Two Charts Illustrate How to ?Follow the Money?

Too often investors get caught up in their political allegiance or parties, focus on the negative and lose confidence in stocks. As a result, they can miss great bull markets. I believe when it comes to finding investment opportunities, it’s not about the political party, it’s about the policies, both monetary and fiscal.

This was a main theme of mine when I was speaking at the Agora Financial Investment Symposium, and throughout my presentations, I encouraged investors to follow the money. With that in mind, here are two of my favorite charts that I believe demonstrate how investors can do exactly that.

1. Global Manufacturing Activity

Manufacturing data among numerous countries has recently been moving in the right direction. For the month of July, the JP Morgan Global Manufacturing Purchasing Manager’s Index (PMI) stayed above the three-month moving average for the second month in a row. Global output continues to expand, rising to 50.8 from 50.6 in June.

Domestic Equity Market - U.S. Global Investors

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To us, the PMI is not only a gauge of economic well-being for the manufacturing sector. Last month, after the PMI initially crossed the three-month reading in June, I explained that this “crossover” has historically signaled higher prices for many commodities.

Here are the details, using the SPDR S&P Metals & Mining ETF (XME) as an example. Since the beginning of 2009, history suggests that one month after the crossover, 60 percent of the time, the XME has gained an average of 7.4 percent.

Consistent with its historical pattern, in July, the XME rose 7.6 percent.

There may still be room for these stocks to grow, too, as the next two months look promising for metals and mining companies. If you look at the three-month average after the “crossover,” 80 percent of the time, the XME gained 12.6 percent.

2. Presidential Election Cycle

Last fall, I said that all the excess money in the system, compliments of the Federal Reserve’s policy decisions, helped the S&P 500 Index to climb significantly. In fact, President Barack Obama’s first-term presidential cycle beat the average of all other presidential cycles going back to 1929. You can visually see this substantial growth in the red line below.

Now, a few months into his second term, Obama’s presidential cycle remains remarkable, as stocks continue to climb a wall of worry. The yellow line shows this upward trend, an outcome of the continued easing policies in the U.S.

At U.S. Global, we believe that government policy is a precursor to change, and the change appeared to be significantly positive for the S&P 500. To me, this chart indicates that many investors who have been following the Fed’s quantitative easing trail have found a very profitable path in U.S. stocks.

Domestic Equity Market - U.S. Global Investors

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Looking Forward: Positive with a Chance of Rally?

After the S&P 500 Index climbed 4.9 percent in July, our team wanted to find out if this positive trend might continue over the next month and three months. The results may surprise you.

And finally, at Agora, I had the pleasure to talk about what Agora believed to be “the no-brainer investment of all of our lifetimes.” The topic was gold and in my presentation, you can find 60+ pages of charts and trends. Download your copy of the presentation here.

Index Summary

  • Major market indices finished higher this week. The Dow Jones Industrial Average rose 0.64 percent. The S&P 500 Stock Index moved gained 1.07 percent, while the Nasdaq Composite advanced 2.12 percent. The Russell 2000 small capitalization index gained 1.08 percent this week.
  • The Hang Seng Composite appreciated 0.96 percent; Taiwan fell 0.61 percent while the KOSPI gained 0.66 percent.
  • The 10-year Treasury bond yield rose 4 basis points this week to 2.60 percent.

Domestic Equity Market

The S&P 500 rose this week as the Fed acknowledged moderating economic growth. This growth will potentially delay the quantitative easing (QE) tapering that was widely expected to begin in September. Economic data was mixed, which helps sustain this “Goldilocks” environment of economic growth not being too hot or too cold, thus enabling continued monetary stimulus.

Domestic Equity Market - U.S. Global Investors

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  • The industrial sector was the best performer this week as the ISM Manufacturing index jumped higher, along with similar indicators around the world, potentially boosting the prospect of a global economic recovery. The sector experienced broad based strength on these macro data points.
  • The consumer discretion and technology sectors were also strong performers this week as cyclical sectors outperformed.
  • Pitney Bowes Inc. was the best performer in the S&P 500 this week rising 21.08 percent as the company agreed to sell its management services unit to a private equity firm for $400 million in cash.


