How Helicopter Ben Helps Jobs and, Inadvertently, Gold
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Weekly Advisor Alert by U.S. Global Investors, Inc.
USFunds.com • October 5, 2012
Table of Contents
Index Summary • Domestic Equity Market • Economy and Bond Market • Gold Market
Energy and Natural Resources Market • Emerging Markets • Leaders and Laggards • Fund Performance Link
If you would like more information on our funds, feel free to contact our Institutional Services Team:
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How Helicopter Ben Helps Jobs and, Inadvertently, Gold
By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors
The world’s central bank leaders continue to spike
the monetary punch bowl, with investors imbibing
on gold once again. This flurry of gold buying
prompts many curious investors and doubting media
to ask me two questions: 1) How can demand for
gold and gold stocks continue; and 2) How high can
the precious metal go?
To answer these questions, we need to look at the
intentions behind the economic and political
decision-making across several developed countries,
analyze the causes, the effects, and the possible
ramifications.
For example, one of the most debated topics today is
America’s ongoing unemployment situation. Job loss
has affected the lives and pocketbooks of millions of
Americans and our friends and families, culminating
to a center-stage position in the election this year.
All eyes turn to President Barack Obama and Mitt
Romney to explain how each intends to create jobs.
During the two years following the Great Recession,
Americans lost jobs at a similar rate to the
employment losses during the Great Depression and
in Finland after 1991. But two years after the crisis,
U.S. employment losses stopped and reversed
direction.
Compare this to the situations in Norway, Spain, Finland and Sweden, each of which had prolonged
unemployment. After Norway’s financial crisis in 1987, it took 8.5 years to return to the country’s employment
peak. It took 13 years for Spain’s employment to return to its 1997 peak. For Finland and Sweden, it took more
than 17 years following their 1991 peaks.
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Although the job losses in the U.S. don’t seem as dismal, “Helicopter” Ben Bernanke wants to avoid Europe’s
and Japan’s catastrophic situations. To him, the economy “has not been growing fast enough recently to make
significant progress in bringing down unemployment.”
In a speech to the Economic Club of Indiana on October 1, Bernanke explained that the Fed is “charged with
promoting a healthy economy,” which includes “an economy with low unemployment, low and stable inflation,
and a financial system that meets the economy’s needs for credit and other services.” With regards to the
decisions relating to monetary policy, the Fed’s goals are dictated by Congress and are to seek “maximum
employment and price stability.” He explains, “We would like to see as many Americans as possible who want
jobs to have jobs and that we aim to keep the rate of increase in consumer prices low and stable.”
Ten years earlier, Ben hinted at the way he might accomplish such goals as a Fed chairman. In a speech
regarding deflation, he shared his position on a government’s means to print money, referring to Milton
Friedman’s comment about dropping money out of a helicopter into the economy. He stated, "The U.S.
government has a technology, called a printing press (or today, its electronic equivalent), that allows it to
produce as many U.S. dollars as it wishes at no cost." Since then, he’s been known as "Helicopter Ben."
With unemployment continuing, the Fed’s helicopter drops another $40 billion per month to buy mortgage-
backed securities, as well as an additional $45 billion of longer-term securities per month through the end of
the year.
And, as Bank of America-Merrill Lynch says, “monetary policy is contagious.” The Fed’s money printing
practice to help create jobs is only one part of the picture. Along with the growing U.S. monetary base, global
liquidity has been growing every year for the past 12 years. As you can see, both of these factors have a close
correlation to the rise of gold.
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While well-intentioned, I believe these “quantitative infinity” programs may have a devastating devaluing effect
on currencies, which has helped to spur gold prices over this entire time period.
Gold investors have recognized this correlation by returning to gold en masse. In August, investors rushed into
gold, with the massive inflows of money going into the gold exchange traded products in August more than
each of the prior five months.
Buying continued in September, with gold lovers loading up on coins. According to Bloomberg, people
purchased the most American Eagles from the U.S. Mint in eight months. Almost 70,000 ounces were sold last
month—the most sold since January when the U.S. Mint sold 127,000 ounces.
