Global Investors: You Should Be Paying Attention to this Economic Indicator

Author: Frank Holmes
Date Posted: July 10, 2015 Read time: 39 min

Reality has set in for investors this week: Tremors are shaking up the global markets.

By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

Reality has set in for investors this week: Tremors are shaking up the global markets.

A “no” vote from the Greek referendum on Sunday, the vast stock market selloff in China, and the volatile movements in the price of U.S. crude oil have made it clear the worldwide economy is collectively riding the brakes. The 3.5-hour halt in trading on the NYSE Wednesday has also added to investors’ unease.

It's been hard to ignore the wild market headlines this week.

This week on BNN TV, Canada’s leading business station, I explained that an important forward-looking economic indicator we closely monitor at U.S. Global Investors can help make sense of this slowdown: the global manufacturing purchasing managers’ index (PMI), which we’ve written about many times. Coupled with this, our portfolio managers recognize that during highly volatile markets adjusting cash levels in our funds is key.

In addition to our own macro models, BCA Research , a highly respected independent research company, pointed out that PMIs in developing economies have plunged to new lows.  The International Monetary Fund also revised downward its global growth forecast for 2015. On this account, bad news is good news, as central bankers are scrambling to stimulate economic growth.

Emerging Markets Manufacturing PMI is Plunging
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As active managers, we have raised our cash levels looking for opportunities in a sloppy market, particularly in our China Region Fund (USCOX). This allows us to mitigate risk and deploy that cash when stocks look attractive per our model, which focuses on factors like high returns on invested capital, sales per share growth and dividend per share growth.

The Trend is Your Friend

It’s common for investors to look at gross domestic product (GDP) when making decisions about how to deploy capital. Unlike GDP, which looks back or in the rearview mirror, PMI is forward-looking. PMI gathers data such as global output, new orders, exports, prices and employment, making it a reliable indicator for both commodity performance and business activity. ISM, or Manufacturing Institute for Supply Management, is the U.S.-specific calculation of PMI.

Take a look at global PMI. It has continued on a three-month downtrend for the month of June.

Global Manufacturing PMI Continues Its Downtrend
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Similarly, PMI in the U.S. peaked seven months ago but has since been modestly declining. The threat of rising rates has been a contributing factor, and although Federal Reserve Chairwoman Janet Yellen stated today that the U.S. is on track to raise rates in September, many agree that this date is too soon.

U.S. Manufacturing PMI Declines After Peak
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Card Counting: Using the PMI Pattern to Your Investing Advantage

Understanding PMI is one way investors can use patterns to improve their chances of positive returns in the market – just like card counting in a game of Blackjack.

When looking at PMIs, a reading of 50 or above indicates manufacturing expansion, while a reading below 50 indicates a slowing economy. PMIs for individual countries like China and Greece are negative right now, meaning that manufacturing activity is contracting.

Our investment team’s research has shown that when the one-month reading crossed below the three-month trend, there was a significant probability that materials, energy and commodities would fall six months later. Conversely, when it crossed above, manufacturing activity would ramp up, which greatly improved the performance of commodities such as copper and crude oil, along with the materials and energy sectors.

Commodities and Commodity Stocks Historically Rose Six Months After PMI "Cross-Above"
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The Great Shift in Seasonal Oil

As I explain in our Managing Expectations whitepaper, using seasonal patterns, along with global PMI, is another way to understand trends in the market and the world at large.

Historically, the hurricane season in August/September has shut down the supply of oil offshore, leading to a peak in relative price around this time. But as you can see in the chart below, the new technology of fracking and a corresponding increase of U.S. onshore production, have led to a surplus, drastically shifting the shorter-term seasonal pattern in oil.

U.S. Manufacturing PMI Declines After Peak
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Staying Nimble During Changing Landscapes

Professor of Mathematics at the University of Oxford, Marcus du Sautoy, said it best:

“Although the world looks messy and chaotic, if you translate it into the world of numbers and shapes, patterns emerge and you start to understand why things are the way they are.”

