In a Flash, China Looks Strong

Author: Frank Holmes
Date Posted: May 23, 2014 Read time: 41 min

Press Release: President and General Counsel of U.S. Global Investors Receives Award for Top Women in Asset Management

Innovation Meets Tradition in China

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

Chinas Flash PMI Reaced a month high for May

If you want to know where the world economy is headed, there is one number that I believe investors should focus on: the HSBC China Manufacturing Purchasing Managers’ Index (PMI).

On Thursday, the preliminary flash PMI for May came in at 49.7, beating Bloomberg’s consensus of 48.3.

When evaluating this number from one month to the next, it is common to focus on whether or not it has crossed above or below the 50 mark. A reading above 50 signifies expansion in manufacturing activity, while a reading below 50 signals contraction. This has certainly acted as a warning sign for how the economy will perform moving forward, but at U.S. Global Investors we look at this number a little differently.

Here’s how we see it:
When it comes to China’s PMI, it may surprise you that from November 2005 to December 2013, there have only been six instances when it crossed above 50. The infrequency of this “tell-tale move” is exactly why co-portfolio manager of our China Region Fund (USCOX), Xian Liang, and I monitor the one-month versus three-month trend, in addition to keeping track of its 50-mark movements.

Largest One Month Jump Chinas Manufacturing Activity since August 2013
click to enlarge

Let me explain: When the current flash PMI number (49.7 for May) moves above the three-month moving average (48.6), our research shows that such a move is positive. Historically, since 2005, after the one-month crosses above the three-month average, there is a 61 to 72 percent probability that commodities and stocks will rise in the following one-month and three-month periods.

Looking back to the post-crisis period, after 2008, the probability for such movement has been lower, but still remains above 60 percent for the S&P 500 Index as well as copper.

Purchasing Managers Index PMI Trends
click to enlarge

Life is about managing expectations, and as I wrote about last week, the PMI is an excellent tool to use.  These numbers allow us to anticipate the direction of manufacturing activity and help to shape our investment decisions while simultaneously managing our emotions.

A case in point for China’s numbers.

From November 2005 to December 2013, there were 18 occurrences when China’s PMI saw one-month cross above three-months. Below are a number of these instances.

Commodities and Commodity Stocks Historically Rose After PMI Cross-Over
click to enlarge

Of course, investors should keep in mind that these are examples of possible ramifications – past performance does not guarantee future results.

China’s flash PMI for May represents not only the highest reading in five months, but also the largest single-month jump since August 2013. This bodes well for industrial production as we move forward, one more encouraging sign for investors to watch, and shows the potential for an exciting second half in 2014 for the energy market and commodity demand.

Government policy is a precursor to change.

Another headline for China this week is the country’s 30-year gas deal with Russia. Vladimir Putin, Russia’s president, signed a multi-billion dollar deal between Gazprom and China National Petroleum Corp. How is this significant for the global economy?

Vladimir Putin and Xi Jinping shake hands 30 year Gas Deal

To start, this deal connects two of the world’s superpowers and allows Russia to expand its gas market to Asia. It’s noteworthy for steel and pipelining as well. Steel demand should grow dramatically along with pipeline production, and this will call for more engineering jobs in China.

Looking forward.

These significant developments out of China, whether in the form of flash PMI or a gas deal with Russia that could boost steel demand, are bullish signs to keep this country on your radar. Look for the opportunity, know what is happening in the global market, and be curious to capitalize on what you find.

Speaking of which, I recently I had the pleasure to catch up with two of U.S. Global Investors’ greatest success stories, Pacific Rubiales and Silver Wheaton, both of which we were seed investors in. This month I attended the Pacific Rubiales Investor Open House 2014 in New York City, and after meeting with top managers, I remain strongly confident that the company will continue to make giant strides in the Latin American oil sector. Also this month, we had the honor of being visited by Randy Smallwood, CEO of Silver Wheaton, whose rise from a startup mining operation only a decade ago to today’s largest precious metals streaming company in the world is certainly a compelling one.

I’m excited to share the stories of these two hugely successful companies and how U.S. Global came to be seed investors in them. Look for the two-part series on these stories soon!

