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August 2015

For the month ending August, spot gold closed at $1,134.80, up $38.98 per ounce, or 3.56 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, rose 1.99 percent. The U.S. Trade-Weighted Dollar Index slid 1.55 percent for the month. The Philadelphia Gold & Silver Index (XAU) rose 1.81 percent. The S&P/TSX Global Gold Index gained 4.54 percent. The FTSE/JSE African Gold Mining Index rocketed 23.48 percent.


  • China devalued the yuan by the most in two decades as policymakers stepped up efforts to introduce more market-based reforms. China’s exporters have been hurt by keeping the yuan pegged to the dollar. The new policy spooked markets, prompting fears of a currency war with the country’s Asian rivals. Gold, in response, climbed to a three-week high on the news.

  • Gold withdrawals from the Shanghai Gold Exchange this year so far have totaled a massive 1,464 tonnes, which is running around 116 tonnes ahead of the record 2013 year at the same time and 370 tonnes ahead of the 2014 figure. If the average monthly withdrawal level for the current year keeps up, we will be looking at an annual withdrawal totaling more than 2,500 tonnes.
  • While gold seems to be falling out of favor amid a looming rise in U.S. interest rates, Germany’s Commerzbank has advised investors to hold on to the precious metal rather than sell it. The bank said gold has already hit a low and the expected Federal Reserve announcement on a change in interest rates will not affect it much. Additionally, gold promises more stability than the euro, thanks to the loose monetary policy of the European Central Bank (ECB).


  • According to a report by the World Gold Council, demand for gold shrank to the lowest in six years last quarter as buyers in China and India, the two biggest markets, saw incomes fall as a result of a volatile stock market in China and a weak harvest in India. However, central banks remained net buyers, increasing purchases by 11 percent from the previous quarter. That’s their 18th consecutive quarter of purchases and the World Gold Council sees them buying 400 to 500 tonnes by the end of the year.

  • De Beers is set to cut diamond prices by as much as 9 percent after production cuts failed to support demand for precious stones. De Beers, along with other diamond producers, is under pressure to cut supply and lower prices as traders, cutters and polishers struggle to turn a profit amid a squeeze on credit and languishing jewelry sales.
  • In the past few months, a handful of mining companies have dropped under $1 per share, prompting notices from the New York Stock Exchange that they have six months to resume trading over $1 for at least a month or else they will be forced to delist. Affected companies include McEwen Mining, Thompson Creek Metals and Silvercorp.


  • In a new piece, Deutsche Bank argues that 2015 will mark the peak in global foreign exchange reserve accumulation, with three drivers pointing to further reserve draw-downs in the short term: China’s economic slowdown, impending U.S. monetary tightening and the collapse in the price of oil. On the other hand, central banks have been increasing their exposure to gold as part of their asset mix, presenting a compelling opportunity moving forward. Since 2014, foreign central banks have withdrawn 246 tonnes of gold from the New York Fed, a trend that reflects that central bankers are more seriously viewing the role of gold in their portfolio to lower the volatility of a reserve mix of just currencies.

  • There is a lot of talk about the negative impact of Fed interest rate hikes on the price of gold. However, historical evidence of past tightening cycles does not provide a consistent confirmation of this. As seen in the chart above, the data is mixed, with the past three tightening cycles actually resulting in a net gain in the price of bullion.

  • According to Metals Focus, gold output will start declining as soon as next year and production will plunge 18 percent by the end of the decade. Global mine output surged 24 percent in a decade to a record 3,114 tonnes in 2014, as companies dug more to exploit a 12-year bull market in prices.


  • With indicators from macro-fundamentals to market-oriented measures all flashing red in recent sessions, the gigantic spike in the Arms Index (TRIN) stands out. TRIN (Traders Index) is a technical indicator that compares advancing and declining stock issues and trading volume as an indicator of overall market sentiment. It is used as a predictor of future price movements in the market. An index value above one is bearish, below one is bullish and one is market neutral. The recent spike to 4.95 reflects a lack of confidence by traders.
  • Investor relations firm Renmac also highlights the TRIN index, showing past episodes of elevated readings. The historical evidence shows that there is usually a clustering of high readings and the first spike—such as the one the market encountered recently—is usually not the last. Therefore, trying to bottom-fish in the market is probably still too early.
  • According to BCA Research, broad-market volatility is likely to persist until the profit cycle turns back up. The latter won’t occur without looser monetary policy. That would include a weaker U.S. dollar, a precondition for easing foreign currency funding strains in the emerging world. Low interest rates have given a huge incentive to shift out of low-risk assets into stocks and corporate bonds in search of higher returns. However, equities require support from rising corporate earnings. That has not been the case lately, as earnings have been flat or declining. Therefore, it is no coincidence that U.S. equities started to struggle this year soon after earnings flattened.

Past performance does not guarantee future results.

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 U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Philadelphia Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of 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 FTSE/JSE African Gold Mining Index is a market capitalization weighted index.

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 6/30/2015: De Beers S.A. 0.00%, McEwen Mining Inc. 0.00%, Thompson Creek Metals Company Inc. 0.00%, Silvercorp Metals Inc. 0.00%.

Net Asset Value
as of 10/12/2015

Global Resources Fund PSPFX $4.96 -0.04 Gold and Precious Metals Fund USERX $5.34 -0.04 World Precious Minerals Fund UNWPX $4.25 -0.01 China Region Fund USCOX $7.67 0.05 Emerging Europe Fund EUROX $5.77 -0.04 All American Equity Fund GBTFX $26.75 0.11 Holmes Macro Trends Fund MEGAX $20.10 0.15 Near-Term Tax Free Fund NEARX $2.25 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.01 No Change