The global markets right now indeed appear “messy and chaotic,” but curious investors and fund managers realize that specific tools and patterns help them navigate through the complexity and intensity of constantly changing landscapes.

In fact, it is the agile active management and the use of these investment tools that landed two of our funds in Investor’s Business Daily’s “Weekly Review” section today.  This particular section of IBD is a screened list of top-rated stocks for the week, along with the top-performing funds that own these particular stocks. Our Holmes Macro Trends Fund (MEGAX) and Global Resources Fund (PSPFX) are recognized for owning nine of these top stocks.

Subscribing to our award-winning Investor Alert newsletter is one way investors can stay on top of geopolitical and economic events that could affect their investments.  We’d really appreciate it if you’d share our publication with your friends and colleagues!

Looking for Tax-Free Income? Explore our Near-Term Tax Free Fund (NEARX) - U.S. Global Investors

Index Summary

  • The major market indices were mixed this week.  The Dow Jones Industrial Average rose 0.17 percent. The S&P 500 Stock Index fell 0.01 percent, while the Nasdaq Composite fell 0.23 percent. The Russell 2000 small capitalization index rose 0.30 percent this week.
  • The Hang Seng Composite fell 4.21 percent this week; while Taiwan fell 4.96 percent and the KOSPI fell 3.48 percent.
  • The 10-year Treasury bond yield rose 2 basis points to 2.40 percent.

What's gold's touchdown pass this week? Watch the replay of Kitco's Gold Game Film

Domestic Equity Market

S&P 500 Economic Sectors
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  • Consumer staples was the best performing sector in the S&P 500 Index this week as concerns over China and Greece led investors into more defensive areas. The S&P 500 Staples Index rose 2.02 percent this week.
  • Utilities was the second best performing sector in this week’s risk-off environment, despite the yield on U.S. government 10-year notes rising. The S&P 500 Utilities Index rose 1.67 percent this week.

Markit U.S. Manufacturing Purchasing Managers' Index Better than Expected
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  • German factory orders fell more than expected. The May orders fell 0.2 percent, compared to the 2.2 percent rise in April.


  • Materials was the worst performing sector in the S&P 500 Index this week as concerns over China slowing led to a sharp contraction in base metals prices. The S&P 500 Materials Index fell 1.64 percent this week.
  • Initial jobless claims in the U.S. came in much higher than expected, rising 297,000 this week.
  • West Texas Intermediate (WTI) crude oil saw the biggest down week in a while as concerns over global growth and crude supply intensify. WTI fell 7.25 percent this week.

WTI Crude Oil Breaks Down
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  • The preliminary reading of the University of Michigan’s consumer sentiment index for the month of July will be released next week. Analysts are expecting a rise, which would be positive for consumer-oriented plays.
  • Industrial production in the U.S. is expected to rise to 0.2 percent for the month of June. A positive reading would benefit more cyclical industries.
  • After previous negative readings, the U.S. Empire state manufacturing index is expected to turn positive for the month of July.


  • Consumer prices are expected to have climbed only 0.3 percent for the month of June, down from 0.4 percent the prior month.
  • Germany’s ZEW Survey of Expectations and ZEW Current Situation Survey are both expected to decline for the month of July.
  • Markets are becoming increasingly concerned that the Chinese economy is running out of steam. A weaker China would not only negatively affect global growth, but growth in the U.S. economy as well.

Frank Holmes to Speak at the MonoeyShow in San Francisco. July 16-18 2015 - Registration is Free

The Economy and Bond Market

Global markets recovered Friday, ending a turbulent week, as worries about Greece’s debt crisis and China’s equity meltdown eased. Belying the daily volatility, U.S. benchmarks were little changed. Yields on "safe-haven" 10-year U.S. Treasury notes and German bunds rose Friday. The euro also gained on growing optimism that Greece and its creditors would be able to agree to terms that would save the country from default.


