U.S. Global Investors, Inc. (NASDAQ: GROW) is a boutique investment management firm specializing in actively managed equity and bond strategies, and has a longstanding history of expertise in gold and precious metals, natural resources and emerging markets. The company, headquartered in San Antonio, Texas, manages a family of no-load mutual funds across a range of asset classes.
In addition, the company manages funds for international clients. Over the years, the company has formed a strong bond with its investors who have entrusted U.S. Global to help them achieve their financial goals. In this Wall Street View, our host spoke with Frank Holmes, CEO and CIO of U.S. Global Investors, Inc. at the New Orleans Investment Conference 2014.
Our host and Frank begin, firstly, with Mr. Holmes discussing what he spoke about at the New Orleans Investment Conference, specifically, 'Managing Expectations and Understanding Volatility,' which he then goes into detail when asked about how 'buying low and selling high' is especially relevant in resources today: "Well I think in resources in particular, and emerging markets, they've been down for 3 years. If you look at China, even though it seems now a bottom as the shares are rising, I think it's important that these stocks are paying you dividends two times what you could earn on a ten-year government bond, three times what you can earn on five-year government bond, and they have growth prospects. So, there are some magnificent opportunities in the resource sector."
Mr. Holmes continues to explain his view on resources, "Now, looking forward, I think that resources that everyone is so bearish, and I understand this whole drop in the price of oil, and I believe a lot of it is political - just like going back in history when [President] Reagan hooked up with Saudis to get the price of oil down to break the back of Russia is interesting ever since the Ukraine-Crimean War, all of the sudden, the price of oil starts declining and the Saudis are helping put oil into the system. So, I think we're going to see Russia basically have to come back and beg for repair of their economy. They did this with Iran. So I think that that's something structural that we have to understand politics and economics. What's really important is that when we get synchronized growth, like we had in '03, '04, '05, and '06 of Europe, China and America, you'll see oil at $130 a barrel."
On junior resource companies: "It may take a little longer for these juniors to really get some critical mass behind them, and for several reasons. Many of their projects are so difficult to pipeline and the capital expenditures, when we need clean air and clean water, but the environmental costs are so great that you're going to have to have substantially higher commodity prices to justify that build out. Where you're seeing it, where there's immediate cash flows, like MLPs (Master Limited Partnerships) for building a pipeline, that's immediate cash flow, that money is quickly raised in America to develop."
For more information about Frank Holmes and U.S. Global Investors, Inc., click here: www.USFunds.com
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