Here’s the Cost of Global Terrorism

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

We were saddened this week to hear that at least 30 people were killed and many dozens more injured in ISIS-related suicide bombings that targeted an airport and train station in Brussels. The Belgian and European Union capital joins Paris, San Bernardino, Ankara, Jakarta and too many other cities in the past year alone that have come under fire from the Islamic terrorist group.

I was in Brussels most recently three years ago for an International Crisis Group meeting, and I was stunned by its beauty and elegance, highlighted with gold-trimmed architecture and vibrant flowers. In August, the city will celebrate the 20th anniversary of its Flower Carpet, which makes jaw-dropping use of over 600,000 begonias.

This artistry stands in stark contrast to the cowardice and brutality we saw this week.

While we can’t leave aside the immeasurable loss of life, tragic events such as these tend to have an enormous ripple effect on the economy. Between 70 and 80 percent of the European economy is based on consumption, and when people’s sense of safety and security ends up being rattled, they might temporarily avoid spending on travel and at malls, cinemas, restaurants and elsewhere.

I definitely saw this to be the case in the days following the 9/11 attacks. As I’ve shared with you before, I was in Manhattan at the time, attending a financial industry conference. Except for emergency services, all of New York City shut down in every way imaginable, from subways to airports to cell phones. (Because I had a San Antonio area code, I could still make calls on my phone.) I was lucky enough to reserve one of the last available rental cars in the area, and on the long drive home to Texas, I passed many stores and businesses that had closed for the week.

Indeed, few things are as disruptive to our lives and the economy as terrorist activity. A recent Gallup poll found that 79 percent of respondents believe global terrorism to be a “critical threat” to the U.S., the highest of any other potential threat.

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What’s more, the economic impact of global terrorism has been rising steadily since 2010. In November, the Institute of Economics and Peace (IEP) calculated its cost at over $52 billion in 2014, the highest ever.

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But this figure takes into account only direct, short-term costs. The 9/11 attacks were initially estimated to have cost $27.2 billion, but when you factor in indirect and long-term expenditures—the economic impact, war funding, future veterans’ care and more—it comes closer to $3.3 trillion, according to the New York Times.

So who are the beneficiaries in the aftermath of such disruptive events? Following the Paris attacks in November, aerospace and defense stocks such as Lockheed Martin, Boeing and Northrop Grumman got a boost.

Very often, governments use terrorist attacks to usurp individual rights and chip away at democracy. Little more than a month after 9/11, Congress passed the USA PATRIOT Act, which was vehemently criticized for violating people’s privacy.

Similarly, one of the biggest consequences of the Brussels attack might very well end up being political. Fueled by the Syrian migrant crisis, far-right parties and nationalist movements have already been gaining ground in Europe—the Alternative for Germany party, the National Front in France, the Danish People’s Party—and Brussels will likely serve as an impetus for further change.

The attacks also highlight the importance of owning gold, which investors have traditionally valued for its stability in times of crisis and currency fluctuations. Lately we’ve seen central banks all over the globe respond to lackluster growth with subzero rate polices, and this could accelerate if terrorist activity continues to shock our economies.

The yellow metal is currently up more than 15 percent since the beginning of 2016, making it one of the best performing assets of the year. Over the same time, inflows into gold ETFs have surged 20.3 percent. Earlier this month I shared with you an observation from Pierre Lassonde, cofounder of Franco-Nevada, who told me that for every $1 billion that goes into the SPDR Gold Trust (GLD), the price of gold rises approximately $30 per ounce.

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I recommend a 10 percent weighting in gold—5 percent in gold stocks, the other 5 percent in physical bars, coins and jewelry—in both good times and bad.

Tony Blair: Time to Put an End to “Flabby Liberalism”

Speaking ahead of the Brussels attack, former British Prime Minister Tony Blair warned that “flabby liberalism” has helped cultivate an environment in which radical Islam can grow and, worse, be tolerated. A more assertive policy of “muscular centrism” is needed, he argued.

Even though Mr. Blair—whom I’ve had the pleasure of meeting several times—was speaking of European politics in general, British in particular, I believe his advice should be heeded by all Western governments. Somehow we’ve gotten it in our heads that we should feel guilty for our beliefs and way of life. In Blair’s words, “we shouldn’t let people intimidate us into thinking there are certain values we shouldn’t be standing up for”—values such as freedom, personal liberty, capitalism and entrepreneurship.

It’s these very values that have attracted some of the world’s greatest minds to the U.S.  

