Performance and Results Oriented. Investment leadership results in performance

Transcription

1 U.S. Global Investors Searching for Opportunities, Managing Risk Managing Expectations Super S-Curves, Presidential Cycles and Seasonal Cycles Frank Holmes, CEO and Chief Investment Officer Performance and Results Oriented Investment leadership results in performance Focus on Education Winner of 29 Lipper performance awards, certificates and top rankings since 2000 (Four out of 13 U.S. Global Investors Funds received Lipper performance awards from 2005 to 2008, six out of 13 received certificates from 2000 to 2007, and two out of 13 received top rankings from 2009 to 2010.) 43 MFEA STAR Awards for Excellence in Education US.FUNDS November

2 Fund Recognition: 4 Funds in the Top 3 Percent for 10-Year Period U.S. Global Investors is Mobile Get Investor Alert and Frank Talk On the Go About U.S. Global Investors (GROW) A boutique publicly listed investment adviser specializing in gold, natural resources and emerging markets opportunities around the world. Visit /apps

3 The Great Disconnect Global Resources are the Building Blocks of Apple Many Smart Phone Choices to Satisfy Wants Compare Market Capitalizations

4 Tech Stocks Lost More Than Lipper Gold Funds Combined Two Stocks Lost More Than Is Invested in SPDR Gold Shares (GLD) Calling Attractive Tops and Bottoms South Beach vs Stock Market Priority Reading Money Magazine

5 The S-Curve Big Question is Where Are We On The Curve? Metaphor: Tipping Points, Melting Points H 2 O is Like Money 7 Billion People Tipping Point Centuries to Decades to a Decade Ice Turns to Water at 32º, but Still H 2 O The S-Curve is a type of curve that shows a rapid, exponential increase in growth for a period of time, followed by a tapering or leveling off

6 Demographics is the Key Super Shift Rural to Urban Low Real Interest Rates Historically Fuel Gold, Silver and Oil 2% Tipping Point for Gold Gold & silver perform well in low or negative real interest rate environments American Dream Trade Massive Urbanization Trend in India and China Deng Xiaoping Half of the global population (>3 billion) is estimated to live in urban areas Projected urban population is larger than the entire world population in

7 Huge Pent-Up Demand for Automotive Transportation in the Developing World +$4 Trillion Infrastructure Spending Globally China/India Share of World GDP Increased Substantially

8 Super Shift Energy Super Shift Electricity Chindia Rising Middle Class Oil Consumption per capita: 1 to 25 1 to 16 Oil Consumption and Industrialization, 1900 to present Oil per capita rises rapidly during early industrialization, then levels to rapid real income growth. Rising world trade actually stimulates the industrialization phase. Lower U.S. labor costs versus Europe U.S. and the U.K. drive American industrialization, enrichment and energy consumption S. Korea Japan Intensity of electricity consumption 1 to 15 1 to Lower Japanese labor costs do the same to the U.S. Lower Korean labor costs do the same to Japan China & India Source: padanisaa.blogspot.com Source: Dr. Marc Faber Source: BHPB Power consumption has been growing faster than the rate of GDP growth

9 High-Speed Rail is a Growth Opportunity for U.S. Companies Government Policy Model Precursor for Change Presidential Election Cycle Ben Bernanke, Chairman President Barack Obama of the Federal Reserve

10 Net Shrinkage of Equity vs. S&P 500 Index It s Not the Political Party, It s the Political Policies Emerging World Holds 50% of the Global Population, Just 21% of GDP

11 Compare E7 vs G7 Money Supply Growth Emerging World s Money Supply is Robust Warren Buffett vs. Gold Gold Demand Drivers Warren Buffett Gold Member Austin Powers Elvis Presley

12 Fear Trade Gold Price Surged With Increase of U.S. Monetary Base Fear Trade Global Liquidity Boom Good for Gold Declining Value of the U.S. Dollar Richard Nixon Alan Greenspan Ben Bernanke

13 Gold Fear Trade for Gold Investors Developed Countries Rolling Over a Massive $8 Trillion in 2012 (Below Inflation Rate) Great Roll Over or Rip Off Creates Opportunity Compare Dividend Yields to 10-Year Government Note Past performance is no guarantee of future results

14 Great Super Cycle Debt Bust Contagion Blood in the Streets Spain Greece Gold Reserves Held as Financial Assets Unionized government workers and social entitlements delay growth. Spain Greece

