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Edited Transcript of GROW earnings conference call or presentation 7-Sep-18 12:30pm GMT

Q4 2018 U.S. Global Investors Inc Earnings Call

SAN ANTONIO Sep 17, 2018 (Thomson StreetEvents) -- Edited Transcript of U.S. Global Investors Inc earnings conference call or presentation Friday, September 7, 2018 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Frank Edward Holmes

U.S. Global Investors, Inc. - CEO, CIO & Director

* Holly Schoenfeldt

U.S. Global Investors, Inc. - Public Relations Leader

* Lisa Christine Callicotte

U.S. Global Investors, Inc. - CFO

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Presentation

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Holly Schoenfeldt, U.S. Global Investors, Inc. - Public Relations Leader [1]

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Good morning, thank you, for joining us today for our webcast announcing U.S. Global Investors' results for fiscal year 2018. I'm Holly Schoenfeldt. If you have any questions during the webcast, you can enter them in the questions area of the control panel side bar, which is normally to the right of your screen. Also, you may download a PDF of today's slides by clicking on the red handout button.

The presenters for today's program are Frank Holmes, U.S. Global Investors CEO and Chief Investment Officer; Lisa Callicotte, Chief Financial Officer; and myself, Holly Schoenfeldt, Marketing and Public Relations Manager.

During this webcast, we may make forward-looking statements about our relative business outlook. Any forward-looking statements and all other statements made during this webcast that don't pertain to historical facts are subject to risks and uncertainties that may materially affect actual results.

Please refer to our press release and corresponding Form 10-K filing for more detail on factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today, and U.S. Global Investors accepts no obligation to update them in the future.

Now, let's go to Frank Holmes, CEO and CIO, for an overview of the period. Frank?

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Frank Edward Holmes, U.S. Global Investors, Inc. - CEO, CIO & Director [2]

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Thank you, Holly. Good morning, everyone. As you can see individual U.S. Global Investors is an innovative investment manager with vast experience in global markets and specialized sectors.

Founded as an Investment club, the company became a registered investor adviser in 1968 and it has a long-standing history of global investing and launching the first-of-their-kind investment products, like, including the first no-load gold fund.

U.S. Global Investors is well-known for its expertise in gold and precious metals, natural resources, emerging markets and now a cryptocurrency space. Our strengths is that we're a go-to stock in exposure to emerging markets, in resources and digital currencies as it appears. I'll discuss that more in greater detail.

We remain debt-free, a strong balance sheet with a reflexive cost structure. We've increased our cash balance and Lisa Callicotte will explain that in further discussion. And our monthly dividend and return on equity discipline, even in a very challenging mutual fund world. We talk about it on a weekly basis, so we make sure that we're focused on what can we do to generate higher returns on our invested capital.

Next, please. I want to thank all the top institutional investors: Royce and Associates; Financial & Investment Management Group, the Michigan; The Vanguard Group, which is basically indexed; and BlackRock Institutional Trust; and the Perritt Capital Management. In particular, the Royce Fund, FIM and Perritt are active fund managers, so thank you for your support and encouragement.

Next, please. For the past 10 years, we've constantly paid a dividend and the yield is a modest 1.86%. The monthly dividends are small, but we're going to maintain that discipline of paying a dividend. The board's approved through to September 2018 and is reviewed quarterly by the board.

Next, please. The board approved a repurchase of up to $2.75 million of outstanding common stock in the open market through the calendar of 2018. For the quarter ended June 30, 2018, the company repurchased only 1,000 shares of Class A shares, using approximately $2,000. And what's interesting, we use a quant model to be able to buy on that volatile days. And the extreme volatility we've experienced last quarter of 2017, calendar quarter, seems to have toned down on these huge swings both up and down. And so that's one reason why we have bought back less stock. And what's important for investors to realize that we may suspend or discontinue at any time this share repurchase program, but it's in place.

Next, please. So balance sheet strength, no debt. As Lisa is going through it -- going into more -- our CFO, Lisa Callicotte, will go into more detail, explaining just over the new accounting changes and overall portfolio on our assets, et cetera. But you can see that we had a biggest movement to end of 2017 in our investment in HIVE Blockchain, which is now corrected this year with the big decline in all these cryptocurrencies with -- and I'll describe that a little more, a few minutes.