Consider the life story of Andrew Grove, the Hungarian-born Jew who went on to become CEO of chipmaker Intel and the man who’s widely credited for building Silicon Valley into the tech mecca it is today. Grove, who passed away this week at the age of 79, grew up behind the Iron Curtain in a country that, at the time, knew nothing of individual rights or personal and intellectual property. Had he stayed, it’s highly unlikely the world would have seen or benefited from the startling advancements in personal computing that came as a direct result of his involvement in memory chips and microprocessors. Fortunately for us, he managed to flee to the U.S., where he found the opportunity to pursue, develop and be rewarded for his talents.

Grove, born András Gróf, was named Time’s Man of the Year in 1997. His 1999 book “Only the Paranoid Survive” is a seminal work on how computer technology has fundamentally changed business and led to new strategic inflection points.

A similar story can be told of Ern? Rubik, inventor of the Rubik’s Cube, who was also born a Jew in Soviet-era Hungary. An architect by trade, Rubik originally conceived of his now-famous toy in 1974 but couldn’t get a patent on it until 1977. His options were very limited for manufacturing and marketing, and even once he was able to get his creation on store shelves, he received little credit or reward because communist and socialist countries don’t respect property of any kind, including intellectual property.

The 3D puzzle game attracted hardly any attention until it was discovered in 1979 by a Hungarian expatriate who owned a games and toys company in England. A deal was negotiated with an American toy company, and Rubik’s invention, renamed the Rubik’s Cube, went on to become one of the most sought-after toys of the 1980s. Today, an estimated 350 million units have been sold worldwide.

Like Grove, Rubik owes much of his success to the values of freedom, capitalism and intellectual property. We should acknowledge and celebrate them, not apologize for them.

Tax-Free, Stress-Free Income

Whether from terror or disease or hurricanes, volatility is a fact of life. What’s important is to have balance, from the food we eat to the activities we engage in to what we put in our portfolios. As such, we need calm investing, which can offset this volatility with quiet, modest growth.

If you’re interested in exploring how to keep more of your wealth in your pocket, and how to take advantage of what I call calm investing, I invite you to join us March 30 at 3:30 CT (4:30 ET) for a special webcast. Fixed-income investment analyst Juan Leon and I will discuss the power of municipal bonds, which provide investors with tax-free, stress-free income. Register today!  

Index Summary

• The major market indices finished mixed this week.  The Dow Jones Industrial Average gained 0.20 percent. The S&P 500 Stock Index fell -0.23 percent, while the Nasdaq Composite fell -0.03 percent. The Russell 2000 small capitalization index lost -1.07 percent this week.
• The Hang Seng Composite lost -0.20 percent this week; while Taiwan was up 0.10 percent and the KOSPI fell -0.10 percent.
• The 10-year Treasury bond yield rose 0.21 percent this week to 1.90 percent.

Domestic Equity Market

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Strengths

• Health care was the best performing sector for the week, increasing 0.62 percent compared to an overall decrease of 0.67 percent for the S&P 500 Index.
• Pepco was the best performing stock for the week, increasing 22.58 percent. The company was acquired for nearly $7 billion by Exelon, creating America’s largest electric utility company.
• US-based Marriott International beat out China’s Anbang Insurance to acquire Starwood Hotels & Resorts Worldwide. The deal is valued at $13.6 billion. The Marriott-Starwood combination would create the world’s largest hotel chain.

Weaknesses

• Energy was the worst performing sector for the week, falling 2.43 percent compared to an overall decrease of 0.67 percent for the S&P 500.
• The Williams Companies was the worst performing stock for the week, falling 15.43 percent. The oil and gas midstream space was rocked by the ruling of a Texas bankruptcy court. What some once thought were ironclad contracts might in fact turn out to be a little more optional than that. That could kill the distributions of companies such as the Williams Companies. 
• Citing risks to the security of U.S. food supply, Senator Chuck Grassley of Iowa asked the Department of Agriculture to review the takeover of seed and pesticide maker Syngenta by ChemChina. The Chinese government–controlled ChemChina struck a $43 billion deal in February to purchase the Swiss-based agribusiness.

Opportunities

• Pharmaceutical companies are enjoying a productivity revival, as a demand-driven surge in pricing power is underway.
• After a prolonged slump, investment in communications equipment is climbing relative to total investment and compared with information technology investment.
• Wages and salaries growth is robust, courtesy of U.S. dollar strength and the collapse in fuel prices, which should underpin consumer appetite for debt. That should be positive for consumer finance stocks.