  • The telecom services sector was the worst performing sector this week as Verizon Communications was weak on general competition concerns concerning customer churn.
  • The energy sector lagged as index heavyweights Exxon Mobil and Chevron reported disappointing earnings.
  • The Mosaic Co. was the worst performer in the S&P 500 for the week, falling 22.11 percent. Urakali, a very large Russian potash producer, backed out of what is essentially a potash cartel, sending fertilizer companies around the world lower as potash prices are expected to move substantially lower.


  • The current macro environment remains positive as economic data remains robust enough to give investors confidence in an economic recovery but not too strong as to force the Fed to change course in the near term.
  • Money flows are likely to find their way into domestic U.S. equities and out of bonds and emerging markets.
  • Earnings have generally been well received and earnings season continues into next week.


  • A market consolidation could continue in the near term, as macro concerns could dominate for the next couple of weeks while the market waits for additional earnings reports.
  • Higher interest rates are a threat for the whole economy, the Fed must walk a fine line and the potential for policy error is potentially large.
  • With much of the significant economic data out of the way, the focus will be on the Fed and whether they will taper or not in September.

The Economy and Bond Market

Treasury yields moved higher this week as global economic data was showing signs of improvement. The monthly purchasing managers indices are released on the first day of the month and are widely followed as an indication of an economy’s direction. The chart below shows this strong improvement in the U.S. PMI but we were not alone as China, Brazil and several countries in Europe positively surprised. This index is often used as a leading indicator as these data points bode well for an improving global economy. Other key data points announced this week included second quarter GDP, which was underwhelming, and employment data, which more or less maintained the status quo. The Fed met and released a statement which acknowledged the modest economic growth and did not hint at tapering its QE program.


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  • U.S. ISM data was strong as July experienced the biggest single monthly point gain since 1996. The underlying employment component was also strong, which potentially bodes well for manufacturing hiring.
  • Economic sentiment in the eurozone hit the highest level in more than a year and adds fuel to the fire that the economic malaise in Europe may finally be coming to an end.
  • The Fed backtracked some this week with a rather dovish statement, potentially indicating no change in monetary policy in September.


  • Consumer confidence fell in July but does remain in a modest multi-year uptrend.
  • Mortgage applications fell 3.7 percent last week and are at the lowest levels in more than two years. The spike in yields and mortgage rates in recent months has significantly dampened the enthusiasm for continued housing recovery.
  • Nonfarm payrolls grew 162,000 in July, modestly below estimates and not enough to establish confidence that the economy can move forward without continued monetary stimulus.


  • Despite recent conflicting commentary, the Fed continues to remain committed to an accommodative policy.
  • Key global central bankers are still in easing mode such as the European Central Bank, Bank of England and the Bank of Japan.
  • The recent sell off in bonds is likely an opportunity as higher yields will act as a brake on the economy and potentially become self fulfilling, thus postponing Fed tapering.


  • Inflation in some corners of the globe is getting the attention of policy makers and may be an early indicator for the rest of the world.
  • Trade and/or currency wars cannot be ruled out which may cause unintended consequences and volatility in the financial markets.
  • The recent bond market sell off may be a “shot across the bow” as the markets reassess the changing macro dynamics.

Gold Market

For the week, spot gold closed at $1,311.75, down $21.55 per ounce, or 1.62 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, fell 7.14 percent. The U.S. Trade-Weighted Dollar Index rose 0.34 percent for the week.