Next, please. So earnings, this is a visual of what our earnings are and we're happy that -- for the year, we have done better and we'll go in more details, but you can see this volatility that's been taking place. And it will probably be increasing as the underlying investments and companies like HIVE Blockchain are volatile that can impact us on a quarterly basis.

Next, please. Average assets remain relatively stable, whereas there's just continuously lots of redemptions across the industry in mutual funds.

Next, please. And that's what this visual shows you. Outflows from domestic equity mutual funds have gone into ETFs, or to separate account business. And you can see here, it just hasn't stopped. And this concentration going at the passive investing is going to have problems. So we know this from a microcosmic point of view of watching the GDXJ perform, and not because of good stocks, but because of just money flows. And that's what's happening in the stock market and I was at a conference in New York yesterday and so a quant fund manager was walking through how this passive investing is over 30% of all the money. And what we saw when the GDXJ is when they went to rebalance that how disruptive it was to all the gold stocks, both good and bad, just on the sheer counting of all the bids to get liquidity. And this is something that seem to be picking up for the S&P 500, when you have 0 cost base and you have a psychology, the performance is not important, it's just to get cheapest is best. And I don't know when the RIA space is going to wake up that people are buying for performance and cheapest is not best. And it will create the next big collection.

Next, please. All because of this money flow, what we're seeing, is BlackRock, Vanguard and State Street capture more than 70% of the mutual fund and ETF market and predominantly, more like 90% it seems to the ETF space. And that's just because all money flows, as a lot of the stock market is, just predominantly money flows, so you can have good ways of -- good processes for picking stock et cetera, but you can underperform trying to beat a benchmark, all because it has nothing for picking, you being a better stock picker than someone else, it's a sheer money flows. And what happens when there's a collection or there is a massive rebalancing and you can have tremendous disruption because money flows hit everywhere. There's no separation from, who are the best players out there in the capital markets, it's just by everything.

Next, please. So I always like to remind investors, did you know that for more than a decade, the gold has outperformed the stock market nearly 2:1. I mean, this century, it's just really quite remarkable, how gold has far outperformed, but the narrative is continuously negative on gold. Gold is an asset class. In particular, gold stocks and gold correlate to each other, but this negative pervasiveness is seeing Vanguard now leads the gold equity space.

Next, please. Sharing insights with the financial media, usually means defending gold and now cryptocurrencies also.

Next, please. So I'd like to always remind investors that GROW is a public company, has a high correlation to the movements of gold and what drives gold. So there's the Fear Trade, which is right now strong dollar and high interest rates relative to other countries around the world and Love. Love Trade is 60% of all gold demand. And that predominantly comes out of Chindia, it's actually known as China and India.

Next, please. Gold's Love Trade has cultural celebrations prompting the purchase of gold. And it starts with Ramadan and then we have the Indian Wedding Season coming up in September, then a season of lights and then we'll have another Indian wedding season, then we'll have Christmas and the Chinese New Year. And this pattern, it's pretty significant when you look back over 5, 10, 15, 20 years and the other part I liked over 30 years, is the correlation in these countries with rising GDP per capita, of rising consumption bullion for gift giving.

Next, please. Now the Fear Trade is all about government policies and in all our perspectives is, we talk with the government policies are precursor to change. So we try to rightly monitor and talk with this on a weekly basis, any change in the monetary policy and the fiscal policy and that should drives Fear. Real interest rates and money supply, but in particular, real interest rates is the most significant factor of weak and strong dollar. And the stock market seems to be really consumed with taxes and we see lower corporate taxes and the changing in spending patterns ends up making the dollar stronger and also in particular, stocks.

Next, please. So is the gold market being suppressed? It appears that something happened around 2013 with the decoupling of gold prices. And we also seeing lots of litigation about -- as you can see in the next visual that spoofing the markets supposedly on the crypto space, they all fell dramatically this week. And the CFO of Goldman Sachs said that they never said they were getting out of the business, and so who planted that fake news that drove markets down. We don't know, but we do know that the allegations against some of the major banks regarding gold-fixing is basically Barclays, HSBC, UBS were allegedly involved in rigging the silver market. The facts have come up from court cases, there's been some settlements made. So this whole push against the price of gold is basically rational, if you're a bank -- if you're Central Bank of a government and the G-20 countries get together and the finance ministers and they are printing oodles of money, like the EU buying $1 trillion of nonperforming loans and the currency is unfazed by it, money just gone to -- evaporated.