Threats

• While airline stocks have enjoyed some modest relief in recent weeks, BCA expects this resilience to fully reverse due to overcapacity in the industry.
• Computer hardware investment is highly cyclical, rising and falling with discretionary spending budgets. Such budgets are being scaled back as the corporate sector tightens its belt in response to deflation and profit margin pressure.
• The latest Federal Reserve senior loan officer survey showed that banks are tightening standards on consumer and industrial loans, the most rapidly growing component of bank assets. This reflects the broad-based deterioration in corporate sector balance sheet health.

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The Economy and Bond Market

Strengths

• The Philadelphia, New York, and Richmond Fed manufacturing sector indicators showed a pretty strong acceleration in growth in March.
• Initial jobless claims came in at 265,000 for the week, better than the expected 269,000.
• The preliminary Markit U.S. Services purchasing managers’ index (PMI) for March came in at 51, up from February’s 49.7.

Weaknesses

• Strong readings from the Empire State, Philadelphia and Richmond Fed surveys sparked hope that the recent soft patch in U.S. manufacturing has come to an end. But a tepid rise in Markit’s U.S. Manufacturing PMI dampened some of that optimism. The index rose less than expected, to a flash estimate of 51.4 in March from 51.0 in February. Economists had expected a rebound to 52.4.
• Sales of existing homes fell 7.1 percent in February, while sales of newly constructed homes rose 2 percent. High prices and low inventories contributed to the decline in sales of previously owned homes.
• No central bank wants to resort to pushing policy rates below zero, but Hungary did just that this week, trimming its policy rate to -0.05 percent from 0.10 percent. Hungary is the first emerging market to adopt negative rates, joining the likes of the European Central Bank, the Bank of Japan and the Swiss National Bank.

Opportunities

• The strong March acceleration in the various manufacturing sector indicators are likely to have an impact on the April Federal Open Market Committee (FOMC) meeting.

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• Chinese economic data could turn brighter thanks to fiscal stimulus. An update of PMI surveys on Friday will provide a reading on China’s economic momentum.
• The March Consumer Confidence Index is expected to come in at 93.9, up from February’s reading of 92.2.

Threats

• It was a heavy week for Fed communication, with five members of the FOMC suggesting the next hike in policy rates should come at the April meeting. In the days following these comments, oil prices slumped, the dollar strengthened and equities declined. However, only two of the five, Kansas City Fed president Esther George and St. Louis Fed president James Bullard, are voting members of the committee this year. Fed Chair Janet Yellen said at her press conference earlier this month that caution is warranted in removing monetary accommodation.
• Weakness in the February durable goods report was widespread. The report is a key input used to estimate equipment spending in the GDP accounts and could lead to downward revisions to first quarter GDP estimates.
• The Fed could receive a conflicting message from two key economic data inputs that shape its policy, core PCE inflation (Monday) and payrolls (Friday). A continued moderate acceleration in core inflation will prevent the Fed from becoming ultra-dovish. However, the robust employment gains could soften in the coming months as indicated by ISM surveys (an update to the manufacturing gauge will be released on Friday).

Gold Market

This week spot gold closed at $1,216.82, down $41.12 per ounce, or -3.27 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, fell by -5.59 percent. Junior miners outperformed seniors for the week as the S&P/TSX Venture Index traded off just 0.13 percent. The U.S. Trade-Weighted Dollar Index rose 1.43 percent for the week.

Strengths

• The best performing precious metal for the week was platinum, however still down -2.35 percent. Price action was driven by increased auto demand in the European Union, reports Market Realist, which rose 14 percent in February. Platinum and palladium is used in the production of catalytic converters.
• Germany announced this week that it wants half of its gold reserves back by the year 2020, reports Bloomberg. Bundesbank, the country’s central bank (which has gold in London and New York), has repatriated 1,400 metric tons, or 41.5 percent, of Germany’s gold reserves to Frankfurt.
• Even though gold prices haven’t done much this month, investors are still pouring cash into gold exchange-traded funds, reports Bloomberg. Gold ETF assets continue to increase, with holdings currently near a two-year high.

