prior year. According to a Bloomberg article, gold imports tumbled for a fourth straight month "as a 16 percent increase in domestic prices since the start of the year kept buyers away."
  • According to Bloomberg, India's government has collected 2.8 tonnes by 105 depositors of gold so far under its Gold Monetization Scheme (GMS). The scheme, which has been in place for six months, is intended to mobilize idle gold held by households and institutions of India to facilitate its use for productive purposes.


  • Paradigm Capital released a comprehensive and informative research note recently, focusing on gold equities and opportunities to be found for the generalist. The group highlights negative interest rates and central banks buying gold (rather than selling it) as a few reasons why this up-cycle is different. Paradigm also states that "producing gold is a better business than most today, one with expanding margins, yet gold equities still offer excellent relative value." Sean Gilmartin at Bloomberg notes that capital spending by gold producers has been decimated, which will lead to a long-term decline in the mine supply of the metal. In the chart below, this shows the long-term price relationship between gold bullion and gold mining stocks. One can observe that the gold miner valuations are currently substantially depressed relative to the change in gold prices.

2016 Inflows Into Bullion-Backed ETPs Top Total Outflows in 2015

  • Turnover in China's top exchange-traded fund backed by bullion, the Huaan Yifu Gold ETF, jumped to a record $191 million following Britain's Brexit referendum. Outstanding shares of the fund also jumped five-fold from the start of the year to 1.6 billion, according to David Xu, managing director at Huaan Asset Management. Similarly, a decline of the Chinese real estate market moved billions into the country's stock market. If Chinese investors sour on stocks and decide gold's historic value looks tempting, this could mean the next boom for the metal, reports Bloomberg Intelligence analyst Kenneth Hoffman. Currently the ETF only holds 16 tonnes of metal, but the creators of the fund expect it to grow to 500 tonnes in the next three to five years.
  • Billionaire investor Stan Druckenmiller is loading up on gold, reports Bloomberg. At May's Sohn Investment Conference in New York, he said the bull market in stocks has "exhausted itself" due to excessive borrowing from the future, adding that gold is his largest currency allocation. "We refer to gold as a currency, not a metal," Druckenmiller said. Hedge fund manager David Einhorn agrees that gold is poised to generate profits, reports Bloomberg, citing increasingly aggressive monetary policies for his view on gold prices.


  • According to a new poll by Marketplace and Edison Research, 71 percent of Americans believe the U.S. economic system is "rigged in favor of certain groups," reports CNN Money. On this note, JPMorgan Chase won the dismissal of three private antitrust lawsuits, reports Reuters, accusing the bank of rigging a market for silver futures contracts traded on COMEX. U.S. District Judge Paul Engelmayer's dismissal was with prejudice, meaning the lawsuits cannot be brought again. During the quarter, Deutsche Bank admitted to manipulation of the gold and silver price fix, agreeing to turn in any information about other banks' wrongdoings over to the authorities.
  • Temporary jobs are the first to go in a downturn and serve as a predictor of general job trends, according to a report from BMO Private Bank. Since December, this sector has shed 27,400 jobs, reversing a five-year trend that saw it grow five times faster than overall employment, the bank writes. Compounding the trend, there has been a pickup in initial jobless claims. Total U.S. commercial bankruptcy filings by corporations of all sizes (along with other business entities), jumped 24 percent year-over-year in the first quarter, reports MacroStrategy Partnership. Following 22 straight quarters of declines, there has been rapid deterioration, which suggests the credit cycle could be turning. Deutsche Bank thinks that the world is "past the point of no return" in the default cycle, according to ETF Daily News.
  • In a recent note from Sovereign Man, the author reflects on how much has changed since the publication started seven years ago. He points out that U.S. government debt soared 70 percent, that the Federal Reserve's balance sheet more than doubled, and that the U.S. government has been caught red-handed spying on everyone--all in seven years' time. "We've seen an appalling rise in police violence and Civil Asset Forfeiture to the point that the U.S. government now steals more than every thief in America combined," he continues. Perhaps Donald Trump is right in that Mexico will pay to build a wall on its northern border--with the intent of keeping Americans from crossing illegally into Mexico.

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 (e.g., short-term trading fees of 0.05%) 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 here or by calling 1-800-US-FUNDS.

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 index benchmark value was 500.0 at the close of trading on December 20, 2002. The FTSE/JSE African Gold Mining Index is a market capitalization weighted index. (Returns are quoted as price return in the home currencies of each index. For example, the S&P/TSX Canadian Global Gold Index is calculated using Canadian Dollars.)

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Gold and Precious Metals Fund and the World Precious Minerals Fund as a percentage of net assets as of 6/30/2016: ICBC Standard Bank Plc. 0.00%, Barclays Plc 0.00%, Huaan Yifu Gold ETF 0.00%, JPMorgan Chase & Co. 0.00%, Deutsche Bank AG 0.00%.

Net Asset Value
as of 10/21/2016

Global Resources Fund PSPFX $5.66 No Change Gold and Precious Metals Fund USERX $8.82 -0.07 World Precious Minerals Fund UNWPX $8.29 -0.02 China Region Fund USCOX $7.97 0.01 Emerging Europe Fund EUROX $5.55 No Change All American Equity Fund GBTFX $22.84 -0.04 Holmes Macro Trends Fund MEGAX $18.60 No Change Near-Term Tax Free Fund NEARX $2.24 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.01 No Change