And with that -- so we believe that it's just -- gold doesn't take off then it makes it look like they are okay and their policies are debasing the currency, offering negative real interest rates. Just shocks me that you would have Japan paying your government bonds, giving you 10 basis points compared to the U.S. that the U.S. dollar should be screaming, on a relative basis, it's not. That's just something that's really quite fascinating to watch.

But there is some kind of suppression taking place against these alternative asset classes. So we have to stay tuned and as more developments take place from litigation in courts, we'll make sure we highlight and secure our shareholders.

Next, please. Inflation. This whole argument is -- inflation being suppressed by the factors. It's really amazing that if you go back to the 1980 or if you go back to 1990s, this one is showing the 1980-based CPI. It would say that inflation is running more like 10%, not 2.5% or 2.7%. I feel it, I feel like I know from launching of the JETS ETF, one of the thought processes with that, was that I saw options of flying, as U.S. Global were flying all over the world. And the price of our tickets went up 300%, to say there's no inflation, just shocks me. I would say that the gas prices, food prices were up 20% in the past year and inflation is only at 2.4%, 2.7%. It just shocks you that housing prices have all rebalanced as an asset class, the cost of mortgages are up dramatically and that's where people's cash flow is going to where it's supposed to, but it's not showing up in the overall CPI, because of the factors we are using to create that CPI.

Next, please. So one of the positive things for gold in longer term is just peak gold. And we had peak gold until a factors came along, which is probably the most significant technological breakthrough of extracting particular natural gas.

But there's been nothing for gold and the exploration budgets have expanded, but they're just continuously -- mother nature has been very, very difficult to be able to find any major deposits and the environmental social restrictions in emerging markets, everywhere you go, makes it extremely expensive, longtime lifecycles to be able to bring something into production. So we believe that there's peak supply of gold because basically exploration budgets have collapsed and even when they were big, they didn't find anything.

Next, please. So tool for contrarian investment, the U.S. global sentiment indicator. We like to use this. It's a collection of over 100 different type of factors going into it -- components and it gives you an idea of sentiment from overbought to oversold. And we can see here that -- well, you can see the trade wars, as basically we come and get a big rally and quote positive sentiment. So announcement of trade wars and it sells off. Like, the July was down tremendously over a very short time period to extremely oversold and then we have a big rebound and now it's happening again. And with composites returning yesterday, put out my cornerstone macro, there is very, very insightful and the comments were basically that President Trump really wants, and his team, 0 tariffs and the issue has been that, the rest of the country did help so many countries in the world, come out of poverty, expand their economies with an unlevel playing field. So the same thing, in particular, with China. China has all these tariffs and restrictions on what America can sell into China, but they want unfettered discretion to sell to our $13 trillion, I repeat $13 trillion consumer economy, which is growing. And we see that -- and Europe is the same thing, when President Trump went over to Europe and he's going to stop on tariffs on cars, immediately, it was Merkel who went to the EU and came back and there was changes made because it's an unlevel playing field. America can't sell its American company cars into Germany, but they want an unfettered discretion to sell into the U.S. So I think that this battle is much more about -- either there's going to be lots of selective tariffs all over the place or there's going to be 0 tariffs. And then WTO has basically failed. And China has found ways around fighting that.

And what's really important at this conference was no surprise, that a lot of the political policies that come out of Trump and his -- and the rhetoric, was actually Ross Perot, who hurt George Bush the first Senior to beat President Clinton in the early '90s, because Ross Perot garnered 20% of the conservative vote. And they're predominantly fiscal conservatives that voted and supported him. And he was very concerned regarding of going into having battles in other countries. He was concerned about the NAFTA, in particular, the deal that was done with Mexico and drain the swamp, the deep state if you want to call it or the unfettered discretion of regulatory policies being made in every sector of the economy -- there's a big push back. And so that narrative that helped Ross Perot capture of 20% of the voters, that's swing vote -- voted similar to Obama. And they seem to go to strong leadership, not so much they're loyal to a political party, but they believe that, that leader can help change the economy and we're seeing the sort of shift that's taking place.

We've written about this and we think there's something much more significant than global, a nationalization, national -- not national, but nationalism and we saw with Modi in India to China to Eastern Europe to America, something happened that's a global concern and so we're going to just have to be able to pivot as money managers throughout these changes.