Miners also attracted interest, with the FTSE Gold Mines Index experiencing a rise of 13.25 percent and the
NYSE Arca Gold Miners Index rising 12 percent during the month of September alone.
So how high can gold go? If you factor in only the Fed’s program to purchase mortgages and Treasuries,
Bank of America-Merrill Lynch says that over the next nine months gold could go to $2,000, and by the end of
2014, gold could be at $2,400.
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This target doesn’t take the Love Trade into consideration. Over the past several months, we’ve heard
only chirping crickets from India, the country that has historically been the world’s largest consumer of gold.
Demand suffered under a very weak rupee, as the price of gold in the local currency climbed to an all-time
high.
The rupee’s recent strength has helped to increase Indian gold demand with flows climbing to a five-month
high, according to UBS. What’s helped bring shoppers back to the market is the fact that the exchange rate is
back to where the rupee was in April.
This improvement in the currency comes just in time, as the wedding season is in full bloom. Every year, about
10,000 weddings are held in India from late September through January, in between the monsoons and the
summer heat. Gold has historically been closely linked with the celebration of weddings, as the bride wears the
precious metal and gifts of gold coins are given to the newlyweds.
In addition, Diwali will be celebrated in November. The Festival of Lights is India’s biggest and most important
holiday of the year and is celebrated by almost 1 billion Hindus around the world. Traditionally, on the first day
of Diwali, it is considered auspicious to clean the home and shop for gold.
Why is India so significant to gold? As you can see below, from 2000 through 2011, the rising incomes in both
China and India have been strongly correlated to the price of gold.
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Investors now have two strong reasons to invest in gold: the Fear Trade, driven by an expanding monetary base,
and the Love Trade, driven by rising gold demand in Chindia. If you’re already sold on gold, make sure to
maintain a modest 5 to 10 percent weighting in gold and gold stocks. For those investors who aren’t in gold,
what’s stopping you?
Index Summary
The major market indices rose this week. The Dow Jones Industrial Average increased 1.29 percent. The
S&P 500 Stock Index rose 1.41 percent, while the Nasdaq Composite gained 0.64 percent. The Russell
2000 small capitalization index closed the week with a gain of 0.65 percent.
The Hang Seng Composite rose 1.11 percent; Taiwan fell 0.32 percent, while the KOSPI decreased 0.05
percent.
The 10-year Treasury bond yield rose 11 basis points for the week, to 1.74 percent.
All American Equity Fund - GBTFX • Holmes Growth Fund - ACBGX • Global MegaTrends Fund - MEGAX
Domestic Equity Market
The S&P 500 Index rose 1.41 percent this week, as the market climbed higher on better economic news and a
more optimistic sentiment. Financials led the way on broadly improving sentiment due to the rebound in
housing, loan growth and Fed policy. Technology lagged and was the only group to post a loss this week as
negative earnings preannouncements weighed in the sector.
Strengths
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The financial sector was the best performer this week rising 3.03 percent. Financials have quietly
become the best performer in the market over the past month, three months and trailing year. Hartford
Financial Services Group was the best performer this week, rising by more than 9 percent as the
company announced it is selling its life unit, a broker-dealer and its individual annuities distribution
business. This will free up capital that will likely be returned to shareholders.
The healthcare sector registered the second best performance this week, rising by 2.59 percent. The
managed care companies were among the best performers with Humana, WellPoint and Aetna all rising
by more than 5 percent. Some of these gains were attributed to Mitt Romney’s performance in the
presidential debate.
Netflix was the best performing stock in the S&P 500 this week as the company rose by more than 22
percent. An analyst reiterated his confidence in the company citing a proprietary survey showing
improving satisfaction with the Netflix service.
Weaknesses
The technology sector experienced weakness among a variety of industry groups. Hewlett-Packard,
First Solar and JDS Uniphase all dropped by at least 8 percent.
Energy also underperformed as oil dropped 2.43 percent and fell below $90. Exploration & production
and oil service companies tended to be the hardest hit.
Hewlett-Packard was the worst performer in the S&P 500 this week, falling by more than 13 percent as
the company reported that the turnaround plan it began a year ago is still a work in progress and
lowered 2013 profit estimates. The company hit a 10-year low this week.