  • A report covering traders’ activities to July 23 shows that gold long positioning increased by 1.5 million ounces to 5.8 million ounces. This marks the second consecutive week of increases, with the change attributed to a combination of short covering and fresh long positions. Gold imports in India surged in July according to finance minister P. Chidambaram, who did not cite a specific number. Meanwhile, the bullion supply remained tight as the price premiums to London prices jumped. According to the chairman of the All India Gems & Jewellery Trade Federation, Haresh Soni, gold's price premium paid by jewelers to banks and other importers, more than doubled to $10 per ounce from $4 per ounce the prior week.
  • Klondex Mines Ltd. reached a 52-week high on Friday, an exceptional feat among gold and precious metals sectors these days. A series of recent announcements have increased speculation that the company will release a detailed resource update in the coming weeks, paving its way to becoming a gold producer in the fourth quarter of the year. In addition, it was reported that members of the board of directors have acquired sizeable stock positions, in what can only be interpreted as a massive vote of confidence in the nascent company.
  • Another interesting research piece by Paradigm Capital shows that gold producers have the capacity to further cut down costs. The report argues that costs will be reined and profits will be rebuilt, even if gold prices do not increase above $1,350 to $1,400 an ounce. Recall that global total cash costs dropped 27 percent from 1996 to 1999 in response to a 28 percent drop in the gold price. There is evidence of producers already implementing significant cost cuts, both at a mine level and at a corporate level, in order to adjust to the new price environment. One of these companies is Gran Colombia Gold Corp. who reported this week that its all in cost decreased from $1,545 per ounce in the first quarter, to approximately $1,200 per ounce in July.


  • Impairments among base and precious metals companies totaled more than $30 billion for gold and $2.7 billion for base metals so far in 2013. What is most shocking is the fact that the cumulative number likely exceeds $200 billion since 2008. With roughly 20 companies expected to report in the coming two weeks, the number could rise significantly.
  • Steve Todoruk of Sprott published a commentary on the cost of political instability for gold miners. In his article, government abuses of gold companies were exemplified using the case of Lydian International. Lydian is a junior company with interests in a high-grade deposit in Armenia. The Armenian government recently halted construction at the Amulsar gold deposit, pending review of its building permits. The hold was introduced late in a project when the bulk of the capital had already been deployed. It appears the government is using this fact as a bargaining chip to force more taxes and royalties to be paid by the company. This company was a top takeover target for a big gold mining company. With the political move, their chances of being taken over have been greatly reduced. This means that the little company could end up having to build and operate the mine on its own, which is not the optimal outcome for its sharehold ers.
  • Macquarie reports that the platinum sector in South Africa faces a perfect storm as a period of weak cyclical earnings coincides with unprecedented labor unrest, production interruptions, and government interference both in South Africa and Zimbabwe. More than 50 percent of South African platinum mines produce negative cash flows at current metal prices, at a time when labor unions are demanding salary increases as high as 100 percent. The reality check is that if metal prices do not rise significantly, a number of companies will find themselves in desperate need of additional external funding.


  • The chart below shows that gold stocks are down on average more than 40 percent year-on-year. This level has offered an attractive entry point on the rare occasion when it has happened in the past. During the last occurrence, gold stocks went on to post a 160 percent return on a year-on-year basis.


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  • On the back of multi-billion dollar write-downs and massive dividend cuts reported by major gold producers this week, it is quite relieving that these companies slightly beat the NYSE Arca Gold Miners Index. This behavior appears to prove that gold miners' stocks have hit bottom. The market is reading these write-downs as a responsible measure companies are undertaking to adjust the value of their assets to reflect lower gold prices, while dividend cuts are making headway in cutting costs and strengthening the balance sheet. The most interesting proof is seen in Barrick Gold Corp. shares that barely budged after it reported a nearly $9 billion write-down, a sign that investors already priced the company's problems into the value of its stock.
  • Geoff Candy of Mineweb reported that conventional wisdom suggests that an upward move in U.S. real interest rates will be bad for gold prices. This may not be the case any longer however, according to the World Gold Council. The WGC says a rise in U.S. real rates has to be seen in the context of rates cycles in other parts of the world, especially emerging markets. Given the structural changes that gold has experienced for more than a decade, it is likely that the U.S. real interest rate will be less relevant than before. This is particularly likely as demand increasingly originates in emerging markets where domestic inflation rates are more relevant than the U.S. inflation rate.


