Three Words Sum Up Recent Markets


"Market behavior over the past few months can be summed up in three words: China, Gold and Apathy."

Market behavior over the past few months can be summed up in three words: China, Gold and Apathy. Our latest shareholder report provides insight on their strong influence on markets over the past year.


What happens in China has ramifications across the global economy and commodities. For nearly two decades, China has been the primary driver of global economic growth but the country is entering a new stage of development. Are we nearing the end of the supercycle in China? Read the feature story and find out. (Hint: No way.)


Once treated as a fringe asset class, gold has become an essential component of global portfolios. The legitimization of gold as an asset class has been accelerated by central banks buying bullion at a breakneck pace. It doesn't look good for paper currencies when the people in charge of monetary systems are seeking gold as a safe haven. Read how central banks are becoming a major buyer of gold.


U.S. markets kicked off 2012 with one of the best quarters in two decades but piles of capital still sit on the sidelines. I think this is the result of investor apathy. Several years of market volatility, burdensome regulations and a void in political leadership have created an "I donít care" attitude. In my letter, I offer five cures for whatís ailing investors. Read my letter.

There's so much to share with our readers about global investing, we've expanded the page count. In the latest edition, youíll be informed about what's happening with gold, emerging markets and natural resources. Find out what's happening in Russia from Eastern European Fund (EUROX) comanager Tim Steinle, read a bullish outlook on energy from Exxon, and get a guest's perspective from Keith Fitz-Gerald, chief investment strategist for Money Morning. Check out the Shareholder Report page to view the full contents.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund's returns and share price may be more volatile than those of a less concentrated portfolio. The Eastern European Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fundís performance more volatile.

Holdings in the Eastern European Fund as a percentage of net assets as of March 31, 2012: ExxonMobil 0.00%.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Frank Holmes,
U.S. Global Investors

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