  • The ISM non-manufacturing index inched up to 56.0 in June from 55.7 in May, suggesting some acceleration in services activity during the month. This was modestly below expectations of 56.4 and is consistent with continued moderate growth.
  • The JOLTS, or Job Openings and Labor Turnover Survey, report showed a further increase in job openings to 5.36 million in May from 5.33 million in April (revised from 5.37 million initially). This was above the expected 5.300 million and left the rate of job openings unchanged at 3.6 percent. Most job openings added over the past 12 months have been in retail trade, professional and business services, and health care and social assistance.
  • Initial jobless claims rose 15,000 to 297,000 for the week ended July 4. Despite a modest increase, this marked the 18th straight week below 300,000.


  • The International Monetary Fund (IMF) trimmed its forecast for 2015 global growth to 3.3 percent from April’s estimate of 3.5 percent, also down from 2014 growth at 3.4 percent. China’s financial market turbulence, Greece’s protracted bailout talks and first-quarter U.S. economic weakness were cited as factors.
  • The trade deficit widened to $41.9 billion in May from $40.7 billion in April (revised from $40.9 billion initially), a bit better than the expected $42.7 billion. Looking ahead, the strong dollar should continue to widen the deficit, supporting imports at the expense of exports.
  • Markit’s service sector purchasing manager’s index (PMI) fell from 56.2 in May to 54.8 in June, cautioning against a slowdown in services activity.


  • Greek Prime Minister Tsipras made significant concessions to creditors late Thursday in an effort to reach a deal by Sunday and stave off bankruptcy. The proposal includes spending cuts, pension savings and tax increases that closely resemble the offer from creditors that Tsipras and the Greek electorate rejected in a strong “no” vote in last Sunday’s referendum. One key difference is the timetable for some pension reform, fiscal and structural measures. European Union leaders will review and vote on the proposal this Sunday.
  • The release of industrial production next week is expected to show a bounce from the prior month’s -0.2-percent decline. This would be consistent with a continued moderate economic expansion.
  • Housing starts are expected to come in at 1,108,000, up from the previous month’s 1,036,000. Such expansionary activity would add confidence in the housing market recovery.


  • What we have seen since the financial crisis is that instead of demand expanding to meet supply, supply has contracted to meet demand. The implications are clear. If demand will struggle to return to a level commensurate with the economy’s productive capacity, then something needs to be done to induce consumers to spend and companies to invest in projects. That “something” has to be low interest rates. As seen in the chart, real rates averaged only 1 percent during the last full business cycle that stretched from 2001 to 2007, a period when inflation was stable and wage pressures were largely dormant. This is an incredibly low number considering the economy was buoyed by a massive debt-fueled housing bubble, fiscal stimulus in the form of the Bush tax cuts and the wars in Iraq and Afghanistan, and a weakening dollar. None of these conditions exists today. The dollar has strengthened, there is no fiscal stimulus in the pipeline, the external backdrop is more challenging, and there is no housing bubble on the horizon. Therefore, if a 1-percent real rate was consistent with stable inflation during the last business cycle, a neutral rate of zero, if not negative, is entirely conceivable today.

The Need For a Lower Rate
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  • Federal Reserve Chair Janet Yellen will deliver her semiannual testimony to Congress next week. Any deviation from her “data-dependent” script could cause turbulence in what have been jittery markets as of late.
  • The release of consumer price index (CPI) data is expected to come in at 0.3 percent, marginally below prior month’s 0.4 percent, demonstrating a still-fragile growth environment.

Curious About the Gold Market? Read Frank Holmes' Latest Insights

Gold Market

For the week, spot gold closed at $1,163.70, down $4.78 per ounce, or 0.41 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, lost 4.82 percent. The U.S. Trade-Weighted Dollar Index lost 0.09 percent for the week.