  • The U.S. economy created only 162,000 jobs in July, while the Bureau of Labor Statistics went on to revise June’s job creation downward. Expectations were for a net of 185,000 jobs created. What hides in the fine print is the number of part-time jobs created at the expense of full time jobs. In July, 174,000 new part-time jobs were created, which is more than the total job creation. After a thorough dissection of the data presented, the employment report was best described by Gregory Weldon as “horrifically weak.”
  • The widely discussed threat of dividend cuts among gold producers has materialized. Barrick Gold Corp. announced it would slash its dividend by 75 percent. Kinross Gold Corp., needing to protect its balance sheet following the earlier write-down of its Tasiast project, went all the way and suspended the payment of a dividend. The implications of implementing such a policy can be fearful. Numerous pension funds, retirement funds, and other investment firms are prohibited from investing in companies that do not earn them an income component. Amid an already dissatisfied investment public, Kinross appears to be neglecting a large portion of the general investment public.
  • Mineweb published a compelling article on the current drought in mine-related transactions. Despite the ultra-low valuations which have set the stage for a buyer’s market, mining and metals companies appear not to bite. The most affected are juniors, who have experienced “a catastrophic withdrawal of equity capital, particularly for those at the early exploration end of the industry.” The report highlights that the average proceeds raised by juniors fell to just $1.6 million, while only twelve initial public offerings were reported during the first half of this year, a 69 percent decline from the previous year.

Energy and Natural Resources Market


oil-prices brent-crude

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  • Manufacturing PMIs, a good indicator of manufacturing output growth, signaled expansion across the developed economies in July with a rampant U.S. and recovering Europe. Data complied by Macquarie shows the G3 PMI, a weighted-average of the US, Europe and Japanese PMIs, rose to 52.1 in July, from 50.1 in June and marking its highest level since June 2011. All three regions recorded a figure above 50, denoting expansion, the first time this has happened since July 2011. This should be good for commodity demand. However, China remains a risk, where more bullish official data is contradicted by a more bearish private survey, and other key developing regions were weak.
  • Crude oil (West Texas Immediate) gained more than $2 per barrel following stronger than expected PMI data. Copper also gained on the week following stronger than expected PMI data.


  • Stocks of fertilizer miners plunged this week on news that prices of potash fertilizer may fall sharply following the breakdown of the main potash producer cartel that controlled approximately 40 percent of global exports.
  • Uranium prices are showing little sign of recovery after sinking to the lowest in more than seven years amid a glut of the radioactive metal and speculation Japan will delay restarting its nuclear reactors. “The process for restarts is clearly going to take some time,” said Jonathan Hinze, a senior vice president at Roswell, Georgia-based Ux, which provides research on the nuclear industry. “Japanese utilities are unlikely to require any new fuel until 2014 at the earliest. There is a realization that the uranium demand from Japan is unlikely to dramatically change anytime soon, especially this year.” Uranium for immediate delivery has dropped as much as 21 percent this year, extending a 17 percent decline in 2012, according to data from Ux. Prices slumped 12 percent in July, the biggest monthly loss since March 2011. They climbed as hig h as $152 in June 2007.
  • Chinese net imports of thermal coal (including anthracite and lignite) declined in June both versus the previous month and last year, and were the lowest of the year at 17.2mt, making for a first half 2013 growth rate of 12 percent year-over-year. If realized over the remainder of the year, this would be lowest annualized growth rate (12 percent) in the five years since China began importing thermal coal on a net basis, and 2013 net imports would be 240mt, below our current estimate of 249mt.
  • Corn fell to the lowest level in more than 33 months as cool, wet weather boosted the outlook for a record crop in the U.S., the world’s biggest grower. Corn plunged 32 percent this year as the U.S. government expects the domestic harvest to jump to 13.95 billion bushels, up from a six-year low of 10.78 billion bushels a year earlier, when the worst drought since the 1930s damaged fields.


