Second Quarter 2021

The Gold and Precious Metals Fund had a total return of 12.53% in the second quarter of 2021, outperforming its benchmark, the FTSE Gold Mines Index, which had a return of 2.67%. See complete fund performance here. Performance data quoted represents past performance, which does not guarantee future results.

Past performance does not guarantee future results. 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.


  • The biggest contributor to fund performance was our overweighting of K92 Mining. With an average fund weighting of 11.10% for the quarter, the stock gained 43.22% and contributed 367 basis points (bp) to the fund. K92 Mining is not a member of the benchmark, the FTSE Gold Mines Index. The first quarter of the year was weaker than anticipated with one underground mechanical piece of equipment down for repairs and some COVID-19 travel issues, but performance in the second quarter bounced back as forecasted.
  • The second biggest contributor to the fund’s outperformance, for the second quarter in a row, was Aya Gold & Silver, which was 2.74% of the fund and returned 89.00% for the quarter, yielding 171 bp for the fund. Aya Gold & Silver is not a member of the benchmark, the FTSE Gold Mines Index, but its performance for the quarter was fueled by strong first quarter production results and continued positive exploration drill results.
  • Australian Strategic Materials was the fund’s third biggest contributor to the fund’s return and is not a member of the fund’s benchmark.  Their share price gained 62.54% and contributed 99 bp to the fund’s relative performance. Australian Strategic Metals was spun out of Alkane Mining to crystallize its unrecognized value for its rare-earth assets, which the market is giving greater value to a supply source outside of China.


  • The largest detractor from fund performance was our underweighting of Newmont Mining, which was a 22.93% member of the benchmark. Newmont’s share price rose 5.96%, better than the benchmark but less than our fund’s return. Nevertheless, with our underweighting this left about 63 bp of performance unfulfilled. We also held long-term equity anticipation securities (LEAPS) expiring January 2023 on Newmont, which gained 4.18%, thus yielding us 10 bp of relative performance.
  • The second largest detractor was Impala Platinum Holdings, which declined 11.03% for the quarter resulting in 45 bp of underperformance. Impala is not a member of the benchmark and was our best contributor in the prior quarter.  With slight decline we still have gains.
  • The third largest detractor from fund performance was overweighting of Barrick Gold, which appreciated 5.42%. With our relative weighting at 2.01% to the benchmark weight of 17.00%, the underweighting detracted 45 bp from the fund’s relative performance to the benchmark.


Early in the quarter, Bloomberg Intelligence senior commodity strategist Mike McGlone noted the gold bull market has stalled. "The gold bull market has clearly stalled, and we believe it's transitioning toward a long-slog, range-bound market …Unless the higher price discovery process in Bitcoin reverses, the crypto represents a top gold headwind." Gold began to finally lift in price after Treasury Secretary Janet Yellen said U.S. President Biden’s plan would not increase inflationary pressures because the boost to demand would be spread out over a decade. This would enable central banks to continue dovish monetary policies, which would allow gold to appreciate. Billionaire investor Sam Zell is also now buying gold, despite decades of criticizing those who purchase it, reports ETF Trends. Zell says it is because these monetary policies may create inflation like the 1970s and gold could be a hedge.

CIBC analyst Cosmos Chiu wrote that he expects silver to benefit from its use in solar panels, especially given the growing importance of environmental, social and governance (ESG) investing. “Of all the metals, silver has the highest electrical conductivity, making it difficult for potential substitutes (such as copper and aluminum) to compete.” MMC Norilsk Nickel PJSC, the world’s largest producer of palladium, expects a 900,000-ounce shortfall of the metal this year after flooding at its Arctic mines upended its December projection for an almost balanced market. Auto demand is picking up with lockdowns being relaxed across the U.S, but palladium is facing its 10th successive year of supply falling short of demand, thus the positive market dynamics that could keep palladium in the spotlight longer than anticipated. In addition, there are only a limited number of miners with exposure to platinum and palladium deposits. The global chip shortage has had “quite a significant” impact on platinum and palladium demand in the automobile industry, according to Suki Cooper, a precious metals analyst at Standard Chartered Bank. “We were expecting a strong recovery across auto production to lift demand for both platinum and palladium, but because of the chip shortages, recent estimates look like they’ll reduce auto production by about 2 to 3 million units in the second half of the year.” Investment Bank Liberum wrote recently that the diamond market looks to be in better condition after some rocky years. Diamond inventories have dropped to cycle low levels, which creates a positive environment for pricing towards the end of this year. Easing COVID restrictions in the U.S. and Europe may release pent-up demand from weddings, which may drive strong jewelry demand for the second half of the year.

Crypto assets such as Bitcoin continue to present a challenge to gold. Paul Tudor Jones, the head of Tudor Investments, believes that 5% of a portfolio should be in crypto assets. It serves as a diversifier, much like gold or commodities. However, the Bank of International Settlements recently issued guidance that banks should apply $1,250 risk weight for bitcoin. This factor along with minimal capital requirements of 8% results in the bank having to hold at least the same amount in offsetting assets to counter the volatility of Bitcoin. This will make it less capital efficient for the banks to hold crypto assets and reject their adoption. The Grayscale Bitcoin Trust could soon surpass SPDR Gold Shares as the growing popularity of cryptocurrencies pushes the bitcoin ETF over $50 billion, close to the $60 billion held in the world’s second-largest commodity ETF which holds gold bullion.


The FTSE Gold Mines Index encompasses all gold mining companies that have a sustainable and attributable gold production of at least 300,000 ounces a year, and that derive 75% or more of their revenue from mined gold. The S&P

A basis point, or bp, is a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001). A warrant is a derivative that gives the right, but not the obligation, to buy or sell a security—most commonly an equity—at a certain price before expiration. Long-term equity anticipation securities (LEAPS) are publicly traded options contracts with expiration dates that are longer than one year, and typically up to three years from issue. They are functionally identical to most other listed options, except with longer times until expiration. Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments.

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 as a percentage of net assets as of 6/30/2021: K92 Mining Inc. 12.55%, Aya Gold & Silver Inc. 3.51%, Australia Strategic Materials 2.77%, Alkane Resources Ltd. 1.09%, Newmont Corp. 3.08%, Impala Platinum Holdings Ltd. 2.60%, Barrick Gold Corp. 1.81%, MMC Norilsk Nickel PJSC 0.00%, Grayscale Bitcoin Trust 0.00%, SPDR Gold Shares 0.00%.

Standard Disclosure
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

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

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% to 10% of your portfolio in these sectors.


Net Asset Value
as of 10/20/2021

Global Resources Fund PSPFX $7.01 0.04 Gold and Precious Metals Fund USERX $12.48 0.23 World Precious Minerals Fund UNWPX $4.81 0.11 China Region Fund USCOX $8.61 -0.04 Emerging Europe Fund EUROX $7.48 0.03 Global Luxury Goods Fund USLUX $24.69 0.08 Near-Term Tax Free Fund NEARX $2.23 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $1.99 No Change