Weaknesses

• The worst performing precious metal for the week was silver, down -3.96 percent. The precious metal plunged on Wednesday, and remains low today, mainly driven by a stronger U.S. dollar.
• The U.S. dollar gained this week against all major peers, causing gold traders and analysts to turn bearish for the third time in four weeks, according to Bloomberg. The dollar was boosted on prospects for higher U.S. interest rates, in turn cutting the precious metal’s appeal as an alternative investment. This week gold headed for its biggest weekly slump since November.
• As seen in the chart below, Bloomberg reports that the gold momentum gauge is flashing a bearish sign as the metal’s rally has started to fizzle. Head of metals research for Societe Generale, Robin Bhar, told Kitco News that the recent gold price rally looks unsustainable. Bhar cited financial turmoil and expectations that the U.S. and global economies will fall into recession have been the factors behind the move, reports Kitco, although these appear to be extreme scenarios.

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Opportunities

• A prominent forecaster from JPMorgan Chase believes investors are better off betting on gold, explaining that the market’s rally is in trouble. An article on CNBC clarifies Marco Kolanovic’s view that the popular trade of being long momentum stocks against a short position on S&P 500 is being unwound. Kolanovic is widely followed by the hedge fund industry and concludes the rally in the broader market has been driven by short covering of bets that the market would fall, thus if stocks reverse, gold should be a beneficiary of the shift.
• Reuters reports that the 19-day strike by Indian jewelers finally came to an end on Saturday, after government assured they will not be “harassed” by the excise department in collecting a new tax. The jewelers went on strike at the beginning of March following the reintroduction of a 1 percent excise duty on gold jewelry after four years.
• Klondex Mines reported fourth quarter and year-end results after market close on Thursday.  The results were positive with costs coming in better than expectations and free cash flow higher than forecast.  Klondex forecasts a 16 percent increase in production for 2016, while most companies are flat-to-negative on growth.  Cash balances increased 30 percent for the year.  We expect further positive developments as we see 2016 progress.

Threats

• A wholly-owned subsidiary of Kinross Gold Corp., Compania Minera Maricunga (CMM), was notified by Chile’s environmental regulatory authority of a resolution starting a legal process, according to a news release on March 21. The resolution will seek to require CMM to close the Maricunga mine’s water pumping wells located in the Pantanillo area of Region III due to drought. Kinross responded stating it is committed to responsible environmental management.
• James Bullard, president of the Federal Reserve Bank of St. Louis, told policy makers this week that they should consider raising interest rates at their next meeting, reports Bloomberg, which would help boost the greenback. Gold has fallen to its lowest in a month as the dollar advance saps up demand in addition to some policy makers saying that recent economic data justifies tighter monetary policy.
• Gold miners are letting the hedge grow, writes Peter Ker. The price of gold has neared record highs in Australian dollar terms, with the largest gold miner on the ASX deciding to embrace hedging. On Thursday, Newcrest Mining confirmed that a portion of the gold produced at the Telfer mine in Western Australia has been hedged until 2018.  This could signify that miners don’t believe the high gold prices can last.

Energy and Natural Resources Market

Strengths

• Precious metals’ ETF holdings continued to climb this week in spite of the headwinds posed by a strengthening U.S. dollar. ETF gold holdings reached a two year high, while silver holdings in similar exchange-traded products rallied to a seven-month high. The rally follows last week’s strong inflation report, which shows real interest rates are at the lowest level they have been since at least 2013.
• The best performing sector for the week was the S&P 500 Utilities Index. The defensive index rose 0.6 percent as investors sought protection from risky assets amid weaker commodity prices.
• The best performing stock for the week in the broader natural resource space was Severstal PAO. The Russian steel producer rallied 6.7 percent for the week after receiving ‘Buy’ upgrades from VTB Capital and Bank of America analysts. The analysts pointed to a strong rally in Russian steel prices as a major driver of profitability for the miner.

Weaknesses

• Oil prices dropped after a “monster” crude inventory build. The Energy Information Administration (EIA) reported a massive 9.4 million barrel expansion of crude inventories, significantly above consensus. According to Desjardins analysts, the build puts U.S. crude inventories within 20 million barrels of estimated storage capacity.
• The worst performing sector for the week was the S&P/TSX Diversified Metals and Mining Index. The index dropped 12.6 percent after numerous Wall Street analyst turned cautious on copper prices.
• The worst performing stock for the week in the S&P Global Natural Resources Index was First Quantum Minerals. The Canadian copper miner declined 17 percent for the week as a stronger U.S. dollar and weaker copper prices led to profit taking after 5 consecutive weeks of strong gains.

Opportunities

• Petrochemical producers in the U.S. are reaping the benefits of a seasonal turnaround in capacity. For the last eight weeks, ethylene spot prices have increased about 68 percent, greatly outpacing the roughly 25 percent rally in Brent oil, a common ethylene input. This dynamic has resulted in expanding operating margins for most producers, and should continue throughout the heavy outage season.

