Susan Filyk - IR Frank Holmes - CEO & Chief Investment Officer Susan McGee - President & General Counsel Catherine Rademacher - CFO

Welcome to the U.S. Global Investors webcast; U.S. Global Investors Earnings Announcement for Third Quarter 2013. Please note that the slides you see on your screen are controlled by the presenters. You may submit questions during the webcast. Simply enter your question in the dialogue box at the bottom of the screen and click submit. Also, you may download a PDF of today's slides by clicking on the resources tab and the tab center area of your screen. You can switch back to the presentation slides by clicking the slide tab. We would like to begin by introducing Susan Filyk, Investor Relations at the U.S. Global Investors. Ms. Filyk.

Thank you. Welcome everyone to our webcast announcing results for the third quarter ended March 31, 2013. The presenters for today’s program are Frank Holmes, U.S. Global Investors’ CEO and Chief Investment Officer; Susan McGee, President and General Counsel, and Catherine Rademacher, Chief Financial Officer. During the 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-Q filing for more detail on factors that could cause actual results to differ materially from any others 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. If you have a question for us you can submit it at anytime during the webcast. Simply type your question in the dialogue box at the bottom of the screen and click submit. If we aren't able to answer your question during the live presentation, we will follow up with you individually. Now let's go to Frank Holmes, CEO and CIO, for an overview of the quarter. Frank?

Thank you, Susan. As forward-looking statements, passed okay. Well, sorry about the delay; we’ve been getting this presentation going. We got as seem to be a period we lost on the loop and I am happy we're on slide now and I am going to try to speak quickly so that we don’t waste any time because we're big believers that time is money. So the U.S. Global is a boutique publicly listed investment advisor, specializing in gold, natural resources and emerging market opportunities around the world. Our strengths are, we're go-to stock for exposure to emerging markets and resources. We're debt-free, strong balance sheet with reflexive cost structure and we pay a monthly dividend and our focus on a return on equity discipline. Our top institutional holders of growth, The Royce Funds with 15%, Financial Investment Management Group, 14%, Perritt Capital Management with 4% and Fidelity Research, 4% and Team Financial Managers 4%. What is interesting for some investors that Sun America was a large shareholder with a change of the guard of their portfolio manager, the new portfolio manager didn’t want to own micro caps, so they’ve been selling their position out this past quarter and I think they better start; in fact they put some additional pressure on GROW. But that’s behind us now and we have a new audience of shareholders and we have had some of our existing shareholders increase the position. When we take a look back at GROW, our market cap is just under $60 million. We're proud of still that over the past decade, our annualized compound rate of return is over 15% and our focus as I will mention through the presentation is what does it take to improve our returns in capital over a three-year running basis or 36 months is how I would like to try to measure it, but in a shorter note, as the next visual shows you the GROW’s performance over the past three months as rational to buy the stock, because our focus as I begin this presentation as a boutique with a focus on resources in emerging markets and these asset have taken on the chin this past quarter, they have started off with a boom and then they went to basically done, and sort of mega center for a global growth you could see that we still perform the venture index, the gold miners index and also some of the resource indexes out there even though the stock decline during this quarter. You compare that to the S&P that is up, but any type of a rebound in the gold assets or the resource based assets, our revenue growth, our earnings growth is substantial and it always shows up in our stock price. The next visual dividend growth, as you can see that we can pay monthly now for five and three quarters of years; our current per month is one as a half of penny per share of the current yield at quarter-end was 1.6, it is now just over a 2% with a stock declining and I will comment on that, so a little further in the presentation. Next slide is 10, buyback plan is in motion; the board approved to repurchase upto 2.75 million of outstanding common shares in the open market through calendar year 2013 and as of March 31st, the company has repurchased 22,203 Class A shares using $84,983. We use an algorithm to buyback our shares that is we buyback on down days and then we have to comply with all the applicable rules and regulations that restrict the amounts of times at purchases, such as the opening in the morning and the last half hour of the day. One day we founded the last half hour our stock seems to have taken up the chin a couple of times one day felt 7% all this took place at last half hour of the day and so some of those opportunities for us to be able to buy, we just can't participate in those, whenever if it happens during those periods. But we do have a model that says that that if it falls X% over a opening periods during the course of the day we will be buying stock back and as a stock is now lower that amount will increase this quarter that we are buying that stock. We are still limited to what the daily volume is over (inaudible) days and what percentage of stock we can buy, so there