But the sentiment continuously is rebounding now and we'll see what happens on the next level of battling with China. Their consumer economy is so much smaller than ours and so they really need us much more than we need them. And that's the ongoing argument, where President Trump has leverage. He believes that there need to be able to sell-through the consumers of America is his ability to renegotiate agreements. So let's just stay tuned with that in the capital markets, but we'll on a regular basis published this sentiment indicator.

Next. We've been hosting several productions of ETF webcasts, reaching valuable institutional audience. We recently had Randy Smallwood, CEO, Wheaton Precious Metals, talk about the royalty company business model, which we're big supporters of. And you can download, if you're accredited investor or RIA slides and see the presentation.

Next, please. The magic behind the math, understanding oscillation. I highly recommend you go to our website and read about managing expectations whitepaper. But there's a tremendous inverse relationship between strong dollar, weak dollar, the price of gold. And it's recognizing whenever those spreads gone extreme, one of them have to capitulate. And we're due for gold going for a big rally.

Next, please. Managing Expectations another factor I always like to remind investors of what's the daily volatility and its 1 year volatility. What's important here, is that bullion and the S&P are approximately the same volatility, even though, the general media narrative is that gold is riskier, when it is the same volatility for the S&P 500. But as you step out and look at emerging markets or you look at gold stocks, the volatility starts to increase greatly. And what's interesting here is that #1 in volatility is actually the gold stocks and then it's going to be oil. Oil prices are very volatile.

Next, please. When we take this concept of understanding 1 day and 10-day periods for bitcoin and Ethereum, we can see the volatility is actually expanded and it last a little while, but it's substantially greater on a daily basis of a factor of 6x to 7x greater of bitcoin Ethereum to gold.

Next, please. Major events suppressing the price of bitcoin. It's predominantly, the headwinds of regulations of what will the regulations be and I think it was very helpful for the SEC coming in and cleaning up some of these ICOs, that raised billions of dollars last year, that were really selling securities, not a utility coin. And to the thought process is that there will be global synchronized policies and the G-20 was supposed to come out in July, but now it's been delayed till next month October. So I think that once some clarity is there then this whole crypto world will change. But some of the real positive parts that we've seen is the CFA exam. And when you get your CFA, it's recognized all over the world. You get your law degree in the U.S., you have to redo your law exams to go practice on another jurisdiction. And same thing with certain accounting degrees, et cetera and MBAs. But CFA society is ubiquitous that is, it's a pretty tough exam and it is highly respected and recognized all over the world. And now they have reversed the position that they're going to start including cryptocurrencies on their exams. In addition, the Facebook reverses position on crypto advertising. So I think we're slowly finding a bottom here.

Next, please. In June of this year, the Federal Reserve of Saint Louis added cryptocurrency to his popular Federal Reserve Economic Data. This signals cryptocurrencies continued maturity.

Next, please. Next, please. Coinbase was growing at an incredible rate a year ago. It's slowed down modestly, but their valuation has just continued to grow as the company grows. And Coinbase is only, 5 years ago, worth $75 million and now it's worth $8 billion. It grew -- as I mentioned before, it grew faster in 3 years than what we saw -- excuse me, a second, what we saw Schwab take 30 years ago. I mean, it just -- it's amazing that in 3 years, they can attract 13 million customers, which is greater than what Schwab -- Schwab took 30 years to get 10 million. So there's something that's happening in that crypto world that's not going away, hopefully. And hopefully, it resolves itself in a very rapid way. It's the best for us because we made a major investment.

The next visual. Well, this time last year, U.S. Global announced a strategic investment in HIVE Blockchain Technologies, I became the Chairman of the Board. Recently, I became the active Chairman -- Executive Chairman basically in the search for a new CEO, as Harry Pokrandt retired. But HIVE's growth potential, you can see that in the next visual, it's just huge, huge cash flow, huge revenue and the volatility's been immense. In January, these numbers were pushing and looking like it when bitcoin was $19,000 and Ethereum was $1,300, but the run rate would be, on a pro forma, it's all a pro forma, would have been $300 million of revenue and has come down dramatically with the price of the coins. And this will have to be reset, in fact, with this week, if you -- this will take it down another probably very about close to $10 million -- $8 million, sorry, $8 million with the decline we've experienced this week. But next week, it can rebound dramatically.

So that's just a very volatile space. But it's latest in that sort of technology world of money and different forms of currency. I do believe that security tokens are going to grow. There is going to be more regulations there. But the real part is for the regulators to realize that the Millennials of the world want to trade 24/7, they don't want to have limited hours. They want to trade globally. And I think that's where we're going to probably starts to see stocks down the road take on that adoption of trading more globally.