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• Supply outages in OPEC countries may push up oil prices. According to OilPrice.com, recent disruptions have trimmed the group’s collective output by nearly 200,000 barrels per day. The main outages are coming out of Nigeria and Iraq, especially from the Iraqi semi-autonomous region of Kurdistan where a rebel attack put a key pipeline temporarily out of service.
• The liquefied natural gas (LNG) supply glut may get some relief after Woodside Petroleum and its partners decided to cancel a massive $40 billion floating LNG project off the coast of Australia. With LNG prices hovering at a quarter of the price from just two years ago, it is expected other planned projects may get a second look.

Threats

• The U.S. dollar rebounded from a nine-month low reached last week as investors weighed slightly stronger economic data and comments from Federal Reserve policymakers suggesting interest rates may rise in the next few months. The dollar strength is inversely correlated with commodity prices and riskier assets, thus threatening the recent outperformance of the natural resource space.
• Demand for copper in the U.S., the second-largest user, has plunged, showing the market has more to worry than just weakening demand from China. Bloomberg reports that the combined consumption globally, ex-Asia, shrank 20 percent in the past decade. The reason is simple–from plumbing to communications to electronics, traditional copper uses are losing out to lower-cost or better-performing substitutes.
• Reuters reports that a number of U.S. shale oil producers are activating drilled but uncompleted wells (DUCs) as recent price gains bring marginal production back into profitability. This strategy is a clear reversal that threatens to bring more crude to a saturated market and dampen any sustained rebound in prices.

China Region

Strengths

• The Stock Exchange of Thailand (SET) Index was the top equity index in the region this week, rising 1.65 percent as the baht weakened.
• The Malaysian ringgit constitutes the top-performing currency in the region this week, rising about 78 basis points over the last four trading days.  Malaysia is the region’s only net energy-exporting country.
• This week Chinese Premier Li Keqiang offered candid remarks that acknowledged China’s headwinds but confirmed its 6.5-7.0 percent GDP growth, also promising greater currency stability.

Weaknesses

• With the exception of the ringgit, almost all regional currencies were weaker against the U.S. dollar for the week.  The worst-performing currency in the region was the Thai baht, down about 1.28 percent for the last four days, after the Bank of Thailand left interest rates on hold but increased other stimulus measures.
• Within the broader Asia Pacific region, the Nikkei Japan Manufacturing PMI fell to 49.1, missing analysts’ expectations for 50.5 and signaling contraction.
• China Singyes Solar Technologies Holdings Ltd. was the worst performer in the Hang Seng Composite Index, falling more than 18 percent on Thursday alone after issuing a negative profit warning.

Opportunities

• Next week we get China and Caixin PMIs on March 31.  Surveys show expectations of 49.3 (up from 49.0) for China Manufacturing PMI, and 48.3 (up from 48.0) for Caixin China Manufacturing PMI.  Chinese officials continue to acknowledge headwinds but stress a focus upon growth and currency stability.  Positive data surprises may help bolster the recent relative calm.
• Facebook CEO Mark Zuckerberg’s latest visit to China has increased media attention upon his efforts to open the country up to Facebook, which has been blocked in China since 2009.  Tapping into China’s 668 million internet users could help move the needle for the social networking giant.

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Threats

• The trade deficit for the January period in the Philippines widened to its largest level since 1980 as imports outpaced exports.  Imports came in up 30.8 percent year-over-year, missing expectations for a decline of 15.6 percent, while the overall trade balance, which was expected to be slightly negative (-$160 million) and down from a positive December measurement ($603 million), actually came in -$2.638 billion. 
• Indonesian officials held a press conference in Jakarta this week to complain about aggressive Chinese actions in the disputed waters of the South China Sea.  Until now, Indonesia in general has avoided criticism of Chinese actions in the South China Sea.
• Reuters reported this week that a Chinese FX official confirmed the country is considering a so-called Tobin tax to help stem capital outflows.

Emerging Europe

Strengths

• Greece was the best performing country this week, gaining 1.54 percent.  The Greek Finance Minister stated that the negotiations between Greece and its creditors will be concluded by April 12-13 so that an agreement should be reached on the firs review and the debt relief by April 22.
• The Ukrainian hryvnia was the best performing currency this week, gaining 1.5 percent against the dollar. The hryvnia was the only currency that gained this week against the dollar; all other emerging European currencies declined in value.
• The telecommunications service sector was the best performing sector among Eastern European markets this week.

