Second Quarter 2021

The World Precious Minerals Fund had a total return of 8.87% in the second quarter of 2021, outperforming its benchmark, the NYSE Arca Gold Miners Index, which delivered a return of 5.05 percent. 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 6.65% for the quarter, the stock gained 43.22% and contributed 191 basis points (bp) to the fund. K92 Mining is a member of the benchmark, the NYSE Arca 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 largest contributor to fund performance was Chalice Mining, which gained 40.92%. With an average fund weighting of 5.99%, the company contributed 169 bp. Chalice made a significant new nickel-platinum-palladium-copper deposit under sedimentary cover, which was proven with the drill bit. Recent new geophysical work shows the deposit has further potential to grow. Chalice Mining was the biggest contributor to fund performance in the first quarter. Chalice is not a member of the benchmark.
  • The third biggest contributor to fund performance was Arizona Metals which gained 128.37% for the quarter with an average weighting in the fund at 1.60%. This yielded the fund 126 bp, while Arizona Metals is not a member of the benchmark.  Arizona Metals is a relatively new company to the market in 2021. They have started evaluating the potential to put the Kay Mine into production; recent drill results have been impressive.


  • The largest detractor from fund performance was Nano One Materials, which declined 15.80%. With an average weighting of 9.89% for the fund, this impacted the fund by 282 bp. Nano One came to the market with a $25 million bought deal in late March, which may have impacted share buying for the second quarter. During the quarter, Nano One graduated the main Toronto Stock Exchange, (a full NASDQ listing is in the works for later in the year). Close to the end of quarter, Nano One announced a Joint Development Agreement with Johnson Matthey for lithium-ion batteries.
  • The second largest detractor from fund performance was our underweighting of Franco Nevada, which rose 16.16%. With an average weighting in the benchmark of 8.03%, the fund was impacted by 75 bp.
  • The third largest detractor from fund performance was our ownership of Chakana Copper, which had an average 1.15% weighting in the fund. Its share price fell by 37.07% over the quarter, shedding 62 bp, on Peruvian presidential elections yielding a more socialist president.  This is short term pain and not the time to sell, typically mining is a hot button discussion in Peru when it comes to elections, but it is critical to keep the sector functioning since it is a large part of the Peruvian economy.

Outlook for Gold Equities

The senior miners continue to talk down merger and acquisition activity. Newcrest Mining CEO Sandeep Biswas said that although there is likely to be further consolidation in the gold industry, current valuations make it a tough market to find compelling targets. RBC gold mining’s team sees value among mid-cap precious metal miners as stocks lagged their large-cap peers. The spread in valuation for intermediates has widened to a 40% discount, 10% higher versus the historical average despite better growth, yields and leverage to metal prices. The mid-tier miners seem to agree with RBC as Fortuna Silver Mines is acquiring Roxgold. The price offered was a 42% premium to the pre-announcement price. Coeur Mining also announced its intent to acquire 17.8% of the outstanding shares of Victoria Gold at a price of C$13.20 per share with an option to acquire more.

While the senior miners have outdistanced some of the mid-tiered miners, exploration companies with new discoveries are catching a bid. Arizona Metals reported the discovery of a new high-grade gold and zinc zone at its 100% owned Kay Mine property in Arizona. The share price climbed more than 450% on the drilling results. Arizona Metals is funded for 75,000 meters of drilling to infill and expand the resource footprint. Gold companies with exposure to copper are set to benefit from surging prices for the red metal, especially during periods of weak bullion prices. Aya Gold & Silver reported very positive drilling results. The results were 6,437 grams/ton Ag over 6.5m incl 24,613 grams/ton over 0.5m, 12,775 grams/ton over 0.5m and 11,483 grams/ton over 0.5m. This newly discovered high-grade zone is only 35m from surface and 75m east of the current resource. Aya’s share price is up about 150% year-to-date. Comp. E79 Resources share price gained 240% on released drill results for its Happy Valley Gold Prospect in Vitoria, Australia. Drill hole HVD002 intersected 0.70 meters at 99.00 g/t Au at 94.90 meters downhole.  Drill hole HVD003 intersected 0.6 meter at 147 g/t Au from 165.2m downhole and 11.10 meters of 160.45 g/t Au from 190.4m downhole. E79 Resources was testing the down-dip extensions of previously mined high-grade structures in the 1870s.   
Investment trends in the gold industry are making it more difficult for gold companies to grow.

Shareholders are demanding a high percentage of earnings and divestment proceeds. Miners must navigate tricky jurisdictions and geologies as well as gain the trust of politicians and populations at a time of rising environmental standards. Host nations are also demanding a bigger slice of any mining windfalls. Those management teams that best understand how to obtain their social license will likely prosper more. According to RBC, new projects have faced upward pressure on capital costs due to ongoing cost inflation including steel (up 50% or more year-to-date) and labor. Since 2019, RBC estimates that project capital intensity has increased by 25%, with average cost to build a 100,000 ounce per year operation of $205 million. Operating costs are also under pressure. Diesel is one of the largest components of input costs, with higher prices to date (up 25%) placing upward pressure on operating costs. RBC estimates a $90 per ounce cost impact for open pits versus $28 per ounce for underground mines.

Adverse climate conditions, noted by the Western Electricity Coordinating Council (WECC), which monitors electric grids in the western U.S. and Canada. WECC estimates that without imports, Nevada, Utah, and Colorado could be short power during hundreds of hours this year, or equivalent to 34 days. New Mexico and Arizona fare a little better with being short only 17 days, under worst-case scenarios this year. The WECC’s Jordon White said: “It’s no longer necessarily a California problem or a Phoenix problem. Everyone is chasing the same number off megawatts.” Miners included as these gold and copper mines in the western U.S. will struggle for its power needs!

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.

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).

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the World Precious Minerals Fund as a percentage of net assets as of 6/30/2021: K92 Mining Inc. 7.71%, Chalice Mining Ltd. 6.18%, Arizona Metals Corp. 2.31%, Nano One Materials Corp. 9.85%, Johnson Matthey PLC 0.00%, Franco Nevada Corp. 0.00%, Chakana Copper Corp. 0.89%, Newcrest Mining Ltd. 0.00%, Fortuna Silver Mines Inc. 0.00%, Roxgold Inc. 1.50%, Coeur Mining Inc., Victoria Gold Inc. 0.00%, Aya Gold & Silver Inc. 1.68%,

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 09/17/2021

Global Resources Fund PSPFX $6.25 -0.08 Gold and Precious Metals Fund USERX $11.49 -0.10 World Precious Minerals Fund UNWPX $4.44 -0.06 China Region Fund USCOX $8.76 0.11 Emerging Europe Fund EUROX $6.85 -0.09 Global Luxury Goods Fund USLUX $23.83 -0.14 Near-Term Tax Free Fund NEARX $2.25 0.01 U.S. Government Securities Ultra-Short Bond Fund UGSDX $1.99 No Change