But HIVE Blockchain, you can read about HIVE Blockchain, you can sign up and get information on it. Earlier this year, we had Iceland trip with -- you can see John Mauldin there, there was Harry Pokrandt there, we are mining Ethereum coins.

Now is U.S. Global for its growth, not in addition to -- in addition to going to launch HIVE, we launched GOGO, which is a smart beta, a quant's approach in picking gold stocks in the Toronto Stock Exchange a year ago. And then we also launched in Canada, the Galileo Partners Fund. That was the first fund really to go in the crypto equity space. And it still has spectacular performance, as you can see, but it's only for accredited investors. And now that fund's being closed and rolled over into a new fund, but it -- that thought process being early first mover advantage did work.

The next visual is on the JETS ETF product, its continuous path of success, but it's very mercurial with the price of oil, when oil goes above a 50-day moving average, then we can see redemptions. When oil falls below the 50-day moving average, JETS airlines stocks surge, they rise and we get creations.

So it's as important that's our relationship for investors to recognize, that drives all the traffic at JETS, which is just under $100 million.

GOAU. We're very proud of -- that we launched a year ago, we did I think 8,000 hours of -- commented on regressional work, like a pharmaceutical company would have to do before launching a product and getting approved by the FDA. We went through rigorous analysis, comparing our active skill set, along with the quant approach and we're very thrilled to launch the product. We're disappointed, it hasn't -- it hasn't grown to the degree that we had anticipated, but it's done exactly what we thought it would do for investors. And it's far outperformed the GDX and the GDXJ. Back testing showed that it would outperform 92% of the time, and basically that's what it did. So we're happy that our modeling, our work has gone and shown in the capital markets its performance. So both 1 year and year-to-date, it's quite significant.

I've been very long winded, because I like to talk about from new products, from launching of HIVE, celebrating 1 year of GOGO, celebrating new funds in Canada and HIVE.

So now I'd like to turn it over to hard-working, Mrs. Dynamite, Lisa Callicotte.

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Lisa Christine Callicotte, U.S. Global Investors, Inc. - CFO [3]

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Thank you, Frank. Good morning, before I summarize the results of operations, I'd like to discuss, the accounting treatment related to our direct investment in HIVE and changes in how this and similar investments will be recorded next fiscal year.

USGI, through its wholly-owned subsidiary, U.S. Global Investors (Canada) limited, directly owns 10 million shares of HIVE. At June 30, 2018, these shares were included in investment securities available-for-sale on our balance sheet. And during fiscal 2018, unrealized gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income as a separate component of shareholders' equity, until realized.

Slide 43. We have summarized our accounting changes in our investments due to the new accounting rules. So we adopted accounting standard update ASU 2016-01 recognition and measurement of financial assets and financial liabilities effective July 1, 2018.

So starting in our fiscal year 2019, some of our corporate investments will be accounted for differently. There will no longer be an available-for-sale classification for equity securities with regularly determinable fair value. And as a part of the adoption (inaudible), the required cumulative effect adjustment and reclassified $3.1 million in unrealized net gains, out of cumulative comprehensive income and into retained earnings.

And effective July 1, 2018, changes in fair value of these investments formerly classified as available-for-sale were reported through earnings rather than comprehensive income. And this will include any changes in market value of our investment in HIVE. We anticipate that this will cause our investment income and thus, the company's net income to be more volatile.

Now, I'll discuss the results of operations for 2018. Beginning on Page 44, we recorded operating revenues of $6.3 million for the year, which decreased $502,000 or 7% from the $6.8 million in fiscal 2017. This is primarily due to decreases in assets under management related to shareholder redemption.

Operating expenses for the year were $8.5 million (inaudible) [$13,000] 13%, primarily for the following reasons: employee compensation and benefits increased $516,000 or 14%, mainly due to increases in bonuses and group insurance cost; general and administrative expenses increased $372,000 or 11% due to increase in ETF costs and increased costs related to new Galileo funds. And our operating loss for the fiscal year was $2.3 million.

