U.S. Global Investors Searching for Opportunities, Managing Risk

Transcription

1 U.S. Global Investors Searching for Opportunities, Managing Risk Bear Correction, Bull Super Cycle Frank E. Holmes CEO and Chief Investment Officer Brian Hicks, CFA Portfolio Manager Evan Smith, CFA Portfolio Manager January

2 Fund Recognition Investment leadership results in performance Winner of 26 Lipper Fund Awards and certificates since

3 Rotation of Commodities Source: Steele and U.S. Global Research 3

4 Convergence And Unexpected Consequences 4

5 Significant Events For S&P Financials And The VIX 5

6 The Global Trade In Bulk Commodities Has Cooled Off Significantly, As Suggested By The Utter Collapse In The BDI 6

7 Deleveraging Impact On EM Currencies The stronger U.S. dollar has had a major impact on EM currencies in the last 6 to 8 weeks, particularly those with large current account deficits and gross external debt. Source: FactSet, Morgan Stanley Research 7

8 Dollar vs. Emerging Markets 8

9 Strong Inverse Correlation Oil To Dollar 9

10 Commodity Based Currencies 10

11 Credit Crunch Hits All Asset Classes 11

12 PMI Leading Indicators For Various Regions Are Now Highly Correlated Simply Because The Credit Crunch Is A Global Phenomenon 12

13 According to IATA, global air freight and passenger travel contracted rapidly in October Another reason for the government to print money 13

14 House prices are falling everywhere in the world from Los Angeles to London and from Dubai to Beijing Governments will print money and lower interest rates to stop falling house prices 14

15 When The Dollar Retested The Lows This Summer Oil Made Its $147 High Source: Kathy Lien Foreign Exchange Report 15

16 U.S. M2 Money Supply Biggest Economy in the World Source: U.S. Global Research 16

17 China M2 Money Supply Most Populated Country In The World Source: U.S. Global Research 17

18 Oil Prices vs. G7 Money Supply Growth G7: Canada France Germany Italy Japan UK USA 18

19 Oil Prices vs. E7 Money Supply Growth E7: Brazil China India Indonesia Mexico Pakistan Russia 19

20 Emerging Market Growth Is Going To Be The Lowest Since 2001 But Still Positive Next Year 20

21 With Per Capita Emerging Market Oil Demand Still Relatively Low, Any Contraction In U.S. Oil Demand Will Be Absorbed Sooner Or Later 21

22 Mature Field Declines Will Likely Prevent A Significant Increase In Global Oil Beyond The Current Levels 22

23 OPEC Spare Capacity On The Rise Near-Term 23

24 Total Non-OPEC Supply Growth 24

25 Both Upstream And Downstream Oil Production Costs Have Increased Very Rapidly In Recent Years. 25

26 Oil Sands, Offshore Or Arctic Projects Will Likely Require Oil Prices Above $90/bbl To Maintain Profitability Canadian Oil Sands 26

27 Almost 800,000 b/d Of Canadian Output Could Go Offline If Oil Drops Below $38/bbl, And Another 800,000 b/d At $30/bbl 27

28 Capex As Percentage Of Oil Reserves Has Been Declining In The Last Few Years 28

29 Natural Gas is Cyclical 29

30 Energy Stocks 30

31 Copper Prices vs. G7 Money Supply Growth G7: Canada France Germany Italy Japan UK USA 31

32 Copper Prices vs. E7 Money Supply Growth E7: Brazil China India Indonesia Mexico Pakistan Russia 32

33 Holding T-bills Or Cash No Longer Generates Interest And, Unlike Gold, Still Bears Credit, Inflation, FX And Political Risk 33

34 Gold and Silver Bullish Sentiment 34

35 Copper Inventories Held At The Exchange Now Cover 7 Days Of Consumption, Still Below The Historical Norm But The Highest Since 04 Chino Copper Mine, Sliver City New Mexico 35