Holmes Macro Trends Fund

Index Summary

  • Major market indices finished higher this week.  The Dow Jones Industrial Average rose 0.70 percent. The S&P 500 Stock Index gained 1.21 percent, while the Nasdaq Composite surged 2.33 percent. The Russell 2000 small capitalization index galloped ahead by 2.11 percent this week.
  • The Hang Seng Composite rose 1.31 percent; Taiwan gained 1.35 percent while the KOSPI advanced 0.19 percent.
  • The 10-year Treasury bond yield rose by 1 basis point to finish the week at 2.53 percent.

Domestic Equity Market

The S&P 500 Index rallied by more than one percent this week. Cyclical areas of the market bounced back sharply with technology and consumer discretion leading the way, while telecommunications and utilities were down for the week. The driver was likely the better economic news out of China, as Markit’s flash manufacturing PMI rose more than expected and hit a five-month high, boosting investors’ confidence in global growth prospects.

S&P Economic Sectors
click to enlarge


  • The technology sector was the best performer as Google rose by more than 6 percent and Facebook wasn’t far behind. Both stocks were strong performers all week as newsflow was positive. Investors appeared to feel comfortable taking more risk this week. The entire sector had a good week with roughly 90 percent of constituents rising for the week.
  • The consumer discretionary sector was also strong this week as internet retailers, broadcasting and homebuilders all posted strong performances, while some of the more traditional retailers were down for the week
  • Netflix Inc. was the best performer in the S&P 500, rising 15 percent this week. The company announced an international expansion into major European countries such as Germany and France that was well received by the market. TripAdvisor also rose by about 15 percent. At a conference this week, TripAdvisor expressed enthusiasm on the strength seen in the second quarter.


  • The telecommunication services sector was the worst performer this week as AT&T fell nearly 4 percent as the company announced a definitive agreement to acquire DirecTV, which had been talked about for at least two weeks.
  • The utilities sector was a weak performer in a broad based selloff as the market embraced risk again.
  • Petsmart Inc. was the worst performer in the S&P 500, falling 14.88 percent. The company announced quarterly results, which were disappointing along with reducing second quarter and full year expectations.


  • As mentioned last week, expectations in the consumer discretionary sector may have gotten too pessimistic and after a period of underperformance over the past few months, could be potentially setting up a scenario where expectations are sufficiently low that stocks could rally as sentiment swings back to a more neutral position. Costco and Michael Kors report next week and will be key companies to watch.
  • The bounce in cyclicals this week has been very encouraging and we may be finally turning the corner after a period of underperformance that began in mid-March. This bodes well for quality growth stocks with reasonable valuations.
  • The S&P 500 closed at a new high and we have seen other encouraging signs that the modest correction may have run its course for the time being.


  • The Russell 2000 closed above its 200-day moving average on Friday which is an encouraging sign but we can’t say we are totally out of the woods just yet.
  • As earnings start to wind down, the focus will shift to macro factors and geopolitics. With a Ukrainian election over the weekend and rhetoric still high the conditions remain ripe for turmoil that may spill over into the financial markets.
  • Housing stocks rallied this week but housing data remains disappointing overall. Housing is a key part of the recovery story and key indicators to watch in the upcoming week include pending home sales and the S&P/Case-Shiller Home price data.

Frank Holmes to Speak in Vancouver July 22-25

The Economy and Bond Market

Treasury bond yields were mixed this week, as the long end of the yield curve rose modestly while short-term yields fell by a few basis points. In the U.S., housing data was in line with expectations of moderate gains. The Conference Board’s index of leading indicators continues its steady ascent and bodes well for the economic recovery over the next six months.

US Leading Indicator Shows Steady Improvement Past Two Years
click to enlarge


  • The Conference Board’s index of leading indicators has been very consistent in forecasting better growth; this is especially true over the past year or so. This latest data point points toward continued improving economic expansion. This follows last week’s release of the National Federation of Independent Business’ (NFIB) optimism index, which measures small business confidence, which rose to the highest level since the financial crisis and has risen for seven months in a row
  • We got some good news out of China this week as Markit’s flash manufacturing index rose to a five-month high.  This is a key indicator to watch for global growth prospects and it is trending higher.
  • Housing data here in the U.S. was generally constructive with both new home sales and existing home sales coming in better than expected.


  • The American Institute of Architect’s billing index fell for the second month in a row. This index is viewed as a leading indicator for commercial real estate.
  • Mortgage applications fell 2.8 percent during the past week and remain much weaker than a year ago.
  • German business confidence as measured by the Ifo Institute’s business climate index fell in May and has stalled out so far year to date.