On slide 45, we see that other income was $3.2 million. In fiscal year 2018 -- and this was an increase from prior year of $2.8 million. Investment income increased $1.2 million compared to fiscal year 2017, primarily due to positive change in unrealized gains and losses on trading securities as $727,000 and $483,000 less in impairment losses. These were somewhat offset by a decrease in net realized gains and losses in securities of $98,000. Also in fiscal 2018, we made investments in 2 Galileo funds, that were accounted for under the equity method of accounting. Under equity method of accounting, the company's share of each fund's net income or loss is recognized in earnings. We recorded income from equity investment of $1.6 million for fiscal 2018. Net income attributable to USGI after taxes for the year is $647,000 or $0.04 per share, which is an increase of $1.2 million or $0.07 per share compared to the net loss of $513,000 or loss of $0.03 per share for fiscal 2017.

Moving on to page 46. We see we still have a strong balance sheet and includes a high level of cash and securities that combine to make up 75% of our total assets. And cash increased approximately $2.4 million, mainly due to cash provided by investing activities.

As you can see on Page 47, we still have no long-term debt. The company has net working capital of $15.3 million and a current ratio of 9.7:1. With that, I'd like to turn it over to Holly.

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Holly Schoenfeldt, U.S. Global Investors, Inc. - Public Relations Leader [4]

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Thank you, Lisa. As you can see starting on slide 50, a majority of our fund assets are in emerging markets and natural resources, while 32% are in domestic equities and fixed income. As for distribution, more than 3/4 of our assets come from retail investors and the other 1/4 from institutional investors.

Our sales and marketing efforts have continued to focus on our mutual funds, including those concentrated on gold, natural resources and emerging markets as well as our ETFs. We believe investor depreciate the expertise that we offer and we are pleased to have received numerous awards from Lipper over the year as recognition by Morningstar. Investors can find more information about our funds on our website usfunds.com.

The company and our funds continue to receive an invaluable amount of viral publicity gained through media interviews. Frank Holmes often shares his insights with financial outlets like CNBC Asia, Bloomberg Radio and Kitco News just to name a few. And we continue to receive recommendations by influential financial newsletter writers as well, along with sharing and syndication of our award-winning original content by third-party publishers. The newsletters have a loyal following and received millions of visitors each month.

Frank Holmes' CEO blog, Frank Talk continues to grow in popularity as well. His commentary is often featured by prominent publications including Forbes, Seeking Alpha, The Crest and Business Insider with millions of monthly visitors. We like to call Frank Holmes our globetrotter because he along with others on our investment team travel around the world to share our thought leadership. He also interacts frequently with our followers through Facebook, Twitter, LinkedIn, Instagram, YouTube and Pinterest.

In December, we launched a new video series to supplement our award-winning Frank Talk Blog. Frank Talk Live features Frank Holmes as he dives into market moving events of the week and shares his thoughts on trending financial topics. We feature other members of our investment team as well in similar short clips. And since implementing these new videos, we've already witnessed syndication to several third-party sites as well as an increase in subscribers to our YouTube Page and investor alert newsletter.

Kitco News is the biggest gold website in the world with an audience of over 30 million monthly visitors. And in partnership with The Street continues to feature the Gold Game Film Show with Frank Holmes' gold and market analysis. And since the show's beginning, 147 episodes have aired. And while I'm on the slide about Kitco, they recently shared some of their websites demographics with us, which I found to be quite interesting, primarily visitors to their site come from the U.S. and Canada. A majority are male between the ages of 35 and 65 and have some kind of higher education. And we keep in mind similar statistics for our own website visitors, many of which are actually similar to U.K. shows.

But back to usfunds.com, we decided to look into the most visited Frank Talk Blog post over the year, no matter what year they were written in, so here you will see that the most visited articles include: Number one, the top 10 countries with the largest gold reserves; number two, what does it take to be in the top 1%?; And number three, 11 reasons why everyone wants to move to Texas, which was actually posted back in 2016, but it continues to receive lots of clicks and shares.

And all of this coverage helped us leverage our brand by reaching millions of readers, viewers and potential investors. Our website usfunds.com was visited over 551,000 times from June of 2017 through June of 2018 by curious investors from all over the world.

U.S. Global Investors is well known for timely and balanced markets insight and thought leadership. The company has been awarded several STAR awards by the Mutual Fund Educational Alliance, adding 3 more at the end of 2017, including Best Overall Retail Communication within the small funds category.

The MFEA STAR awards recognize excellence in investor education. Our weekly free investor alert newsletter has been named the best electronic newsletter 6 times.

To date, the company has earned a total of 83 STAR awards. And this year, our gold Love Trade whitepaper was also recognized for an award by the American Marketing Association local chapter.