Date Event Survey Actual Prior
July -9 U.S. Initial Jobless Claims 275K 297K 281K
July -14 Germany CPI YoY 0.30% 0.30%
July -14 Germany ZEW Survey Current Situation 60 62.9
July -14 Germany ZEW Survey Expectations 29 31.5
July -14 China Retail Sales YoY 10.20% 10.10%
July -15 U.S. PPI Final Demand YoY -0.90% -1.10%
July -16 Eurozone CPI Core YoY 0.80% 0.80%
July -16 Eurozone ECB Main Refinancing Rate 0.05% 0.05%
July -16 U.S. Initial Jobless Claims 285K 297K
July -17 U.S. Housing Starts 1115K 1036K
July -17 U.S. CPI YoY 0.10% 0.00%


  • Gold maintained its rebound from a three-month low on concerns that economic risks in China and Greece will prompt the Federal Reserve to delay raising interest rates.
  • Swiss gold flows counter reports of slackening gold demand. Despite the weak gold price, Swiss data shows that physical gold demand continues to be strong and gold is still moving from west to east. Switzerland is on pace to export a little under 2,000 tons of gold in 2015, the second-most active year on record. Since the country is home to four of the biggest gold refineries in the world, and almost two-thirds of the world’s gold is refined in Switzerland, it makes an excellent source of gold flow data for investors.
  • Claude Resources reported second quarter 2015 gold production of 20,619 ounces, a 10-percent increase from a year ago. The record-breaking first half performance of 41,686 ounces has resulted in the company increasing its gold production guidance to between 68,000 and 72,000 ounces in 2015. Kirkland Lake reported results for its fiscal 2015 fourth quarter and achieved a head grade of 0.42 ounces per ton, or 14.4 grams per ton. It produced 37,979 ounces of gold in the quarter and a total of 153,957 ounces for the full year. Centamin second quarter 2015 output results were up 33 percent year-over-year for a total of 107,781 ounces of gold.


  • The standoff in Greece hasn’t sparked much demand for gold, which is traditionally seen as a store of value amid crises. The metal fell in the past four quarters in the longest slump since 1997. Holdings in exchange-traded products backed by bullion fell 5.4 percent since this year’s February peak and are near the lowest in six years.
  • South African trade union UASA said that while gold producers tabled a “good opening offer” in pay negotiations last week, it still needs work. The producers offered wage increases of as much as 13 percent, plus a share of profits. Virtually unchanged housing allowances and increases not linked to inflation were also issues.
  • All commodity futures markets in China were limited down earlier in the week as Chinese hedge funds have increasingly hedged long stock market positions by aggressively shorting commodities, as they are now prevented from shorting equities.  


  • Large gold futures investors such as hedge funds have slashed overall bullish positions by a whopping 55 percent. That’s more than 14 million ounces below levels hit in January this year when gold reached its 2015 peak. The net long positioning is also the lowest since October 2006 when gold was worth less than $600 an ounce.

Short Gold Speculative Positions at Extreme Level
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  • Central banks around the world have one thing in common: they like to print money. Since 2008, the U.S. Federal Reserve has increased money supply by 67 percent, or more than $5 trillion, while the European Central Bank has also joined the game, starting its 1.1 trillion euro quantitative easing program earlier this year. For any investor, managing risk is necessary. In market conditions like this, gold provides a great hedge against not only stock market downturns but also the monetary crisis that part of the world is already experiencing.
  • Based on the latest Office of Comptroller of the Currency quarterly derivative report, JPMorgan and Citigroup seem to have literally cornered the commodity derivatives complex as their notional exposures soared by 1,690 percent and 1,260 percent, from $226 billion to $4 trillion and $3.9 billion to $53 billion, respectively, in one quarter. This accounts for more than 96 percent of the total outstanding derivatives. The lack of corresponding movement in the spot price of gold when the derivatives book is cornered creates an uncertainty of great magnitude.