15 Merrill Lynch is Calling $2,400 Fear Trade Driver: The Love Trade Gold Love Trade Strong Correlation Between Rising Incomes and Gold Price

16 Holidays Drive Gold Demand Managing Expectations Gold Seasonality Oil and Gold Undervalued Compared to Rise in Other Areas of U.S. Economy Past performance is no guarantee of future results

17 Managing Expectations The Math Standard Deviation (as of 09/30/12) based on 10-Year Data Multiple Compression: How Long Before Revival? Gold Stocks Underperform Bullion Rolling 1 Year NYSE Arca Gold BUGS Index (HUI) 36.5% WTI Crude Oil 35.1% MSCI Emerging Markets (MXEF) 31.3% S&P 500 Index (SPX) 18.6% Gold Bullion 13.8% 12-month rolling volatility of price action over 10 year period View the presentation Anticipate Before You Participate at /investor-resources/publications/research Baywatch Source: Bloomberg

18 History Repeats Itself Cash Flow Multiple Collapse and Bottom in Late 1970s Contagion? China s GDP Growth Tends to Stabilize in Fifth Year of Leadership Transition Cycle Jimmy Carter For China, Europe is a bigger trading partner than the U.S

19 Oil Stocks Underperform Oil Energy M&A Unlocks Value Energy M&A Unlocks Value China Canada Malaysia Canada Past performance is no guarantee of future results

20 Oil Supply Cost Curve Global Resources Fund Price Reversal? Gold and Precious Metals Fund Price Reversal? Past performance is no guarantee of future results. Past performance is no guarantee of future results

21 Are You Underweight? Global Resources Fund Outperformed 10 year Apple is a Want, Global Resources Are Needs: Energy, Food, Water, etc. Energy & Basic Materials 15% of S&P 500 Past performance is no guarantee of future results

22 Fund Performance Come Visit Us at Disclosures Facebook: Twitter: Frank Talk: /franktalk Investor Alert: /alert 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 US- FUNDS ( ). 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. Diversification does not protect an investor from market risks and does not assure a profit. 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% to 10% of your portfolio in these sectors. 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. 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. Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Users acknowledge that they have not relied upon any warranty, condition, guarantee, or representation made by Lipper. Any use of the data for analyzing, managing, or trading financial instruments is at the user's own risk. This is not an offer to buy or sell securities. Morningstar Ratings are based on risk-adjusted return. The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)

23 Disclosures The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. 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 NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) Index (HUI) is a modified equal dollar weighted index of companies involved in gold mining. The HUI Index was designed to provide significant exposure to near term movements in gold prices by including companies that do not hedge their gold production beyond 1.5 years. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. 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 index benchmark value was at the close of trading on December 20, The S&P 500 Oil & Gas Exploration & Production Index is a capitalization-weighted Index. The index is comprised of six stocks whose primary function is exploring for natural gas and oil resources on land or at sea. The S&P/TSX Global Gold Index is an international benchmark tracking the world's leading gold companies with the intent to provide an investable representative index of publicly-traded international gold companies. 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 Market Vectors Junior Gold Miners Index is a market-capitalization-weighted index. It covers the largest and most liquid companies that derive at least 50 percent from gold or silver mining or have properties to do so. Alpha is a measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's alpha. M1 Money Supply includes funds that are readily accessible for spending. M2 Money Supply is a broad measure of money supply that includes M1 in addition to all timerelated deposits, savings deposits, and non-institutional money-market funds. M3 money supply is the broadest monetary aggregate, including physical currency, demand accounts, savings and money market accounts, certificates of deposit, deposits of eurodollars and repurchase agreements. Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility. Holdings in the Gold and Precious Metals Fund (USERX), Global Resources Fund (PSPFX), World Precious Minerals Fund (UNWPX), Eastern European Fund (EUROX) as a percentage of net assets as of 9/30/2012: Apple 0.00%; Sprint 0.00%; AT&T 0.00%; Verizon 0.00%; Groupon 0.00%; Facebook 0.00%; Berkshire Hathaway 0.00%; Starbucks 0.00%; McDonald s 0.00%; Progress 0.00%; CNOOC 0.00%; Nexen 0.00%; SPDR Gold Shares (USERX 1.11%, UNWPX 1.31%). General Electric 0.00%