Frank Holmes'  Instablog

Anyone who has visited New York has probably seen The National Debt Clock, a digital readout of how much the federal government owes its creditors. The speed at which that number grows is daunting.

A more comprehensive monitor can be found online at USDebtClock.org. Not only do you get the total national debt of $12 trillion (and rising), you also get a raft of other key economic trend data for the country and its citizens based on information gathered from reputable sources that include the Census Bureau, Treasury Department, Federal Reserve and the Congressional Budget Office.

On the day before Thanksgiving, I checked this web site in the morning and then again on Friday morning, and I’d like to share a few observations about what happened during these two days.

The Fed printed up more than $10 billion in new money over that period, or more than $200 million per hour. Any wonder why gold remains an attractive asset class and our overseas trading partners are wary of the dollar?

The national debt grew by nearly the same amount, with each taxpayer’s share of that burden going up $65 to $110,781. The federal budget deficit rose by $9 billion, and total unfunded liabilities shot up almost $30 billion to $106.3 trillion, or $345,088 per citizen. We’ve commented in the past on how federal deficits have historically been positive for gold and especially gold equities.

Looking at the largest federal budget outlays: More than $5 billion went out the door for Medicare/Medicaid, $4 billion in Social Security benefits, $3.6 billion for national defense and the war efforts in Iraq and Afghanistan, and more than $2 billion in interest payments on the national debt.

One worthwhile feature of the USDebtClock.org is that it tells a fuller story by making room for good economic news.

Gross domestic product in the United States grew by nearly $200 billion, or $1,600 per worker, and about $40 billion in value was added to the total national assets during the two days.

And we also see evidence that, while the federal government continues to strap on heaps more debt, the citizenry is going in the other direction.

About $4 billion in private debt was paid down – most of that was in mortgages, reflecting the prolonged weakness in housing, but more than $1 billion in personal debt and $700 million in credit card debt went away. Personal savings climbed by more than $1 billion over the two days as Main Street continues deleveraging after years of free spending.

You can get to the U.S. Debt Clock by clicking on the image at the top of this commentary. I encourage you to pay a visit – there aren’t many places where you can get so much useful and important economic information at a single glance.

By clicking the link, you will be directed to USDebtClock.org. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

The Milken Institute recently released its 2009 list of Best-Performing Cities Index and Austin, Texas has been named the best-performing metropolitan area in the U.S.

The index is designed to measure which U.S. cities are most successful in terms of job creation and retention, the quality of jobs being produced and overall economic performance.

Austin combines several advantages that put it atop the rankings. It is the capital of an economically powerful state (at $1.1 trillion, the Texas GDP is the nation’s second-largest and in the top 15 worldwide), and home to the well-funded research centers at the University of Texas, a thriving technology cluster and an extensive professional services sector.

Austin has plenty of local company on this year’s list – Texas claimed four of the top five spots and nine of the top 25. Our hometown of San Antonio came in at No. 11, up four places from last year.


 

Texas cities benefited from a welcoming business climate and a housing market that has declined less than other markets. The state also benefited from its huge oil and gas industry.

The Northeast corridor of the U.S showed considerable improvement from last year, as 14 of the top 20 biggest gainers were from the region. After a rough 2008, the Connecticut cities of Hartford (#48) and New Haven (#88), and Cambridge, Mass. (#45), each moved up about 100 spots in 2009.

 

View the Interactive Version of the Report

By clicking the link to the interactive report, you will be directed to MilkenInstitute.org. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-825

If seeing is believing, natural resources and infrastructure opportunities abound in Brazil.

The above photo was snapped by our global strategist Jack Dzierwa at São Paulo’s Guarulhos International Airport as he spent hours trying to board a domestic flight to Rio de Janeiro. Not surprisingly, he didn’t make the flight.

Jack has traveled extensively around the world, and he says he’s never seen anything like the hectic scene at Guarulhos, which just can’t service the rapidly growing number of Brazilians who can now afford to travel by air.

Scenes like this are important for investment managers to experience in order to grasp the significance of what’s taking place in emerging countries like Brazil. You just can’t get the full flavor of the chaos at Guarulhos from an economic data spreadsheet or a research report.

Jack traveled to Brazil to collect some insight on the country’s infrastructure development and the best prospects for investment. His experience at the airport gives him tacit knowledge and a clear understanding that Brazil will have to expand on its domestic infrastructure.

Brian Hicks, who co-manages our Global Resources Fund (PSPFX), has also spent the week in Brazil – he has been doing research and meeting with natural resources companies.