JP Morgan Total Commodity Derivative Exposure
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Citigroup Precious Metals Derivative Exposure
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  • The Boston Consulting Group has taken on mineral exploration in a recent report titled “Tackling the Crisis in Mineral Exploration,” which details the lack of big, important discoveries in recent years despite a massive increase in exploration spending.
  • Cornerstone Macro has released a report about the unprecedented disconnect between central bank easing and economic activity. Despite 57 global central bank easing policies since the beginning of 2015, China has continued to deteriorate, the eurozone economy has run intro structural headwinds, and Japan’s economic recovery appears to have stalled in Q2. This is a very unusual time where, despite a global easing cycle, global growth is not accelerating and, if anything, is continuing to slow.
  • In a recent interview, influential investor Marc Faber issued a warning to those who still think that Greece doesn’t matter in the grand scheme of things. He spoke about the likelihood of contagion being very high and how the European Union continued to pump money into Greece, in part to bail out its own banks and suddenly now realizing the debt is no longer manageable. Chiming in on China, he said he had expected the market to fall at least 40 percent from the peak given the speculative run up.

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Energy and Natural Resources Market


China's Global Solar and Wind Power Consumption Could Rise
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  • Construction materials led the natural resource sector on improved sentiment for non-residential construction activity.  The S&P Construction Materials Index gained 6 percent over the five-day period.
  • Utilities outperformed the broader resource space as stock market volatility in China and Europe rattled domestic markets and brought down government yields. The S&P 500 Utilities Index rose 1.8 percent this week.
  • Once again this week, oil refiners outperformed on further strength in margins and peak summer gasoline demand.  The S&P Supercomposite Oil & Gas Refining & Marketing Index made a new 52-week high on the week, gaining 1.4 percent in the period.


  • Developing natural resource companies underperformed large cap energy and material stocks in the week on higher commodity and emerging market volatility.  The S&P/TSX Venture Index declined 4.5 percent over the week.
  • Coal prices and related equities declined this week in response to general weakness in crude oil and natural gas markets.  The Market Vectors Global Coal Index fell 6.9 percent in the week.
  • Equity market weakness in China weighted on industrial metals for a second week slowdown as the S&P/TSX Diversified Metals and Mining Index fell 5.6 percent.


  • PIRA notes that the worst of the oil market imbalance is over and supply overhang should start to shrink. Crude stockpile draws have started and will pick up momentum in the third quarter while the longer-term supply/demand fundamentals are bullish.
  • Negotiations for a nuclear agreement with Iran missed a third deadline this week, thus delaying a congressional review by another 30 days, and postpone the lifting of crude oil export sanctions that threaten to oversupply global oil markets. 
  • Natural gas futures could strengthen as the outlook for warmer summer temperatures gains momentum among forecasters.


  • In the International Energy Agency’s (IEA) recent energy report, the agency stated that crude oil prices may have to decline further in order to balance global supply in the back half of the year.
  • Industrial commodities could weaken further if China’s Industrial Production and Fixed Asset Investment data for the month of June show continued deceleration in economic activity.
  • U.S. dollar strength may pressure commodities further in response to Federal Reserve Chair Janet Yellen’s comments stating that she still expects to raise interest rates this year. 
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Emerging Markets



  • Chinese equities bounced back this week after suffering tremendous losses due to margin calls. The Shanghai Stock Exchange Composite Index rose 5.18 percent this week.
  • Turkish stocks rallied this week as oil prices took a hit and investors become more optimistic that a coalition government will be formed in time. The Borsa Istanbul 100 Index rose 1.94 percent this week.
  • Hungarian equities outperformed this week as the central bank continued to offer ample monetary support to the economy and inflation continued to pick up. The Budapest Stock Exchange Index rose 0.87 percent this week.


  • Russian stocks fell alongside Brent crude oil this week. The MICEX Index fell 0.47 percent this week.
  • Indian equities underperformed this week on the back of concerns that the global economy may be slowing. The S&P BSE SENSEX Index fell 1.54 percent this week.
  • The Brazilian real retreated this week as commodities slumped and concerns regarding global growth spread. The real fell 1.75 percent this week.


  • Eurozone M3 money supply growth continues to remain in a strong uptrend and is fueling inflation throughout the region. The European Central Bank’s (ECB) newly implemented bond purchasing program appears to be having the expected effect.