  • China plans to cut steel capacity from the 400 million metric tons of production that was built without proper approvals, the National Business Daily reported, citing an unidentified person. Authorities will stop banks from lending to steelmakers with unapproved capacity if the companies have failed to meet environmental and land use rules, the newspaper said. The 400 million tons of unapproved capacity accounts for more than 40 percent of China’s total, according to the report. Unapproved capacity operating within China’s environmental and land use standards may continue to be supported by banks because of considerations for local employment and tax revenue, the newspaper reported.
  • Copper investment may win future preference over other products “because we see that in the long term it could have greater returns,” BHP Billiton CEO Andrew Mackenzie said in interview with Chilean newspaper El Mercurio. Copper is “fundamental part” of the company’s future strategy, along with iron, coal and oil, he said. While Copper prices may rise 3 percent per year in the long term, we have to prepare for a copper price like the current one or perhaps a little lower, that is, around $3 a pound, according to Mackenzie. Chile’s market leadership in copper at risk unless the nation makes productivity improvements, Mackenzie said in the interview.


  • World copper supply may outstrip demand by 643,000 metric tons in 2014, the highest since 2009, compared with 143,000 tons this year as mine output increases amid slowing demand from China, Yoshihiro Nishiyama, Senior Executive Officer in the marketing department at Pan Pacific Copper said. China’s consumption will decline 2.5 percent next year, he said. New and expanding mine output including Oyu Tolgoi in Mongolia, Kamoto and Kov mines in the DRC and Caserones, Collahuasi and Escondida in Chile, will add 742,000 tons in 2013 and 990,000 tons in 2014, Nishiyama said. World production of refined copper will increase 7 percent to 21.9 million tons in 2014 from 2013, while demand will grow 4.5 percent to 21.3 million tons, Nishiyama said.