  • All eyes are on the European Central Bank’s (ECB) June 5 meeting, as the ECB is expected to ease monetary policy by taking the rate on reserves at the central bank into negative territory.
  • With a heavy calendar of economic data out next week, key indicators to watch include durable goods orders, consumer confidence and first-quarter GDP revisions.
  • There are many moving parts to the taper decision and while the Fed began the process it is very possible that tapering could be delayed if the economy stumbles.


  • Long-term bonds have posted strong returns so far year to date and with economic data looking supportive a modest selloff wouldn’t be surprising.
  • While the ECB is moving toward easing, U.K. policymakers at the Bank of England are considering raising interest rates as the housing market has been very strong along with retail sales.
  • Housing data remains mixed and the spring selling season has disappointed so far. If activity doesn’t pick up soon, housing may not be the positive catalyst many were expecting for 2014.

Looking for Tax-Free Income?

World Precious Minerals Fund – UNWPX • Gold and Precious Metals Fund – USERX

Gold Market

For the week, spot gold closed at $1,293.46, up $4.67 per ounce, or 0.36 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, declined 1.30 percent. The U.S. Trade-Weighted Dollar Index rose 0.19 percent for the week.

Date Event Survey Actual Prior
May 21 China HSBC Flash Manuf. PMI 48.3 49.7 48.1
May 21 FOMC April Meeting Minutes
May 22 Eurozone Markit Flash Manuf. PMI 53.2 52.5 53.4
May 23 U.S. April New Home Sales 420K 433K 384K
May 27 U.S. May Consumer Conf. Index 83.0 82.3
May 27 U.S. April Durable Goods Orders 0.7% 2.5%
May 29 U.S. Q1 GDP Second Reading -0.5% 0.1%
May 29 Japan April Nationwide CPI 3.3% 1.6%


  • Gold and the equity markets barely budged with the release of the latest Federal Open Market Committee (FOMC) minutes on Wednesday. The minutes revealed that the Federal Reserve is likely to carry on with its plan to achieve full employment, disregarding recent concerns over inflation risks. More importantly, this week we heard statements from the Federal Reserve Bank of New York’s President Dudley on the policy outlook. Dudley indicated that rates are likely to normalize well below previous recovery cycles. Historically rates have averaged 4.25 percent when inflation was around 2 percent, which according to Dudley, is much too high in the current economic environment where headwinds persist. The lower-rate normalization, with inflation running at 2 percent, ensures that real rates remain negative, traditionally supportive for gold prices.
  • Rio Alto Mining and Sulliden Gold announced intentions to merge and create a new mid-tier gold producer. The transaction combines Rio Alto’s producing La Arena asset with Sulliden’s Shahuindo development project, both located in Peru. The transaction highlights the renewed interest in merger and acquisition (M&A) activity in the gold space.
  • Since the start of the second quarter, Lucara Diamonds announced the recovery of 13 diamonds larger than 100 carats, eight of which are of gem quality. The ongoing recovery of such stones from the company’s Karowe mine provides another encouraging stone tender. Klondex Mines provided underground infill and exploration drilling results from its Fire Creek deposit in Nevada with grades up to 10 ounces per tonne. The drill results enhance the understanding of the rich mineralization and raise confidence over the resource definition.


  • Gold dropped $7 per ounce early Tuesday morning after a suspicious panic seller dumped $520 million in gold futures during thin trading volumes. In an initially unrelated news story, the U.K. Financial Conduct Authority (FCA) announced that it had fined Barclays bank 26 million British pounds for manipulating the gold-price fixing in order to avoid paying out on a client order. However, the U.K. FCA also confirmed that Barclays sent out burst orders aimed at moving the gold market, more specifically, the inexplicable early-morning gold raids that dump outsized positions into early-morning thin trading.
  • Hedge funds have reportedly cut bullish bets on gold futures following strong new home sales and manufacturing data in the U.S. As a result, the SPDR Gold Trust bullion ETF holdings dropped to 780 tonnes, the lowest since December 2008.
  • The European Central Bank (ECB) announced the revised framework for its five-year gold sales agreement, which will come into effect in September. The statement is virtually identical to the existing agreement, except for one key aspect. While the previous agreement capped annual gold sales to 400 tonnes, the revised document removed the existing cap. Although the signatories have been noticeably absent from the gold market, with sales of under 200 tonnes over the past five years, the lack of an explicit quota introduces pointless uncertainty.