Growth in Eurozone Money Supply is Fueling Inflation
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  • Greek Prime Minister Alexis Tsipras submitted a proposal to his nation’s creditors this week, reviving hopes that a last minute deal can be reached. The proposal mirrors in many ways the one that was put to a vote last Sunday.
  • Value as an investment style delivered the best performance in Asia during the second quarter, a strong comeback after a mediocre showing in 2014.  As regional market volatility rises thanks to wild sentiment shifts caused by rapid deleveraging in the China A Share market and fierce government rescue, value should continue to outperform growth stocks as risk appetite retreats and defensive positioning prevails. 

Value to Remain "In Style" as Volatility Rises in Asia
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  • Yellen stated on Friday that the U.S. in on track to raise rates in September. With many thinking that date is too soon, stocks could pullback.
  • The International Monetary Fund (IMF) posted its global growth forecast for 2015 this week. The IMF attributed the downward revision primarily to weaker than expected growth in the U.S. during the first quarter. The IMF left its outlook for China and the euro area unchanged, but did note the uncertainty surrounding recent events.
  • Small- and micro-cap Chinese A Share companies have experienced a severe drawdown in the last month from extremely overbought levels, which challenges the core rationale for privatizing U.S.-traded Chinese companies and re-listing them in the A Share market, because the sustainability of valuation premium in the A Share market has become highly uncertain.  This can weigh on investor sentiment towards Chinese ADRs in the near term.

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Leaders and Laggards


Weekly Performance
Index Close Weekly
DJIA 17,760.41 +30.30 +0.17%
S&P 500 2,076.62 -0.16 -0.01%
S&P Energy 538.25 -8.03 -1.47%
S&P Basic Materials 299.42 -5.00 -1.64%
Nasdaq 4,997.70 -11.52 -0.23%
Russell 2000 1,252.02 +3.76 +0.30%
Hang Seng Composite Index 3,407.91 -149.75 -4.21%
Korean KOSPI Index 2,031.17 -73.24 -3.48%
S&P/TSX Canadian Gold Index 146.56 -5.30 -3.49%
XAU 59.01 -3.64 -5.81%
Gold Futures 1,162.30 -1.20 -0.10%
Oil Futures 52.82 -4.11 -7.22%
Natural Gas Futures 2.77 -0.05 -1.84%
10-Yr Treasury Bond 2.40 +0.02 +0.63%


Monthly Performance
Index Close Monthly
DJIA 17,760.41 -239.99 -1.33%
S&P 500 2,076.62 -28.58 -1.36%
S&P Energy 538.25 -31.20 -5.48%
S&P Basic Materials 299.42 -15.89 -5.04%
Nasdaq 4,997.70 -78.99 -1.56%
Russell 2000 1,252.02 -14.91 -1.18%
Hang Seng Composite Index 3,407.91 -315.21 -8.47%
Korean KOSPI Index 2,031.17 -20.15 -0.98%
S&P/TSX Canadian Gold Index 146.56 -11.14 -7.06%
XAU 59.01 -9.46 -13.82%
Gold Futures 1,162.30 -24.30 -2.05%
Oil Futures 52.82 -8.61 -14.02%
Natural Gas Futures 2.77 -0.12 -4.19%
10-Yr Treasury Bond 2.40 -0.09 -3.50%


Quarterly Performance
Index Close Quarterly
DJIA 17,760.41 -297.24 -1.65%
S&P 500 2,076.62 -25.44 -1.21%
S&P Energy 538.25 -47.11 -8.05%
S&P Basic Materials 299.42 -12.39 -3.97%
Nasdaq 4,997.70 +1.72 +0.03%
Russell 2000 1,252.02 -12.75 -1.01%
Hang Seng Composite Index 3,407.91 -430.23 -11.21%
Korean KOSPI Index 2,031.17 -56.59 -2.71%
S&P/TSX Canadian Gold Index 146.56 -19.31 -11.64%
XAU 59.01 -10.26 -14.81%
Gold Futures 1,162.30 -43.20 -3.58%
Oil Futures 52.82 +1.18 +2.29%
Natural Gas Futures 2.77 +0.26 +10.31%
10-Yr Treasury Bond 2.40 +0.45 +23.10%


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.  Distributed by U.S. Global Brokerage, Inc.