are regulatory boundaries and rules of engagement that we have to comply with, but we are getting close to our I’ll almost say our book value and lastly present visiting Omaha to Brookshire half the way so Warren Buffet and Charlie Munger’s rock festival for financial people and it was interesting to see that they are also buying back their stock and they have a model of space and book value to intrinsic value, but they have been also when they see their stock under pressure because they believe that the big stocks today is replacement cost; what does it cost to replace your buildings; what does it cost to replace your franchise, the brand etcetera and so they believe that this is a very significant way to over a long periods of time to improve your returns on capital. The next visual is important is strategic partnership with Galileo; as we mentioned at year end, that we have lowered our dividend, we’ll use those proceeds to make strategic relationships and acquisitions of assets to build our asset base and to buyback our stock. So what we have seen and what we have been able to demonstrate is structured yield 50% of the issue, outstanding shares with an option to go up to 65% over the next 12 months; it’s a Toronto-based company, worth CAD$320 million under assets; it’s been growing; it’s accretive to grow, it’s a five star fund piece multi-dividends and 2013 Lipper Fund award for the best small mid cap over five years. We have been assisting them with their marketing and their branding and so now it’s a full throttle, lets say profitable in the first quarter which is great and they have become more profitable over the next, starting the next three months. So that’s exciting for us and for them. Now the next visual is showing the quarterly average assets under management, how they declined. They declined from a year ago, I'll give you more exact numbers with it, but what we find is interesting to share with shareholders is that our numbers, our assets were they are, are back to like the fourth quarter of 2008, but we are making money and its modest, its skinny and the big part of that is it reflects a cost structure and the fact that where assets are down is a little its truly a function of negativity that takes place towards goal and resources a comment made on this presentation regarding this as being truly contrarian as an opportunity because we are now seeing so many factors mathematically and then even fundamentally looking at what gold mining companies dividends are higher than five year government notes. But we are very, very sensitive over these assets levels and where we are doing strategically grow, because in the next visual what you are seeing is assets by domestic and fixed income is only 23% in rigid markets and natural resources 77% of our assets. And so when those assets have volatility on a down stroke it does impact us and rising movement we make a lot of money with it, so it’s this we've always tried to articulate the volatility that's inherent in our revenue due to the asset classes. The other more important part is the asset distribution channel that Susan McGee will talk about the institutional is 27% and the retail is still the largest component. One of the stresses we've had is that a lot of the retail comes through these platforms and these platforms they come and go like the tide and mostly any asset redemptions we've had have come through these third party platforms, the swaps, at the [bellies] of the world etcetera. We still maintain a unique relationship with our shareholders which I believe is a lot has to do with our website and how we communicate and Susan McGee, our President and General Counsel will comment more on those aspects of what makes us special and unique. But let's take a look at the next visual, earnings per share that’s as long term important is the driver of a company. As you can see here we [eat] those something as a modest $40,000, but basically on a per share basis flat but in 2008 we took it on the chin, and how those assets declined and our cost structure was declining but nothing as well as we've done here and Catherine Rademacher, our CFO will basically comment on our 555 and things like that and we've done an additional observation of what we do to be more reflexive to any types of swings and the downstroke in asset classes and I'm going to talk about strategy how we are dealing with that. But the earnings per share as you can see are on a relative basis better to the assets when they were on previous corrections. Pre-tax profit margins are much better on previous times relative to where the asset levels are. Our balance sheet in the next visual as you can see here is a slight up tick in the cash and cash (inaudible) investments in our portfolio. This is important for investors and we have no debt. The cost of our building, the replacement cost, $200 a square foot would be over $9 million and for us to operate this space our rep will be twice if we were to go and rep someone and so it’s a very, very helpful low cost weights of function and have a nice attractive asset on our balance sheet. So we are healthy with the cash level to still make acquisitions and to buyback our stock and to be able to deal with these down grafts. Now the next visual we are showing you peer group comparisons. For growth the earnings per share have declined, I don’t know how they manage the 100% but they are just basically flat. But the peers are as you can see three years 4.8 for value investors the return on equity. This is something that's been really a significant value driver that how we like to look at our company, and I think that smarter, longer term investors look at your returns on equity overruling three year period. This last quarter