  • One of the most important economic data points of the week, the Flash HSBC China Manufacturing Purchasing Managers’ Index (PMI) handsomely beat economists’ expectations by rising to 49.7. The reading marks a five-month high along with a short-term trend reversal, with the one-month reading crossing above the three-month average. The rising PMI bodes well for a stabilization of growth in China, translating into greater consumer confidence and increasing gold sales. China’s commodity import numbers for the first four months of the year surprised economists. Copper imports rose 56 percent and zinc imports rose 44 percent over the period. The outsized copper demand is likely to add pressure to the refined copper market deficit at a time when London Metals Exchange (LME) inventories reach multi-year lows, and new water legislation threatens supply growth out of Chile, the largest supplier of the metal.

Expectations for Rising Inflation Good for Gold
click to enlarge

  • Jim O’Neill, former chairman of Goldman Sachs Asset Management, says the Indian market is on the cusp of a bull run following the primary elections results. The reform-hungry BJP Party has already announced a number of measures to unblock trade, break up monopolies and spur economic growth. The opportunities for gold are two-fold; firstly, analysts expect gold import curbs to be relaxed during the second half of the year, which could expand inbound shipments of bullion to the tune of 15 tonnes per month. The incremental demand could result in an additional 5.7 million ounces imported per year, a very sizeable figure. Secondly, if the new government is successful in reenergizing the Indian economy, demand for gold as part of the love trade could multiply several times over, just as it has in China previously.

Government Policy Has Limited Indian Gold Demand
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  • Balmoral Resources is exploring a newly-discovered, semi-massive, nickel-copper-PGE mineralization sulphide zone at its Grasset project in Quebec. The latest intercepts reported caught the market’s eye, including a 45-meter at 1.79 percent nickel intercept with significant copper byproduct. Given the project’s location, product mix and grade, it has the potential to become a prolific mine if a sufficiently large deposit can be delineated. Dundee Precious Metals announced the addition of John Lindsay to its executive team, as it seeks to optimize the output coming from its copper concentrate Tsumeb smelter. Mr. Lindsay is an engineer with extensive experience at Barrick and SNC-Lavalin.


  • Deutsche Bank reiterated its bearish outlook on gold despite strength year-to-date. Analysts at the German bank expect gold price weakness to be driven by acceleration in U.S. growth and a strong upswing in the U.S. dollar. Furthermore, the bank’s analysts expect gold to trade close to its marginal cost of production, and to start behaving more like a commodity as the market refocuses on supply and demand dynamics.
  • Gold has the worst prospects among commodities over the next 12 months, according to an investor poll conducted by Credit Suisse. According to the bank’s global head of metals trading, Kamal Naqvi, gold continues to dominate in terms of the vast majority of commodities analysts “hating it.”
  • Reuters reported a fifth mineworker has been killed while on his way to work at Amplats’ Union mine in South Africa. The mineworker, a National Union of Mineworkers (NUM) member, had allegedly been threatened by striking workers belonging to the Association of Mineworkers and Construction Union (AMCU) and was asked to stop working. The pressure has mounted on employees who wish to continue working amid the 17-week-long strike that is threatening to send platinum and palladium into shortage this year.

What's Driving Gold?

Energy and Natural Resources Market


Barclays Research Multi Year Oil Gas Exploration Production Spending Forecasts
click to enlarge


  • The price of West Texas Intermediate crude oil reached a five-week high of $104.39 on Friday as U.S. crude supplies dropped to 23.4 million barrels at Cushing, Oklahoma, the delivery point for WTI.  Stockpiles in the region are at the lowest level since 2008.
  • China’s refined copper imports rose to a three-month high of 341thousand metric tons in April, and 5 percent above the prior month and 86 percent higher than last year. Year-to-date, imports of refined copper climbed to 1.3 million metric tons, according to General Administration of Customs.
  • Aluminum made a three-week high in London Metals Exchange (LME) trading this week due to lower bauxite imports into China (the world’s largest producer) following Indonesia’s export ban of the aluminum input earlier this year.