Opportunity
While debasing the value of its paper currency in the long term, renewed money printing in the
developed world may have the ability to send asset prices higher in the near term.
Threat
The market will now shift to earnings announcements and the upcoming elections, which could cause
some volatility.
U.S. Government Securities Savings Fund - UGSXX • U.S. Treasury Securities Cash Fund - USTXX
Near-Term Tax Free Fund - NEARX • Tax Free Fund - USUTX
The Economy and Bond Market
Treasury bond yields rose this week on better-than-expected economic data. The ISM manufacturing index
rose more than expected in September and moved back above the critical 50 level, indicating expansion in
manufacturing. The unemployment report was released on Friday and was generally well received with a lot of
focus on the headline unemployment rate falling below 8 percent to 7.8 percent. The change in nonfarm
payrolls was only 114,000, hardly enough to push the unemployment rate down by 0.3 percent. It is estimated
that all else being equal, nonfarm payrolls need to grow by 125,000 per month just to maintain the
unemployment rate as new workers enter the market faster than people leave the market. The chart below
depicts how the unemployment rate has fallen from a high of 9.9 percent in April 2010 to the current 7.8
percent. Since the end of 2009, nonfarm payrolls have averaged just 127,000 per month, essentially break-even
job growth. The drop in the unemployment rate is due almost entirely to people leaving the labor force, as
opposed to any significant job creation. There were also some seasonal adjustments in this report that helped
drive down the unemployment rate. Ironically, the economy appears to be doing better because people have
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given up hope and are no longer even looking for jobs.
Strengths
Nonfarm payrolls rose 114,000 in September and the prior two months were revised higher by 86,000.
Overall, this was better than expected and a modest positive for the economy.
The ISM manufacturing index rose to 51.5 in September, which was the best showing since May,
indicating expansion in the manufacturing sector.
The ISM nonmanufacturing index was also stronger than expected in September, indicating a broader
economic improvement than many had expected.
Weaknesses
JP Morgan’s global purchasing managers index improved but remained in contraction territory.
On a year-over-year basis, auto sales fell 26 percent in Italy, 37 percent in Spain, and 18 percent in
France. These are dramatic declines and give an indication of the severity of the economic situation in
Europe.
Opportunity
While Chinese authorities did not announce any substantial government policy changes during this past
holiday week, there remains considerable speculation about the prospects for near-term government
policy action that would support the economy or stock market.
Interest rates are likely to remain very low for the foreseeable future, both here in the U.S. and globally.
Threat
Europe remains a wildcard with the markets shifting focus on a weekly basis.
China also remains somewhat of a wildcard as the economy has slowed and officials appear in no hurry
to take decisive action.
The International Monetary Fund’s chief economist stated that the recovery from the global financial
crisis will take a decade. If that is a correct assessment, we are not even half way through the recovery
process.
World Precious Minerals Fund - UNWPX • Gold and Precious Metals Fund - USERX
Gold Market
For the week, spot gold closed at $1,780.60 up $8.50 per ounce, or 0.48 percent. Gold stocks, as measured by
the NYSE Arca Gold Miners Index, lost 0.07 percent. The U.S. Trade-Weighted Dollar Index fell 0.75 percent
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for the week.
Strengths
This past week, gold prices hit a new high for the year following a couple of weeks of consolidation
around $1,770. Although it is still early in the month, we have not seen much in terms of profit taking
since the rally started in August.
Senior gold stocks were flat for the week with mid-tiered gold plays putting in a slight gain, but silver
stocks were the strongest, climbing almost 2 percent on average.
Gold held in exchange traded funds reached a new record high and sales of gold and silver coins by the
U.S. Mint were very robust in September.
Weaknesses
South African gold mining shares traded on average 4.8 percent lower over the course of the week. The
Chamber of Mines and the unions reached agreement on a one-page framework document that may
provide the common ground needed to get the gold miners back on the job.
Labor relations may not be progressing as smoothly for the platinum miners. Anglo American Platinum
dismissed 12,000 workers for participating in the illegal strikes at the company’s operations and some
fear this could lead to escalated violence.
