February 2016


  • Gold's rally is holding steady as investors lose faith in central banks' ability to deal with economic challenges, reports Bloomberg. "If they're not going to put up U.S. rates as fast as the market had been anticipating, then that's going to send the U.S. dollar lower," David Lennox of Fat Prophets in Sydney said. "That will be beneficial to the gold price." Inflows into bullion-backed exchange-traded products (ETPs) this year have also topped outflows in all of 2015.

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

  • In combination with continued strong cash flow from operations, St. Barbara is anticipating it will pay out the Red Kite debt facility in full by the end of June, 12 months ahead of the amortization schedule. Other positive news comes from Argentina, where a national newspaper reported on Friday that the newly elected president, Mauricio Macri, repealed the export mining tax in the country.
  • Tahoe Resources announced its definitive agreement to acquire Lake Shore Gold.


  • China's imports of gold from Hong Kong slumped to the smallest amount since 2011 in January, reports Bloomberg, with net purchases falling to 17.6 tonnes from 111.3 tonnes in December. In India, the jump in bullion costs has dampened Indian demand, with price discounts widening from as little as $4 in November to $30 an ounce, according to Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation.
  • The core consumer price index (CPI) gained the most in four-and-a-half years, up 2.2 percent year-over-year and exceeding the Federal Reserve's 2 percent inflation target. Sputnik News says according to the regulator's data-based approach to tightening monetary policy, the Fed will have to respond with another rate hike. The odds of a 2016 rate hike climbed to 44 percent from 11 percent on February 11, according to Bloomberg. The cost of living in the U.S. (excluding food and fuel) increased in January by the most in four years, adding to the prospects of the Fed raising rates.
  • It seems that even gold bulls failed to imagine just how much the precious metal could soar this year, reports Bloomberg, adding that gold prices have surged past three-quarters of the peak forecasts in a mid-January survey by the London Bullion Market Association.


  • According to the World Gold Council, central bank gold sales have historically resulted in a market surplus. From the second quarter of 2009 through 2015, net gold purchases by central banks absorbed most of the surplus, which may continue as reserve portfolio diversification is pursued. Bloomberg Intelligence estimates that central banks accumulated more than 2,448 tonnes of the metal versus gold ETF outflows of around 270 metric tons during the period.

Central Bank Gold Buying: Deficit to Surplus

  • The San Francisco Fed is calling for a period of inflation overshoot, according to a note from UBS. Given economic slack, the Fed sees possible benefit in allowing inflation to rise above 2 percent for a short period to achieve a better balance between the Fed's dual mandates.
  • Nearly a quarter of the world economy is now experiencing negative rates and gold bulls are thriving in reaction. As central banks around the world move toward new and untested strategies, such as negative rates or the prospect of widespread debt forgiveness, analyst Kenneth Hoffman says that gold is the natural beneficiary.

Key Negative Interest Rates


  • There are "no limits" to how far central banks can ease monetary policy, reports Bloomberg, stating that this is a recent declaration of both the European Central Bank (ECB) President Mario Draghi as well as Bank of Japan Governor Haruhiko Juroda. These policymakers have joined their counterparts in Denmark, Sweden and Switzerland to embrace interest rates of less than zero. JP Morgan's economist reported in a recent study that the ECB could cut rates to negative 4.5 percent and the Fed to negative 1.3 percent. They strongly cautioned investors that there appears to be a lot of room for central banks to probe how low rates can go, stating: "We believe it would be a mistake to underestimate their capacity to act and innovate."
  • Goldman Sachs predicts losses over the coming year for gold, despite the precious metal's rally, citing the Fed's interest rate increases over no fewer than three times. The group forecasts that bullion will be at $1,100 in three months. Supporting Goldman's view, gold's relative strength index, an indicator that tracks momentum, has climbed over 70, reports Bloomberg. This indicates to some analysts that prices will fall.
  • The German government is considering introducing a limit of 5,000 euros (or $5,450) on cash transactions, reports the New York Times, in an effort to combat money laundering and the financing of terrorism. Zero Hedge writes that these cash controls come at a "rather convenient time for policy makers in Europe," pointing out that rates are already sitting at negative 0.30 percent (and likely to be cut an additional 10 basis points in March).

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 Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

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 12/31/2015: Tahoe Resources Inc. 1.49% in Gold and Precious Metals Fund; St. Barbara Tld. 6.44% in Gold and Precious Metals Fund, 3.06% in World Precious Minerals Fund; Lake Shore Gold Corp. 5.31% in Gold and Precious Metals Fund, 2.85% in World Precious Minerals Fund.

Net Asset Value
as of 05/05/2016

Global Resources Fund PSPFX $5.10 -0.01 Gold and Precious Metals Fund USERX $8.04 0.16 World Precious Minerals Fund UNWPX $6.44 0.15 China Region Fund USCOX $6.91 -0.03 Emerging Europe Fund EUROX $5.58 0.02 All American Equity Fund GBTFX $23.65 0.02 Holmes Macro Trends Fund MEGAX $17.63 0.06 Near-Term Tax Free Fund NEARX $2.26 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.01 No Change