36 The Correlation Of Copper With The U.S. dollar... 36

37 Huge Pent-Up Demand for Automotive Transportation In The Developing World 37

38 Mining Stocks: Bad News Priced In 38

39 The Correlation Between Oil Markets And Agricultural Markets Has Increased Tremendously 39

40 Global Economic Activity Is A Driver Of Agricultural Demand 40

41 Food Consumption Out Sprinted Population Growth In The Last 5 years Beijing China 41

42 The Recent Global Economic Expansion Reached Poorer Nations That Have High Income Elasticity Of Demand For Food Products 42

43 If Disposable Income In Emerging Markets Continues To Increase, Agricultural Demand Growth Will Follow 43

44 Substitution On Both The Demand And The Supply Side Explains Why Global Crop Prices Tend To Move Together 44

45 6.7 Billion People-Tipping Point 45

46 Disclosure Please consider carefully the 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. 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. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. The IHS/CERA Downstream Capital Costs Index tracks the costs of equipment, facilities, materials, and personnel (both skilled and unskilled) used in the construction of a geographically diversified portfolio of more than thirty refining and petrochemical construction projects.the HIS/CERA Upstream Capital Costs Index tracks the costs of equipment, facilities, construction materials and personnel used in a geographically diversified portfolio of more than two dozen onshore and offshore oil and gas development projects. The Purchasing Manager s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.the Baltic Dry Freight Index is an economic indicator that portrays an assessed price of moving major raw materials by sea as compiled by the London-based Baltic Exchange. The Commodity Price Index is a fixed-weight index or (weighted) average of selected commodity prices, which may be spot or futures prices. It is designed to be representative of the broad commodity asset class or a specific subset of commodities, such as energy or metals. The CRB Metals Index is a subset of the Reuters/Jeffries CRB Index comprised of 22 sensitive basic commodities whose markets are presumed to be among the first to be influenced by changes in economic conditions. The commodities used are in most cases either raw materials or products close to the initial production.the CRB Energy Index is a subset of the Reuters/Jeffries CRB Index comprised of oil and gas commodities.the Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The Air Freight subset is a compilation of current air freight rates.the U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The AMEX Natural Gas Index (XNG) is an equal-dollar weighed index designed to measure the performance of highly capitalized companies in the natural gas industry involved primarily in natural gas exploration and production and natural gas pipeline transportation and transmission.the Reuters/Jefferies CRB Index is an unweighted geometric average of commodity price levels relative to the base year average price.. Holdings in the Global Resources Fund as a percentage of net assets as of 9/30/08: Basic Energy Services (0.00%), Carbo Ceramics (0.00%), Chart Industries (0.00%), Global Industries (0.00%), Hercules Offshore (0.00%), ION Geophysical (0.00%), Key Energy Services (0.00%), National Oilwell Varco (1.80%), Parker Drilling (0.00%), Tetra Technologies (0.00%), Trico Marine (0.00%), Weatherford International (1.06%)

47 Thank You For Attending Today s Webcast. Gold funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The price of gold is 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 gold or gold stocks. 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 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the base period. The S&P Volatility Index (VIX) shows the market s 30-day volatility, and is a widely used measure of market risk. Holdings in the Global Resources Fund and World Precious Minerals Fund as a percentage of net assets as of 12/31/08: Basic Energy Services (0.00%), Carbo Ceramics (Global Resources 1.42%), Chart Industries (0.00%), Global Industries (0.00%), Hercules Offshore (0.00%), ION Geophysical (0.00%), Key Energy Services (0.00%), National Oilwell Varco (0.00%), Parker Drilling (0.00%), Tetra Technologies (0.00%), Trico Marine (0.00%), Weatherford International (0.00%), Bank of America (0.00%), Merrill Lynch (0.00%), Freeport MacMoRan (Global Resources 0.53%), Alcoa (0.00%), Chevron (0.00%), Exxon (Global Resources 4.30%), PetroChina (Global Resources 3.06%), Petrobras (Global Resources 1.58%)