A small silver lining to the labor problems in South Africa is that the rand fell 5.7 percent over the last
week. Should the currency continue to fall, the profit margins of the miners should expand, perhaps
nullifying some of the wage increases being sought.
Opportunities
Pretium Resources reported a number of new high-grade gold intercepts from recent drilling at the
Valley of the Kings zone at Brucejack. Highlights include concentrations of gold ranging from 260
ounces per tonne to 32 ounces per tonne over some relatively narrow intercepts, but certainly
economic. Importantly, the continuity of the deposit is being proven up and the structure is now known
to extend for 800 meters and is still open to the east, west and at depth.
Rob McEwen, CEO of McEwen Mining and a former CEO of Goldcorp, was interviewed on Mineweb
and stressed that now is a great time to buy gold stocks due to their underperformance relative to
bullion during the debt crisis. Rob noted that the message sent by shareholders to management
regarding properly running a mining company has been heard loud and clear.
India has seen a resurgence in gold buying as the rupee has regained some of its value, lowering the
local gold price. In addition, the Indian stock market has surged, creating more confidence for
spending. India, traditionally being the largest gold buyer, has seen falling gold purchases for most of
the year. Should there be a turn in India’s gold purchases, it would be supportive of higher gold prices.
Threats
As we mentioned last week, a strong move in the gold price was still missing two things – China and
India. While it looks like we are getting somewhat of a turnaround in India’s gold appetite we really
haven’t seen a turn in its stock market yet. The Shanghai Composite Index rallied in the last couple of
days, but we have not seen a major policy announcement such as QE3 in the U.S. to get the market
going yet.
As a reminder, gold demand in China during the second quarter was 145 tonnes, down 43 percent from
the first quarter. Retail Chinese gold buying picked up during the recent Golden Week holidays with
some retailers seeing sales pick up by close to 60 percent.
While it is too early to see meaningful improvements in the management practices at mining companies
from growing the size of the company versus the profits, as discussed at the Denver Gold Forum last
month, we still remain cautious going into earnings reporting season this October. On average, you
don’t get good news when gold companies report, partly due to a historical lack of focus on delivering
profits. Hopefully, all the bad news will be put out and companies will get down to the business of
delivering profit growth going forward.
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Global Resources Fund - PSPFX • Global MegaTrends Fund - MEGAX
Energy and Natural Resources Market
Strengths
Natural gas futures closed at their highest level this year at $3.53 per mmbtu early in the week as a
forecast for a blast of cold air in the U.S. signaled stronger demand for heating fuel.
The shale revolution continues as U.S. oil production climbed last week to the highest level since
December 1996 to 6.52 million barrels a day in the week ended September 28, the Energy Department
reported. America met 83 percent of its energy needs in the first six months of the year, department
data shows.
Weaknesses
The latest data from the American Iron and Steel Institute shows that U.S. weekly crude steel output
dropped to the lowest level thus far in 2012 in the week ending September 28. Output dropped 2.4
percent week-over-week to 83.6 million tonnes per annum, while capacity utilization fell to 72 percent
from 73.8 percent the previous week. The slowdown suggests some wider weakness in the overall U.S.
economy, and has been accompanied by sharp falls in hot rolled coil and steel scrap prices over the past
couple of weeks.
Iron ore miner Vale said it would temporarily idle three iron ore pellet plants comprising about 20
percent of the company’s pellet capacity in response to falling demand. The company said it would
boost supply of sinter feed instead as it reduces iron ore supplied to pellet plants.
Opportunities
Chinese iron ore output rose only 2.6 percent year-to-date through August, the weakest growth for the
month since 2009. Average capacity-weighted cash costs are about $100 per metric ton, and the
Metallurgical Mines' Association of China recently claimed that nearly 40 percent of domestic iron ore
mine output has been halted, which could support prices.
Iraq’s crude oil exports are likely to exceed 2.7 million barrels a day in October and the country’s
Kurdish northern region is expected to increase its crude exports to 200,000 barrels, the Oil Minister
said.