This year, we are very proud to celebrate the 11th anniversary of our CEO Blog Frank Talk. Frank Talk was one of the very first blogs distributed by a mutual fund company and has also received numerous awards from the MFEA over the years.

We have surpassed 10,000 subscribers to the Blog. Investors can sign up at usfunds.com and join over 43,000 subscribers, who receive the award-winning investor alert and adviser alert e-newsletters as well as Frank Talk. And now, we would like to open it up to questions. We have a few more minutes.

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Questions and Answers

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Holly Schoenfeldt, U.S. Global Investors, Inc. - Public Relations Leader [1]

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(Operator Instructions) And we have one or 2 here already, Frank, I am going to direct this first one to you. It says, do you see GROW moving more with the price of gold or the price of bitcoin recently? Or is it kind of a combination of both?

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Frank Edward Holmes, U.S. Global Investors, Inc. - CEO, CIO & Director [2]

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I'm seeing this a combination of both. But the daily volatility is, there's a lot that has to do with the crypto space, so it appears the volume exploded last year in the fourth quarter 2017 with the investment in HIVE, our volume just went up exponentially.

And a lot of that has to do with quant funds that are -- rather than going to the trade through a Coinbase or in exchange, Ethereum or bitcoin there, they have been using GROW as a proxy. And I heard that from institutional trading desks in Canada also. So I think that it's a combination of both.

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Holly Schoenfeldt, U.S. Global Investors, Inc. - Public Relations Leader [3]

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Great. And another one for you Frank is, what is next for gold and commodities? And what does this mean for GROW?

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Frank Edward Holmes, U.S. Global Investors, Inc. - CEO, CIO & Director [4]

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Well, the most important part is the product, coming out with new products -- innovative products, such as GOAU for the U.S. and GOGO for -- in Canada in that gold space. And I think there is going to be, what I mentioned earlier, that passive investing is going to create a crisis. And so I don't know how, but we do know from what happened to GDX and GDXJ that, in particular to GDXJ, they started (technical difficulty) as a cannibalization that took place and the volatility went up greatly and it has nothing to do with a good stock versus a bad stock, just fund flows. So I think that GOAU is starting to show that having an selective gold stocks from a quant approach, you can outperform this other money flow index.

And hopefully that grows and $100 million would start to throw off positive cash flow for us to continue to grow and I'm just always bewildered that there is billions of dollars in these other inferior products. But this is part of marketing that the first mover advantage of being in the marketplace is key, but the other one is just it seems to be expense ratios are driving such fund flows into indexing having 0. And we like to point out that Vanguard, which basically captures so many gold investments as a gold stock fund with billions of dollars because they were cheaper, it was better thought process or argument. And now they are basically selling to be north of the gold stocks and going to go down to 20% weighting and change their gold -- mutual fund into a gold -- into a cyclical product.

And so, what we think for us is that, this space is basically -- the argument is so flawed because we outperformed, our gold shares fund outperformed the Vanguard gold equity fund for 1, 3, 5 and 10 years, but it grew bigger all because cheaper was allegedly better. And then they orphaned all their gold stock investors. We still maintain that it's healthy to have a 10% weighting in gold and gold stocks and rebalance once a year. It helps your sharp ratio, it helps your overall protection against imbalanced fiscal monetary policies by governments. And we think that we're well positioned to be able to provide superior products. So that's what we have to do.

The other part is that we're really at an oversold when it comes to equity versus commodities, maybe take the Goldman Sachs total return index and divide it by the S&P 500 as a factor to oversold and overbought, we -- we are definitely at a troughing period, and -- so we believe, any type of sustained global growth, we'll basically all of a sudden see the demand for commodities pick up. And we believe, what China's doing on the silk road and recently playing Santa Claus road to Africa is -- it was very constructive long term for commodity demand. And so with that, we remain bullish.

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Holly Schoenfeldt, U.S. Global Investors, Inc. - Public Relations Leader [5]

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Great. Thank you for that Frank. All right. Well, this concludes U.S. Global Investors webcast for fiscal year 2018. The presentation will be available on our website at usfunds.com. Thank you all for your participation today.

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Frank Edward Holmes, U.S. Global Investors, Inc. - CEO, CIO & Director [6]

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Thank you, Holly and Lisa.

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Holly Schoenfeldt, U.S. Global Investors, Inc. - Public Relations Leader [7]

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Thank you.