  • The spot uranium price fell by $1 to $28 per pound. Ux claims that further delays in the Japanese reactor restarts and ample supplies are contributing to price drop.
  • Benchmark iron ore fell to $97.50 per metric ton this week, its lowest level since September 2012 when the steelmaking raw material spent two weeks below $100 a metric ton.  Apart from that quick gap down in 2012 ore hasn’t traded below $100 at all since 2009.
  • The number of natural gas rigs in the U.S. fell from a one-month high due to operating constraints for additional pipeline capacity.  U.S. rigs drilling for natural gas have declined by 29 in the past year despite a higher gas price, highlighting improved drilling efficiencies and record volumes.


  • An Australian government agency expects to announce a second agreement within three months to fund a renewable energy project at a remote mining operation before the government moves to wind it up. The Australian Renewable Energy Agency, which this week provided money to a Rio Tinto Group plant, had planned to allocate as much as A$300 million ($277 million) to projects that provide solar and wind power to mines and surrounding communities.
  • China Daily reports that the rate of coal mine accidents in China has declined over the past decade. The number of work safety accidents declined from 800,000 in 2004 to 300,000 in 2013, as has the number of deaths, from 136,700 to 69,000 over the same period.  The death rate per 1 million metric tons of coal has also dropped, from 3.08 to 0.288, a decline of 90 percent. Chinese officials are also strengthening efforts to close down small unsafe coal mines. A government agency estimates that roughly 2,000 small coal mines will be closed this year and in 2015. Currently, there are about 13,000 coal mines in China.
  • Japan has been forced to sharply increase expensive energy imports since the shutdown of nuclear-power plants following the 2011 Fukushima accident, with crude oil shipments jumping 200 percent, LNG rising 23 percent and thermal coal increasing 4 percent. The surge reflects Japan’s lack of domestic energy sources and its previous reliance on nuclear for 11 percent of primary energy. Hydro and renewable energy, especially solar and wind, now account for 7 percent.


  • According to the U.S. Drought Monitor Index, at least half of Texas, two-thirds of Oklahoma and Kansas, nearly all of New Mexico, Arizona and Nevada, and all of California are in severe-to-exceptional drought. New Mexico’s pasture and range is in the worst condition, with 71 percent rated poor to very poor. California is second with 65 percent in similar condition, followed by Arizona with 54 percent.

Innovation Meets Tradition in China

China Region Fund – USCOX  •  Emerging Europe Fund – EUROX

Emerging Markets


  • HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) was stronger than expected at 49.7 in May, compared with 48.1 in April. This is the highest reading in five months and the largest sequential improvement since August 2013, driven mainly by recovering export orders and easing deflationary pricing.
  • Turkey’s central bank cut its benchmark interest rate by 50 basis points in a decision that took economists by surprise and sparked rallies in both the Turkish lira and the domestic equity market. The central bank argued that inflation should decelerate later this year because of domestic demand growing slower than in the past while thriving exports help narrow its large current account deficit.
  • Dedicated emerging market equity funds reported inflows of $1 billion for the week ending May 21, 2014, more than doubling the inflow of $0.46 billion for last week. Within the emerging market complex, global emerging market (GEM) funds reported the largest inflows. At the country level, China, South Africa and Brazil reported the largest inflows.


  • The Center for European Economic Research (ZEW) suggested in its monthly bulletin that economic expectations for Germany have continued to worsen in May. The ZEW Indicator of Economic Sentiment decreased 10.1 points to 33.1 points, slightly above its historical average of 24.7 points. The decline suggests there are indications that Germany will not be able to maintain this fast pace of growth.

European Union Shale Gas Reserves Cover 28 Years of Consumption
click to enlarge

  • The strong pace of growth in the eurozone eased slightly in May mainly due to slower factory activity.  The eurozone manufacturing PMI for May fell to 52.5, missing economists’ estimates for 53.2. Despite the slowdown, the service industry unexpectedly picked up, showing the recovery is gaining traction. In addition, the composite PMI was the second-strongest over the past three years and brings the second-quarter average to the highest since the second quarter of 2011.
  • Investors took profits in both Indonesian equities and currency this week, as presidential frontrunner Joko Widodo’s major competitor Prabowo Subianto formed an alliance with the second-most popular political party in the country, adding to uncertainty of the election outcome and difficulty of parliamentary politics going forward.