is the first time we took a dip relative to our peers and when we analyze our peers, there seems that those who are demonstrating the biggest growth have a franchise of money coming in to them from 401-K or that EPF business. They have a strong franchise of attracting assets and they have been able to have strong returns on equity with this rising stock market. For us, we're very sensitive to this and that’s one of the reason which gives you drop your cost and (inaudible) also require assets. Our dividend income at the moment is relative to our peers but we offer I believe on a oversold basis, tremendous more upside in price appreciation potential. Now, what I want to really highlight to investors is this formation of capital model is changing and it's important to recognize why is the stock market making it all time high? Why are resources taking on the chin? Why is gold down? I am going to try to highlight that because this formation of capital model is very important. Most people think our creativity is only in music and art, but the financial sector has been and especially in America not only have traded Facebook to the world and Microsoft that has been so creative and creating significant companies that have revolutionized the world. In the financial markets, we too are very, very creative. There is no other place in the world that has tax rebonds to fund schools. They just don’t have them. It’s all relied on the central government, and in America there is greater ownership like a family it’s more important than a community and the community has the capacity to raise the capital to improve their community. This makes America special and unique and what we're seeing though is this formation of capital there is more thing is that dividend buybacks on the S&P 500 stocks is very, very significant. It is driving change and what you are seeing is these stocks make it all time highs allow them that they are increase their dividend and when you have low interest rate environment it is profound and it is significant. When you have treasure bills at 6 basis points, that’s like a half of basis point a month, a half of basis point a month is a non-event. And you have companies paying dividends that are 100 times greater, a 100 times higher dividends, so you are seeing now we are witnessing in the past two weeks disclosure the central banks in Europe have been buying blue-chip companies in their country because the dividend yields are higher and so this is important for investors to recognize that what's driving this market higher are companies that are really driving the returning on capital model and in particular they are doing two things, they are buying back the stock and they are paying dividends and this is last year showing that this increased again and the first quarter was witnessing further companies are doing that. Now the next visual is the formation of capital models changing, and what drives this why would management really be caught up to improve the returns on equity by two levers, buying back stock and increasing dividend. What’s in it for them? Well you are seeing compensation change, you are seeing compensation of issuing shares over a five year period or 10 year period that become invested over this period in lieu of stock options. So with that it's in the best interest for that management to be buying back stock because the overall position rises over those five period and increase in dividends because they are enjoying the fruits of those dividend increases. When you have stock options granted there, those management companies all they are doing is playing the data of the stock market. There is no real direct interest in them buying back stock and increasing dividends, and so I think it is important to recognize compensation changes how people make decisions, and what alliance the decisions with us as mutual fund investors of the company's is that they are focused like we are of driving their return on capital, return on equity model and this is a key factor and it is now showing you that restrict the stock ranks is more significant then issuing stock options and the previous visuals is showing that therefore you have an outcome with that, and the next visual, it looks complicated but let me try to help you with that. It is basically looking at the total number of shares outstanding in the S&P index and what has happened for the past five years is that the number of shares outstanding S&P has been shirking by 2% a year and this is helping to drive earnings higher, higher, and higher because there is less share outstanding. So if there is less of a top line revenue and less earnings as a macro point of view, however you shrink the number of shares outstanding then you are getting rising revenue per share and rising earnings per share, and this allows for companies to get higher valuation and what we are seeing here is, we see this huge spike in the red line call it the stock buybacks, the peak. If you go back to March of 2008 is that after the banking crisis took place, they issued so many shares to the federal reserve; the financial real estate top companies were buying back the stock and stock met with all time high, then they got in to the financial problems, they issued all these shares and you can see the red line the financial bailout it had a huge spike in numbers of shares outstanding in the S&P and since that crisis what have they been doing. They have been buying the stock replacement dividend. Last year as we believe government policy precursor changed, we saw last year that the federal reserve allowed and the Treasury Department basically allowed banks to increase dividend, start paying dividends again because previous four years they had cut all the