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

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio.

The Emerging Europe Fund invests more than 25 percent of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

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 percent to 10 percent of your portfolio in these sectors.

Bond funds are subject to interest-rate risk; their value declines as interest rates rise. Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. The Near-Term Tax Free Fund may invest up to 20% of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. The Near-Term Tax Free Fund may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer.

Investing in real estate securities involves risks including the potential loss of principal resulting from changes in property value, interest rates, taxes and changes in regulatory requirements.

Past performance does not guarantee future results.

Some link(s) above may be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

These market comments were compiled using Bloomberg and Reuters financial news.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings as a percentage of net assets as of 6/30/2015:

Claude Resources: 0.00%
Kirkland Lake Gold: Gold and Precious Metals Fund, 5.74%, World Precious Minerals Fund, 1.59%
Centamin PLC: Gold and Precious Metals Fund, 1.33%

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.
The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry.
The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.
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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 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 Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
The S&P 500 Construction Materials Index is a capitalization-weighted index that tracks the companies in the construction materials industry as a subset of the S&P 500.
The S&P Supercomposite Oil & Gas Refining & Marketing Index is a capitalization-weighted index.
The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index.
The Market Vectors Global Coal Index tracks the overall performance of companies involved in coal operation (production, mining and cokeries), transportation of coal, from production of coal mining equipment as well as from storage and trade.
The S&P/TSX Capped Diversified Metals and Mining Index is an index of companies engaged in diversified production or extraction of metals and minerals.
The Shanghai Stock Exchange Composite Index is a capitalization-weighted index that tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange.
The Borsa Istanbul 100 Index is a capitalization-weighted index composed of National Market companies except investment trusts.
The Budapest Stock Exchange Index is a capitalization-weighted index adjusted for free float. The index tracks the daily price-only performance of large, actively traded shares on the Budapest Stock Exchange.
The MICEX Index is the real-time cap-weighted Russian composite index. It comprises 30 most liquid stocks of Russian largest and most developed companies from 10 main economy sectors. The MICEX Index was launched on September 22, 1997, base value 100. The MICEX Index is calculated and disseminated by the MICEX Stock Exchange, the main Russian stock exchange.
The S&P BSE SENSEX Index is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange.
The University of Michigan Confidence Index is a survey of consumer confidence conducted by the University of Michigan. The report, released on the tenth of each month, gives a snapshot of whether or not consumers are willing to spend money.
The New York Empire State Manufacturing Survey is sent out to companies in the manufacturing industry in New York state. The survey provides an early indication of business conditions, such as price levels and employment trends, and it gives an indication of changes in sentiment. The survey is produced by the Federal Reserve Bank of New York and is released around the middle of the month.
The ISM Nonmanufacturing index based on surveys of more than 400 non-manufacturing firms’ purchasing and supply executives, within 60 sectors across the nation, by the Institute of Supply Management (ISM). The ISM Non-Manufacturing Index tracks economic data, like the ISM Non-Manufacturing Business Activity Index. A composite diffusion index is created based on the data from these surveys that monitors economic conditions of the nation.
The Job Openings and Labor Turnover Survey (JOLTS) is a survey done by the United States Bureau of Labor Statistics to help measure job vacancies.
The ZEW Indicator of Economic Sentiment is a qualitative assessment of the direction of inflation, interest rates, exchange rates and the stock market in the next six months. Thus the indicator provides a medium-term forecast for the German economy.The ZEW Current Situation survey focuses on the results that relate to the current health of the German economy. Expert opinions on whether the current situation is improved, worsened, or unchanged are summarized as the number of positive responses minus the number of negative responses. A higher headline figure indicates a stronger economy and better business climate.