Emerging Markets


  • The Central Politburo of the Communist Party of China (CPC), China’s ruling party, held its meeting this week to support Premier Li Keqiang’s policy to maintain economic growth, restructuring and reform. The Politburo discussed the promotion of healthy and stable developments in the property market, but did not mention curbing housing sales or price control. In the State Council meeting Li Keqiang promoted new urbanization spending plans by focusing on improving urban transit, water and the environment. The People’s Bank of China (PBOC), the central bank, conducted two reverse repos this week by injecting $2.8 billion and $5.55 billion, respectively, demonstrating easing bias in maintaining growth. Also on the policy front, the government ordered the National Audit Committee to audit local government debts in preparation for the Third Plenary Session of the 18th CPC Central Committee. The session will be held in October, where the economic policy will hopefully be discussed.
  • China’s official purchasing managers’ index (PMI) for the month of July rose to 50.3 from 50.1 in June. This was better than the market consensus of 49.8. The new orders index increased from 50.4 in June to 50.6 in July, mainly due to a rise in new orders. The employment index also went up from 48.7 in June to 49.1 in July, following a similar increase in small enterprise PMI from 48.9 in June to 49.4 in July. China’s production index grew from 52 in June to 52.4 in July. The purchasing price index jumped from 44.6 in June to 50.1 in July. The purchase index also improved from 49.5 in June to 50 in July. On the other hand, the finished goods inventory index fell from 48.2 in June to 47.3 in July. The reading for the raw materials inventory index edged up from 47.4 in June to 47.6 in July, remaining in contracting territory along with the finished goods inventory index. Continued demand improvement is required fo r enterprises to add inventory. The indices for new export orders, as well as for imports, improved in July signaling a possible recovery in trade performance. The new export orders index improved from 47.7 in June to 49 in July. China’s import index also improved from 47.9 in June to 48.4 in July. Given the close correlation between these indices and the real export performance, a mild recovery in China’s export performance is expected in the next two to three months.
  • Sales growth for China’s healthcare industry was 22 percent year-over-year in May, up from 21 percent in April, and 15 percent in May 2012. Chemical drug sales grew 16 percent, which is higher than the 13 percent growth in April but lower than the 22 percent growth in May 2012. Biotechnology, traditional Chinese medicine (TCM), and device sales growth surged to 33 percent, 30 percent and 25 percent, up from 12 percent, 20 percent and 12 percent, respectively, in May 2012. China’s overall gross margin expanded by 110 basis points to 30.5 percent in May, on better gross margins of chemical drugs, biotech and devices. Operating margin also increased, by 170 basis points to 11.9 percent from 10.2 percent in April. Net margins widened by 110 basis points to 10 percent in May, with higher net margins across all subsectors.
  • Korea’s exports increased 2.6 percent in July, surpassing analysts’ expectations of a 2.1 percent increase. The previous reading for June was negative 1.0 percent. Headline inflation rose in July to 1.4 percent year-over-year from 1.0 percent in May and June. On month-over-month terms, headline inflation rose to 0.2 percent from being down 0.10 percent in June. July figures were in line with the market consensus. Core consumer price index (CPI) inflation, excluding agricultural products and oils, rose further by 0.10 percent month-over-month and 1.5 percent year-over-year, from 1.4 percent in June.
  • Taiwan’s second-quarter GDP recovered by growing 2.27 percent year-over-year, above the consensus of 2.1 percent. This was due to stronger than expected exports.
  • Brazilian inflation slowed to 5.18 percent in July from 6.31 percent in June, showing the monetary tightening process initiated in June is rapidly yielding the desired outcome. A different report showed that industrial production in Latin America’s largest economy rose 3.1 percent in June. The reading was ahead of economists’ forecast of a 2.2 percent increase, a faster pace than the 1.4 increase recorded for the previous month.
  • Poland’s PMI rose for the third month in a row as July’s reading reached 51.1 from 49.3 in June. The reading lends support to the central bank’s decision earlier this month to end the easing cycle and adds to the sentiment of the Polish economy bottoming in the first half of the year. Similarly, the Czech manufacturing PMI rose for the fourth month in a row, as July’s reading reached 52, up from June’s reading of 51. This supports the thesis that economic growth in the country is gaining momentum after a very weak first quarter.


  • HSBC reports that Latin American markets are heading into another disappointing earnings quarter. Though it is still early in the second-quarter earnings season, emerging market earnings are down 10 percent compared to analysts’ forecasts. Mexico, who is nearing the end of its reporting period, has so far missed by an average of 20 percent. Brazil, only one-third of the way done at this point, has missed by 10 percent. The only large Latin American market that is currently beating earnings’ forecast is Colombia.
  • Turkey’s PMI declined to 49.8 in July from 51.2 in June. The reading is the lowest in a year, boosting speculation that the nation may miss its 2013 growth targets. The impact of a weak Turkish lira added to the volatility surrounding the recent Gezi Park protests. Turkey joins other emerging market nations such as Russia and Hungary, which are showing signs of weakening economic activity.
  • China’s government revenue in the first half of the year grew 7.9 percent, 1.9 percent slower than the same period last year. The slower government revenue growth is due to slower economic growth. Per-capita income grew 6.5 percent for the first half of the year, slower than 9.7 percent for the same period last year, and slower than the GDP growth rate, indicating structural weakness in the economy.
  • China’s industrial profits in June were 11.1 percent year-to-date, which is the lowest print so far this year.
  • Indonesia saw July’s headline inflation rising to 8.61 percent from 5.9 percent, following the fuel price hike in June . This is higher than the consensus of 8.04 percent. The surge in inflation was mainly driven by food, processed food and transportation prices. Indonesia may raise interest rates following the expectation of rising inflation.