  • A recent Sino-Russian, gas-supply agreement epitomizes China’s commitment to new targets for natural gas to comprise 7 percent of total energy supply in 2015, and 9 percent in 2017. This compares to 5 percent currently.  Rising gas supply and lower cost for imported gas should benefit natural gas distributors in the longer term, especially for those located in Northeastern China.

Sino Russian Agreement Highlights Chinas Commitment to Raise Natural Gas Consumption
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  • The London Stock Exchange is expecting the busiest year for initial public offerings (IPOs) from developing countries since 2008. Emerging market companies are taking advantage of increasing global-risk appetite by raising capital abroad. Year-to-date, emerging market stocks have raised nearly $1.9 billion from share sales in London, up eight-fold from 2013. Maria Pinelli, vice chairwoman of strategic growth markets at Ernst & Young, expects IPOs to reach levels last seen in 2010, when 962 share sales raised $196 billion.
  • Indian shares rallied on optimism that the new prime minister will take steps to spur growth. According to Reuters, reforms will begin with the inefficient coal sector, as Narendra Modi wants to improve electricity supplies across the country. Shares of Coal India Ltd surged to the highest level in nearly three years following reports that Modi was considering breaking up the company and opening the sector to foreign investment.


  • Russia may raise trade barriers against Moldova if the former Soviet republic moves to sign a free-trade pact with the EU next month. Russian government officials with knowledge of the plans argue that such a move, similar to Ukraine’s previous attempts at associating with the 28-member bloc, may hurt the competitiveness of Russian products in the country. This is Russia’s latest attempt at destabilizing the region, thus leading a number of nations, namely the Baltics, to request additional military support from NATO to ward off Russian threats.
  • Producer prices in Poland and the Czech Republic continued to decline in April, official figures showed. Poland’s producer price index dropped 0.7 percent year-on-year in April, in line with economists’ expectations. In the Czech Republic, industrial producer prices dropped 0.3 percent year-on-year in April. The weakness in these prices may be a reflection of soft domestic demand for its factory goods.
  • Deteriorating sentiment toward Chinese residential property oversupply in lower-tier cities, coupled with a peak in the maturity of wealth management products in the second half of this year, only adds to volatility of property-developer stocks in the near term. This also means the potential for contagion going forward.

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The Good, the Bad and the Opportunity

A Blog by Frank Holmes, C.E.O. and Chief Investment Officer

Leaders and Laggards

The tables show the weekly, monthly and quarterly performance statistics of major equity and commodity market benchmarks of our family of funds.

Weekly Performance
Index Close Weekly
DJIA 16,606.27 +114.96 +0.70%
S&P 500 1,900.53 +22.67 +1.21%
S&P Energy 686.90 +5.77 +0.85%
S&P Basic Materials 305.76 +4.17 +1.38%
Nasdaq 4,185.81 +95.22 +2.33%
Russell 2000 1,126.19 +23.28 +2.11%
Hang Seng Composite Index 3,143.49 +40.72 +1.31%
Korean KOSPI Index 2,017.17 +3.73 +0.19%
S&P/TSX Canadian Gold Index 176.71 -0.30 -0.17%
XAU 88.22 -0.64 -0.72%
Gold Futures 1,292.60 -1.00 -0.08%
Oil Futures 104.38 +2.36 +2.31%
Natural Gas Futures 4.40 -0.02 -0.34%
10-Yr Treasury Bond 2.53 +0.01 +0.36%


Monthly Performance
Index Close Monthly
DJIA 16,606.27 +91.90 +0.56%
S&P 500 1,900.53 +20.98 +1.12%
S&P Energy 686.90 +4.85 +0.71%
S&P Basic Materials 305.76 +5.08 +1.69%
Nasdaq 4,185.81 +24.35 +0.59%
Russell 2000 1,126.19 -29.42 -2.55%
Hang Seng Composite Index 3,143.49 -332.01 -14.83%
Korean KOSPI Index 2,017.17 +12.95 +0.65%
S&P/TSX Canadian Gold Index 176.71 -5.52 -3.03%
XAU 88.22 -2.83 -3.11%
Gold Futures 1,292.60 +11.50 +0.90%
Oil Futures 104.38 +2.25 +2.20%
Natural Gas Futures 4.40 -0.34 -7.20%
10-Yr Treasury Bond 2.53 -0.18 -6.57%