Weaknesses

• Ukraine was the worst performing market this week, losing 6.9 percent.  The PFTS stock exchange declined 6.3 percent on Thursday. Yuriy Lutsenko, head of President Petro Poroshenko’s party in parliament, suggested nominating Speaker Volodymyr Hroisman as prime minister.
• The Hungarian forint was the worst performing currency this week, losing 2.29 percent against the dollar. The Central Bank of Hungary cut its main interest rate from 1.35 percent to 1.2 and slashed 2016 and 2014 inflation projections. Hungary expects 2016 consumer price index (CPI) at 0.3 percent versus 1.7 percent and 2.4 percent in 2017 versus 2.6 percent.
• The industrial sector was the worst performing sector among Eastern European markets this week.

Opportunities

• Markit’s flash Composite Eurozone purchasing managers’ index (PMI), which tracks changes in service and manufacturing business activity, moved higher for the first time this year. PMI rose from 53.0 in February to 53.7 in March.

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• Poland imports most of the gas it consumes from Russia, but it has been looking for years to diversify its sources of supply. The country has finished construction of a 3 billion zloty ($794 million) LNG terminal by the Baltic Sea, which is expected to receive its first shipment in July. And, last year, PGNiG, the state controlled utility company, revived plans to build a pipeline by 2020 to carry gas from Norway.

• U.S. Secretary of State John Kerry on Thursday met with Russian President Vladimir Putin. Kerry said he hoped the talks would be constructive and allow the nations to find a way to “rebuild and strengthen the relationship between the United States and Russia by proving that we know how to solve some serious problems together and building from there.” This meeting was arranged after Putin made a surprise announcement last week that Russian troops would partially withdraw from Syria after five months of military operations in support of Assad’s government.

Threats

• The number of Russians living below the poverty line rose to the highest levels in nearly a decade in 2015. According to the Federal Statistics Service, 19.2 million people in Russia, or 13.4 percent of the population, were living in poverty in 2015, compared with 16.1 million people, or 11.2 percent in 2014. Years of high crude oil prices had pushed the Russian’s living standards up, but Brent crude oil declined 25 percent in 2015 and the oil-dependent economy suffered.
• Four months after a terrorist attack in France that killed 130 people, there was a twin attack on the Brussels airport and a rush hour metro train in the Belgian capital on Tuesday. European travel and airline stocks fell after the Brussels airport attack. 
• Russian stocks breached overbought level after a 39 percent rally since late January, and have pushed the 14 day relative strength index above 70. When the stocks last approached that level, a decline of about 30 percent followed. Analysts at Barclays advise clients to refrain from chasing the rally.

Leaders and Laggards

U.S. Global Investors, Inc. is an investment adviser registered with the Securities and Exchange Commission ("SEC"). This does not mean that we are sponsored, recommended, or approved by the SEC, or that our abilities or qualifications in any respect have been passed upon by the SEC or any officer of the SEC.

This commentary should not be considered a solicitation or offering of any investment product.

Certain materials in this commentary may contain dated information. The information provided was current at the time of publication.

Some links above may be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for their content.

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

Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 12/31/2015:
Boeing
First Quantum Minerals
Klondex Mines
Newcrest Mining Ltd
Northrop Grumman
Severstal PAO
Syngenta AG

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The Richmond Fed Manufacturing Index is based upon mail-in surveys from a representative sample of manufacturing plants and seeks to track industrial performance.
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 S&P Global Natural Resources Index includes 90 of the largest publicly-traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified, liquid and investable equity exposure across 3 primary commodity-related sectors: Agribusiness, Energy, and Metals & Mining.
The Ukraine PFTS Index is a benchmark stock market index which tracks the performance of major companies listed on the PFTS Stock Exchange.
The Consumer Confidence Index (CCI) is an indicator which measures consumer confidence in the Economy.
Service PMIs are published monthly by Markit Economics in conjunction with sponsors, and are based on surveys of over 400 executives in private sector service companies. The surveys cover transport and communication, financial intermediaries, business and personal services, computing & IT and hotels and restaurants.
The Bangkok SET Index is a capitalization-weighted index of all the stocks traded on the Stock Exchange of Thailand.
The Hang Seng Composite Index is a market-cap weighted index that covers about 95% of the total market capitalization of companies listed on the Main Board of the Hong Kong Stock Exchange.