Threats
A global nickel surplus may expand for a third year to the highest level since 2008 as supply from new
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mining projects outweighs China’s demand growth. Supply will likely exceed demand by 60,000 metric
tons in 2013, said Toru Higo, Sumitomo Metal Mining’s general manager of nickel sales and raw
materials. Supply outstripped demand by 40,000 tons this year and 22,000 tons in 2011, he said in an
interview with Bloomberg news.
The World Steel Association (WSA) said China’s expected steel demand growth may not materialize.
WSA said that expectations of a recovery in Chinese steel demand after years of declining growth may
not materialize given the likelihood of less intense usage of steel as the country moves to a different
stage of its economic growth. This may worsen the oversupply problem.
China Region Fund - USCOX • Eastern European Fund - EUROX
Global Emerging Markets Fund - GEMFX
Emerging Markets
Strengths
China’s September PMI rose to 49.8 from 49.2 in August, closer to the 50 level, above which economic
activities are expanding. The good news inside the index was that the output component rose from 50.9
to 51.3; new orders increased to 49.8 from 48.7; and new export orders jumped to 48.8 from 46.6. The
finished goods inventory edged down to 47.9 from 48.2, indicating the de-stocking process in China is
reaching an end.
Philippines’ net bank lending expanded by 16 percent on a year-over-year basis in July, while non-
performing assets eased to 2.67 percent from 3.07 percent a year ago. Also in the Philippines,
September inflation eased surprisingly to rise just 3.6 percent, versus the consensus 3.8 percent, and
lower than the 3.8 percent seen in August.
Indonesia’s headline CPI inflation rose only 4.3 percent in September from a year ago, significantly
below the market expectation of 4.6 percent. Also in September, Indonesia’s current account showed a
surprising surplus of $249 million, in spite of a bigger drop for exports than for imports.
Weaknesses
Indonesia’s exports decreased 24.3 percent in September, worse than the 12.6 percent decline expected
by Bloomberg, while imports decreased 8 percent.
Thailand’s September inflation was 3.38 percent year-over-year, slightly higher than the market
expectation of 3.3 percent.
Singapore’s manufacturing PMI fell in September to a four-month low of 48.7, with falling new orders,
new export orders and productions. PMI below 50 indicates that economic activities are contracting.
Macau’s September gaming revenue rose 12.3 percent year-over-year to MoP 23.9 billion, below the
street estimate of MoP 25 billion. The lower growth was partly caused by the Mid-Autumn holiday
which fell on the last day of the month while it was in mid-September last year.
Malaysia’s exports in August fell 4.5 percent from a year ago, the largest contraction seen since
September 2009. The export decline was led by crude petroleum and palm oil, falling 28.8 percent and
27.2 percent, respectively.
Opportunities
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The graph above shows the stages of urbanization driven by growth of GDP per capita. It shows
Thailand probably has the most potential to urbanize from the current level. The urbanization process
will drive demand for bank loans and housing sales, along with other big-ticket item consumer goods.
Despite the recent push higher, the rupee remains fundamentally undervalued. As the chart below
shows, India's real effective exchange rate (REER) – that is, the trade weighted average of the country's
currency adjusted for inflation – remained near record lows in September, at more than two standard
deviations below its 10-year average.
The next chart shows India’s REER against a host of other emerging markets. Again, the rupee appears
fundamentally undervalued across the emerging market universe.
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Threats
Diesel demand growth in China is now only 0.7 percent year-to-date as of the end of August, much
lower than gasoline demand growth of 10.9 percent. Since 50 percent of the diesel consumption is for
logistics, and 70 percent for industrial sectors, it confirms slowing industrial activities in China this
year.
Bond investors were frightened after shelling in Syria spilled over the border into Turkey, sending yields
up to the highest level in two months as the government in Ankara retaliated against the shelling. The
incident shows the mounting risks for Turkey of the violence that has engulfed Syria. Turkey is a NATO
country with the second largest army among NATO countries, after the U.S.
Russia’s central bank held back from raising interest rates after a surprise increase last month, a pause
that may prove brief after inflation quickened past the target range to 6.6 percent, the highest in 10
months.
Leaders and Laggards
The tables show the performance of major equity and commodity market benchmarks of our family of funds.