  • Manufacturing PMI for the eurozone expanded at a faster pace than was estimated for July to 50.3. This was up from 48.8 in June topping the 50-mark for the first time since July 2011. A reading above 50 indicates expansion. Similarly, economic confidence in the region improved to a fifteen-month high. According to Markit economists, rising confidence encourages businesses to invest more, and also encourages consumers to lift their spending. This may place the region nicely, spurring positive third- quarter economic growth and helping the eurozone to exit recession.


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  • The second quarter reporting period in the global emerging markets space has been challenging. Latin America has posted negative earnings’ surprises, driven by Mexico and Brazil. Asia and the EMEA (Europe, the Middle East and Africa) region have not fared any better. The shining star amid the negativity is China, where the average market capitalization weighted earnings’ surprise is close to 35 percent. Is still early in the reporting cycle, but a continuation of this trend could bode very well for Chinese utilities, information technology, healthcare, consumer discretionary and real estate stocks.
  • Despite private equity fundraising declining in 2013, Latin America is capturing a greater share of the market. Of the total emerging market private equity fundraising deployed in the first half of 2013, 23 percent was directed to Latin America. This is up from only 10 percent in 2012. Interestingly, two-thirds of this money was deployed on specific country mandates ex-Brazil. Asia continued to lead, capturing 63 percent of total fundraising.


  • Peter Hooper, chief economist of Deutsche Bank, continues to expect that economic activity and inflation in the U.S. will show enough evidence of improvement to allow the Federal Reserve to move ahead with a tapering in September. At the same time, the tapering will likely be accompanied by an emphasis on keeping rates low for an extended period of time. The bottom line is that the tapering is still on, and despite the dovish signals seeking to reduce volatility, emerging markets will continue to face selling pressure.
  • A recent Nielsen study shows that consumer confidence is growing in every region except in Latin America. Within that region it falls in every country, except Colombia. Brazil’s consumer confidence remains the highest, which makes the country more vulnerable given its lower economic growth. On absolute terms, Latin America’s consumer confidence fared significantly better, holding above that of North America, Europe, the Middle East and Africa.
  • Thailand’s manufacturing declined 5.2 percent in the second quarter. Imports of capital goods dropped 11.4 percent in June and were down 10.3 percent for the second quarter. Exports in June dropped 2.3 percent. These weak economic indicators point to a de-stocking bias in the country.

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




Nasdaq 3,689.59 +76.42 +2.12%
Oil Futures 106.85 +2.15 +2.05%
10-Yr Treasury Bond 2.60 +0.03 +1.33%
S&P Basic Materials 258.49 +3.28 +1.29%
Russell 2000 1,059.86 +11.35 +1.08%
S&P 500 1,709.67 +18.02 +1.07%
Hang Seng Composite Index 3,031.66 +28.76 +0.96%
Korean KOSPI Index 1,923.38 +12.57 +0.66%
DJIA 15,658.36 +99.53 +0.64%
S&P Energy 610.96 -1.59 -0.26%
Gold Futures 1,312.90 -9.00 -0.68%
Natural Gas Futures 3.34 -0.22 -6.19%
S&P/TSX Canadian Gold Index 176.08 -12.07 -6.42%
XAU 94.19 -6.69 -6.63%

Monthly Performance
Index Close Monthly




Nasdaq 3,689.59 +256.19 +7.46%
XAU 94.19 +6.53 +7.45%
Oil Futures 106.85 +7.25 +7.28%
Russell 2000 1,059.86 +70.39 +7.11%
S&P Basic Materials 258.49 +15.86 +6.54%
S&P/TSX Canadian Gold Index 176.08 +10.70 +6.47%
S&P 500 1,709.67 +95.59 +5.92%
Gold Futures 1,312.90 +67.10 +5.39%
10-Yr Treasury Bond 2.60 +0.13 +5.14%
DJIA 15,658.36 +725.95 +4.86%
S&P Energy 610.96 +27.90 +4.79%
Korean KOSPI Index 1,923.38 +68.36 +3.69%
Natural Gas Futures 3.34 -0.32 -8.73%
Hang Seng Composite Index 3,031.66 -332.01 -14.83%

