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Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., a boutique investment advisory firm based in San Antonio that manages domestic and offshore funds specializing in the natural resources and emerging markets sectors. The company’s no-load mutual funds include the... More
My company:
U.S. Global Investors
My blog:
Frank Talk: Insights for Investors
My book:
Goldwatcher: Demystifying Gold Investing
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  • Long Distance Investors Feeling The Gold Gain

    Investing in gold stocks over the past few years has been tough. It's like crossing the start line intending to run a 10K race, but the course turns out to be the distance of a marathon.

    For those who have persevered and pushed through the pain, it's been nothing-but-elation lately as gold companies have seen incredible moves. Over the past three months through March 3, the Philadelphia Gold & Silver Index (XAU) rose an incredible 25 percent, significantly outperforming the S&P 500 Index by about 22 percent.

    (click to enlarge)

    We're pleased to say that the mutual funds within Morningstar's equity precious metals funds category grew even more in the same time frame, averaging a three-month return of nearly 30 percent.

    What's more impressive is that these funds collectively were the best performers among the entire fund universe.

    Back in January, we said that gold stocks had reached the historical limits of their multi-year decline. Morningstar also anticipated this rebound. In its annual "Buy the Unloved" strategy that looks at annual flows in and out of equity funds to figure out what's loved and hated by investors, precious metals funds were among the most unloved fund categories.

    The strategy suggests investors buy funds from "stock categories with heavy redemptions and sell those with the greatest inflows." Historically, the approach worked well. Assuming a three-year holding period and category average returns, "the unloved funds returned an annualized 10.4 percent versus 6.4 percent for loved," according to the article.

    "Of course there's no guarantee those results will repeat, but it does illustrate the value in going against the grain," says Morningstar.

    Where will gold stocks go from here? I recently told Palisades Radio that I look forward to gold stocks experiencing a nice, slow move up, so if you haven't been a long distance runner in gold companies, you might not want to miss out on this exciting course.

    Two ways to participate are U.S. Global's Gold and Precious Metals Fund (MUTF:USERX) and World Precious Minerals Fund (MUTF:UNWPX). Each fund seeks companies that have historically experienced growth on a per share basis and offer potential capital appreciation. We believe this selective approach has helped the funds outperform the indices over the one-year period through February.

    Download the USERX fact sheet or UNWPX fact sheet to see long-term performance today and take time to listen to the Palisades Radio conversation to learn more about what's going on with gold miners.

    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.

    Past performance does not guarantee future results.

    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.

    All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content. 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 S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.

    Tags: GLD
    Mar 06 2:41 PM | Link | Comment!
  • Going For The Gold

    Everyone wants the gold. Around the world, athletes train for years to compete for a gold medal. In Hong Kong and China, the Love Trade seeks gold coins, bars and jewelry.

    We found out last week the extent that gold is sought in the East. For the first time since 1980, Switzerland released monthly gold trade data, providing a more transparent picture of physical gold flows.

    In January alone, the Swiss report showed an incredible 80 percent of gold shipments went to Asia.

    Switzerland plays a key role in the gold market because it is home to many big gold refiners, so its report confirms what we've been saying about gold's move out of the West to the strong hands of the East.

    So even though the gold price fell in 2013, the smart money tuned into this flow of physical gold that was moving into the East. Meanwhile, naysayers were distracted by the Fear Trade's selling out of gold ETFs.

    "Gold flooding onto the market as a result [of large-scale ETF selling] was used to feed the voracious appetite for physical metal among consumers in India, China and numerous Asian and Middle Eastern markets," says the World Gold Council in its latest report. You can see in the chart that gold demand reached record levels in the jewelry, bar and coin areas of the market last year. In fact, there was a 21 percent increase in demand from consumers, which was in contrast to the outflows from gold ETFs, per the WGC.

    (click to enlarge)

    Along with this continued demand in January, Daniela Cambone from Kitco and I discussed the factors that could drive gold to $1,400 an ounce. Find out what those are now.

    By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Feb 25 3:12 PM | Link | Comment!
  • This Commodity Was The Decade's Worst Performer, But Led In 2013

    How dramatically things can change in a decade.

    We've talked about how volatile resources can be, and 2013's top commodity performer is an excellent example. Per our latest Periodic Table of Commodities Returns, natural gas increased the most in 2013. However, the commodity is still the worst performer over the past 10 years. You can see several times when gas fell toward the bottom: in 2006, 2009, 2010 and 2011. However, by 2012, gas climbed to the top half of the chart, clamoring for the top spot in 2013.

    While every commodity has wide price fluctuations, in the case of natural gas, this season's arctic weather in the U.S. is having a strong effect on pricing, as demand soars and inventory levels fall below normal.

    According to the U.S. Energy Information Administration (NYSEMKT:EIA), the seasonality effect on natural gas prices has been decreasing in recent years. Take a look at the chart below, showing the average price spread in October between natural gas futures contracts for delivery in November of the current year and February of the next year. In 2010, the spread was an average of 65 cents per million British thermal units. By 2013, the average spread decreased to 24 cents.

    (click to enlarge)

    According to the EIA, several factors contributed to the lower spread, including increased U.S. production, which we highlighted in our Special Energy Report.

    Will the spread continue to narrow? Time will tell, but in January 2014, the commodity kept rising, jumping nearly 20 percent in one week, and breeching the $5 level for the first time since 2010.

    Download your copy of the Periodic Table today. Looking back at the annual rotation of leaders illustrates not only the seasonal and cyclical effects on commodities, but also how commodities can be disrupted. You'll see why this chart is one of the most sought-out pieces by investors around the world.

    Rob Wile from Business Insider recently highlighted this "beautiful quilt," showing a "skitched-up version" comparing the volatility of natural gas and corn.

    Also take time to read the article by Frik Els from mining.com, who talks about how the periodic table highlights how gold was the least volatile of all commodities. To Mr. Els, the chart "shows just what a fickle market commodities can be with wild price swings from year to year." Read the article here.

    What will be the top performing commodities in 2014? Stay tuned for more details about our webcast in March where we'll discuss factors investors shouldn't miss in commodities, emerging markets and domestic stocks.

    All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content. Past performance does not guarantee future results. Returns are based on historical spot prices or futures prices.

    Feb 13 9:23 AM | Link | Comment!
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