Weekly Performance
Weekly Weekly
Index Close Change($) Change(%)
DJIA 13,610.15 +173.02 +1.29%
S&P 500 1,460.93 +20.26 +1.41%
S&P Energy 552.93 +1.74 +0.32%
S&P Basic Materials 235.18 +2.30 +0.99%
Nasdaq 3,136.19 +19.96 +0.64%
Russell 2000 842.86 +5.41 +0.65%
Hang Seng Composite Index 2,834.71 +31.15 +1.11%
Korean KOSPI Index 1,995.17 -1.04 -0.05%
S&P/TSX Canadian Gold Index 347.82 -1.49 -0.43%
XAU 191.53 +0.53 +0.28%
Gold Futures 1,780.80 +6.90 +0.39%
Oil Futures 89.88 -2.31 -2.51%
Natural Gas Futures 3.40 +0.08 +2.29%
10-Yr Treasury Bond 1.74 +0.11 +6.73%
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Monthly Performance
Monthly Monthly
Index Close Change($) Change(%)
DJIA 13,610.15 +562.67 +4.31%
S&P 500 1,460.93 +57.49 +4.10%
S&P Energy 552.93 +24.67 +4.67%
S&P Basic Materials 235.18 +12.64 +5.68%
Nasdaq 3,136.19 +66.92 +2.18%
Russell 2000 842.86 +21.63 +2.63%
Hang Seng Composite Index 2,834.71 -332.01 -14.83%
Korean KOSPI Index 1,995.17 +121.14 +6.46%
S&P/TSX Canadian Gold Index 347.82 +31.98 +10.13%
XAU 191.53 +21.93 +12.93%
Gold Futures 1,780.80 +86.80 +5.12%
Oil Futures 89.88 -5.48 -5.75%
Natural Gas Futures 3.40 +0.60 +21.50%
10-Yr Treasury Bond 1.74 +0.15 +9.20%
Quarterly Performance
Quarterly Quarterly
Index Close Change($) Change(%)
DJIA 13,610.15 +713.48 +5.53%
S&P 500 1,460.93 +93.35 +6.83%
S&P Energy 552.93 +45.94 +9.06%
S&P Basic Materials 235.18 +10.49 +4.67%
Nasdaq 3,136.19 +160.07 +5.38%
Russell 2000 842.86 +25.43 +3.11%
Hang Seng Composite Index 2,834.71 +143.26 +5.32%
Korean KOSPI Index 1,995.17 +119.68 +6.38%
S&P/TSX Canadian Gold Index 347.82 +36.25 +11.63%
XAU 191.53 +29.59 +18.27%
Gold Futures 1,780.80 +167.00 +10.35%
Oil Futures 89.88 +2.66 +3.05%
Natural Gas Futures 3.40 +0.45 +15.31%
10-Yr Treasury Bond 1.74 +0.15 +9.14%
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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 06/30/12:
The Hartford Financial Services Group, Inc.: 0.0%
Humana, Inc.: 0.0%
WellPoint, Inc.: 0.0%
Aetna, Inc.: All American Equity Fund, 0.91%
Netflix, Inc.: 0.0%
Hewlett-Packard Company: All American Equity Fund, 0.83%
First Solar, Inc.: 0.0%
JDS Uniphase Corp.: 0.0%
Anglo American Platinum Ltd: 0.0%
Pretium Resources, Inc.: 0.0%
McEwen Mining, Inc.: Gold and Precious Metals Fund, 0.58%
Goldcorp, Inc.: Gold and Precious Metals Fund, 2.48%; World Precious Minerals Fund, 1.81%
Vale S.A.: 0.0%
Sumitomo Metal Mining Co., Ltd: 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.
http://www.usfunds.com/alert/advisor_alert.html[10/5/2012 7:52:44 PM]Weekly Advisor Alert by U.S. Global Investors, Inc.
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 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 ISM Services Non-Manufacturing Index is a national non-manufacturing index based on a survey of roughly 370
purchasing executives in industries including finance, insurance and real estate (or FIRE), communications and utilities.
This sister of the Purchasing Managers’ Index measures service-sector activity.
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.
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.
These market comments were compiled using Bloomberg and Reuters financial news.
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