Quarterly Performance
Index Close Quarterly




10-Yr Treasury Bond 2.60 +0.97 +59.72%
Oil Futures 106.85 +12.86 +13.68%
Russell 2000 1,059.86 +120.01 +12.77%
Nasdaq 3,689.59 +348.97 +10.45%
S&P 500 1,709.67 +112.08 +7.02%
S&P Energy 610.96 +34.28 +5.94%
DJIA 15,658.36 +826.78 +5.57%
S&P Basic Materials 258.49 +12.29 +4.99%
Korean KOSPI Index 1,923.38 -33.83 -1.73%
Hang Seng Composite Index 3,031.66 -86.55 -2.78%
S&P/TSX Canadian Gold Index 176.08 -20.82 -10.57%
Gold Futures 1,312.90 -158.70 -10.78%
XAU 94.19 -12.96 -12.10%
Natural Gas Futures 3.34 -0.69 -17.14%

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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. Investing in real estate securities involves risks including the potential loss of principal resulting from changes in property value, interest rates, taxes and changes in regulatory requirements.

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. Each tax free fund may invest up to 20 percent 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. Bond funds are subject to interest-rate risk; their value declines as interest rates rise. The tax free funds 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.

Past performance does not guarantee future results.

These market comments were compiled using Bloomberg and Reuters financial news.

Holdings as a percentage of net assets as of 6/30/13:

Klondex Mines Ltd.: World Precious Minerals Fund, 3.48%

Gran Colombia Gold Corp.: Global Emerging Markets Fund, 0.08%; Global Resources Fund, 3.19%; Gold and Precious Metals Fund, 6.31%; Holmes Growth Fund, 1.35%; Megatrends Fund 0.49%; World Precious Minerals Fund, 7.66%

Barrack Gold Corp.: Gold and Precious Metals Fund, 2.18%; World Precious Minerals Fund, 0.12%

Kinross Gold Corp.: Global Resources Fund 0.0%; Gold and Precious Metals Fund, 1.00%; World Precious Minerals Fund, 0.14%

Pitney Bowes Inc.: 0.0%

Verizon Communications Inc.: All American Equity Fund, 1.15%

Exxon Mobil Corp.: All American Equity Fund, 0.92%

Chevron Corp.: All American Equity Fund, 0.90%

The Mosaic Co.: Global Resources Fund, 2.20%

Uralkali USJC: 0.0%

BHP Billiton Ltd.: Global Resources Fund, 0.15%

SPDR S&P Metals & Mining ETF: 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 S&P BARRA Growth Index is a capitalization-weighted index of all stocks in the S&P 500 that have high price-to-book ratios.

The S&P BARRA Value Index is a capitalization-weighted index of all stocks in the S&P 500 that have low price-to-book ratios.

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 MSCI Russia Index is a free-float weighted equity index developed in 1994 to track major equities traded in the Russian market.

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 Bloomberg Gold Bear/Bull Sentiment Indicator charts the percent of respondents in a weekly Bloomberg News survey of traders, investors, and analysts predicting gold prices will rise the following week. The number of participants in the survey, which is completed every Friday, may vary.

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 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 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 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 Producer Price Index (PPI) measures prices received by producers at the first commercial sale. The index measures goods at three stages of production: finished, intermediate and crude.

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 ISM manufacturing composite index is a diffusion index calculated from five of the eight sub-components of a monthly survey of purchasing managers at roughly 300 manufacturing firms from 21 industries in all 50 states.

The China Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, is issued by the China Federation of Logistics & Purchasing and co-compiled by the National Bureau of Statistics.

The J.P. Morgan Global Purchasing Manager’s Index is an indicator of the economic health of the global manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

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