Quarterly Performance
Index Close Quarterly
DJIA 16,606.27 +502.97 +3.12%
S&P 500 1,900.53 +64.28 +3.50%
S&P Energy 686.90 +57.09 +9.06%
S&P Basic Materials 305.76 +14.23 +4.88%
Nasdaq 4,185.81 -77.60 -1.82%
Russell 2000 1,126.19 -38.44 -3.30%
Hang Seng Composite Index 3,143.49 +3.14 +0.10%
Korean KOSPI Index 2,017.17 +59.34 +3.03%
S&P/TSX Canadian Gold Index 176.71 -28.11 -13.72%
XAU 88.22 -14.66 -14.25%
Gold Futures 1,292.60 -31.60 -2.39%
Oil Futures 104.38 +2.18 +2.13%
Natural Gas Futures 4.40 -1.74 -28.31%
10-Yr Treasury Bond 2.53 -0.20 -7.28%

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.

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Past performance does not guarantee future results.

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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 3/31/14:

Pacific Rubiales Energy Corp.: Global Resources Fund, 0.25%
Gazprom OAO: Emerging Europe Fund, 2.07%
Silver Wheaton Corp.: All American Equity Fund, 0.68%; Global Resources Fund, 1.06%; Gold and Precious Metals Fund, 0.27%; Holmes Macro Trends Fund, 0.67%; World Precious Minerals Fund, 0.20%
Rio Alto Mining Ltd.: Gold and Precious Metals Fund, 0.70%; World Precious Minerals Fund, 0.32%
Sulliden Gold Corporation Ltd.: 0.0%
Lucara Diamond Corp.: Gold and Precious Metals Fund, 0.25%; World Precious Minerals Fund, 1.34%
Klondex Mines Ltd.: Gold and Precious Metals Fund, 1.19%; World Precious Minerals Fund, 6.31%
SPDR Gold Trust ETF: Gold and Precious Metals Fund, 0.30%
Balmoral Resources Ltd.: World Precious Minerals Fund, 0.38%
Dundee Precious Metals Inc.: Emerging Europe Fund, 0.79%; Global Resources Fund, 0.27%; Gold and Precious Metals Fund, 3.75%; World Precious Minerals Fund, 2.27%
Barrick Gold Corp.: Gold and Precious Metals Fund, 2.82%; World Precious Minerals Fund, 0.39%
SNC-Lavalin Group Inc.: 0.0%
Facebook Inc.: All American Equity Fund, 1.55%
Google Inc.: All American Equity Fund, 1.91%; Holmes Macro Trends Fund, 0.52%
DirecTV, LLC: 0.0%
Netflix, Inc.: 0.0%
AT&T Inc.: All American Equity Fund, 1.08%
Petsmart Inc.: 0.0%
Costco Wholesale Corp.: 0.0%
Michael Kors Holdings Ltd.: Holmes Macro Trends Fund, 1.91%
TripAdvisor Inc.: 0.0%
Coal India Ltd.: 0.0%

*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.
The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks.
The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.
The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months.
The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange.
The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.
The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver.
The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar.
The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks.
The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500.
The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500.
The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period.
The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500.
The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500.
The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500.
The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500.
The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500.
The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500.
The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.
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 HSBC Flash China Manufacturing PMI is published a week ahead of the final HSBC China PMI every month. It analyzes 85-90 percent of the responses to the Final PMI from purchasing executives in more than 400 small, medium and large manufacturers, both state-owned and private enterprises.
The European PMI Manufacturing Index is derived from original national surveys of manufacturing and service sector business conditions conducted by NTC Research.
The Consumer Confidence Index (CCI) is an indicator which measures consumer confidence in the Economy.
The S&P/Case-Shiller Index tracks changes in home prices throughout the United States by following price movements in the value of homes in 20 major metropolitan areas.
The National Federation of Independent Business’s (NFIB) Index of business optimism is based on responses from 1221 member firms.
The Conference Board index of leading economic indicators is an index published monthly by the Conference Board used to predict the direction of the economy’s movements in the months to come. The index is made up of 10 economic components, whose changes tend to precede changes in the overall economy.
The Architecture Billings Index (ABI) reflects the approximate nine-to-twelve month lag time between architecture billings and construction spending. The index is used as an economic indicator of construction activity.
The London Metal Exchange (LME) is the futures exchange with the world’s largest market in options, and futures contracts on base and other metals.