Brazil is a key driver for natural resources and infrastructure markets. It is home to 190 million people, many of them moving into the middle class, and it’s also one of the world’s fastest-growing economies.

Similar to China, this rise of the middle class will increase demand for oil and other commodities, and its expansion will put growing pressure on the country’s inadequate infrastructure.

Just a couple of weeks ago, a blackout left nearly 60 million people without electricity and another 7 million without water. Traffic in downtown São Paulo is so bad that many businessmen use helicopters as taxis to get around the city. Brazil only has three main international airports, despite that it has 14 cities with at least 1 million residents.

The U.S. Energy Information Administration estimates that Brazil has more than 12 billion barrels of proven oil reserves. That number is certain to grow as we learn more about the large discoveries recently made off its southeastern coast. In addition to vast reserves of oil, it is also a leading producer of iron ore, aluminum, platinum and other industrial metals.

This natural wealth puts Brazil in an enviable position compared to some other large emerging economies. As the domestic demand for resources increases with infrastructure expansion, much of that demand can be met from internal sources. This benefits the economy on both ends and sets the stage for further economic growth.

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting usfunds.com 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. 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.

You can add gold demand to the list of items being supported by China. China was the sole market to see positive growth in consumer demand for gold, rising 12 percent from a year ago the World Gold Council reports.

Total gold demand in China reached 120 tonnes, nearly double the amount from just four years ago.

Overall, gold demand was off 34 percent from 2008 but that is largely the result of exceptionally high demand increases during the darkest time of the financial crisis. On a year-to-date basis, gold demand is only down 6.3 percent.

China’s improving economy has made consumers less price sensitive than those in India and the Middle East who have not fully adjusted to gold prices at current levels.

Jewelry demand in India fell 42 percent on a year-over-year basis but Indians haven’t abandoned their strong cultural connection to gold. Exchange activity among consumers—where old pieces are swapped for new ones—has spiked.

The WGC says this “suggests a strong desire by consumers to remain attractive in the [gold] market.”

BMO doesn’t believe that the downtick in demand is a symptom of a long-term trend. In a research note, they write that “the combination of a strengthening economy, modest supply growth, central-bank buying and concerns surrounding the U.S. dollar and inflation should continue to support gold demand and prices into 2010.”

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-819

While the Indian government buys its gold in the hundred of tons, a growing number of people around the world are buying by the ounce.

For years I’ve been saying on TV and elsewhere that one-ounce coins like the American Eagle and the Canadian Maple Leaf make excellent gifts that the recipients will always remember and treasure. The same goes for 24-karat gold jewelry.

The U.S. Mint seems to be thinking the same thing – it plans to restart the sale of half-ounce, quarter-ounce and one-tenth-ounce gold coins on December 3, just in time for Christmas gift-giving. Last year, the Mint ran out.

Coin sales have been impressive this year – the Mint has sold more than 1.1 million of the one-ounce American Eagles and 140,000 American Buffalo coins, also one ounce.

In Britain, the Royal Mint quadrupled its gold-coin output in the third quarter of 2009 to meet demand.

The World Gold Council says gold demand overall was up 10 percent in the third quarter of 2009 compared to the second quarter. The council says jewelry demand was up 17 percent to 473 metric tons, and that 81 tons worth of gold bars were purchased, up 30 percent from the previous quarter.

Even at the current record prices, gold in the form of coins and jewelry may prove to be gifts of good value.

If someone offered to sell you a one-ounce gold coin for $50, would you buy it? It may seem like a silly question, but apparently not everyone would make that deal. Watch this humorous video to see.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-816

An article this week from Morningstar analyst Greg Wolper “Give Small Fund Shops a Chance” argues that investors who ignore small fund complexes may be missing out on growth opportunities.

It’s long been hard for small fund companies to get attention – they don’t have the money to spend on advertising that the giants have. But Wolper writes that “lesser-known firms, and funds, have advantages that make it worth the time to seek them out.”

He also makes a good point when he says that small fund managers can struggle when they try to cover too many asset classes and sectors. He says “a good small firm often focuses on one thing it does well.”

We recently revamped our company site—USFunds.com—to make it easier for new and returning visitors to quickly learn about U.S. Global Investors and its focus on the global growth theme, which is at the intersection of emerging markets and natural resources.

Wolper finishes by giving his readers some sound advice:

When you come across an intriguing fund in one of your screens, or in a media report, don’t ignore it just because the name is unfamiliar. Some investigation through Morningstar and on the fund’s Web site might lead you to conclude that this obscure fund is worth serious thought.

Read the Full Article

By clicking the link to the Morningstar story, you will be directed to Morningstar.com. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-812