dividends and what they have been doing, they have been raising the dividend and buying back their stock and so you add that change you have a stock market rising. So that is how the formation of capital has more often changed and its the capacity to understand and comprehend this gives a long move. Now how does US mobile participate in this change of arena. Well we are subject to lots of change and the ETS is another part of this incredible clear process that comes out of America and how growth formation of capital models is changing and fund flows. And I feel what we really do is sort of a flat footed in grasping the significance and having our own ETS space, because ETS in the past four years have grown 151% whereas mutual funds have only grown 36% which has been dominantly been bond funds and which is predominantly been dividend paying mutual funds. Funds that will pay once a year are not gathering the assets as those funds that are paying quarterly or monthly. So this is important to recognize this formation of capital is changing and there are several reasons for it. Some are external such as record low interest rates, coupled with the attractors of ETS, the way the tax structure of them, the liquidity, they bided (inaudible) investors from around the world to come into your market. You can't sell your mutual funds. We can't sell ours in Europe or Canada with complete massive legal registration and marketing partnership that costs millions and millions of dollars. However people from other jurisdictions could buy ETS. So that's how these market capital markets have more often changed and so that's one reason why we are going to change with it and the next visual is showing you sort of the fact behind us making those statements is investor sold domestic equity mutual funds at a faster pace November-December once again government policies are precursor to change, a lot of redemptions took place because of taxes and the ability to crystallize on that, and what important is that money is flowing back into equity so a lot of it’s gone into this ETF space or those mutual funds which are paying dividends. The next visual showing bond mutual funds flows continue to remain strong and also bond ETFs remain strong. We are just shocked to seeing a new Bond ETF come out and it’s got twice the management fee of our near term tax rate, but in two weeks they collect more assets than what we do in five years. They It just shocked us. Our yield is more attractive. Our yield is tax efficient. It doesn't matter. It is just now. I spoke of product, function to people, this is the trend that's taking place. So we call this in the capital markets creative disruption. It’s a disruptive model and disruptive technology and that's what's taking place and we have to adapt to it faster than we've ever done before and that leads to the next visual. Growth strategy for 2013 continuing the process which we are doing to acquire assets, we have looked at small ETF companies, we've looked at valuations and looked is that a faster way to have that space in addition to going through and creating our own ETFs which we are in motion with. And then the other one is reposition our equity funds to be dividend focused, that including making monthly payouts to shareholders, which is just it’s not on linear lines, you just don't turn down like you would turn out on water faucets and turn it off. You have to go through a set of legal issues and to resolve etcetera, but it’s in motion that U.S. Global to be able to start paying monthly dividends for the majority of our funds and then is to create our own suite of active ETFs and we are in full tilt of doing that. It's interesting because you can create ETFs that are quickly index or you can have your own index which is basically rules based active management or you can have open-ended totally active management, but each as you become more open-ended, again your total flexibility as an active manager with ETF, you have restrictions of where you can go around the world etcetera and which you can do. So we want to make sure that we really truly understand that as we come up with our suite of ETFs. Now I want to turn it over to Catherine Rademacher, our CFO.

Thanks, Frank. Good morning. I want to just summarize our financials and beginning on page 26. We reported total revenues of $4.77 million for the quarter, that’s down 13.8% from $5.54 million we reported for the same quarter last year primarily for the following reasons. In total, mutual fund advisory fees did increase by 262,000 or 9.2% compared to the same quarter last year, but keep in mind the two main components of the advisory fees are management fee and performance fees. The performance fees of 109,000 were received from the funds during the current quarter, compared to 1.1 million that was paid out to the funds during the comparable quarter of the prior year for an increase in performance fees of 1.2 million year-over-year. However, offsetting the increase in performance fees was $984,000 decrease in mutual fund management fees as a result of lower assets under management. Also, investment income decreased by 481,000 or 104% primarily due to unrealized losses on trading security. Our distribution fee revenue declined by 268,000 or 28% also due to lower assets and transfer agents fee revenues decreased by 195,000 or 23% as a result of the decline in the number of shareholder accounts and transaction. Moving to the next page, total expenses for the quarter were 4.69 million, a decrease of 56,000 or 1.2% and first platform fees decreased by 212,000 or 24% as a result of lower assets held through the broker dealer platform. Secondly, employee compensation benefit did decline by 77,000 or 3.3%, primarily as a result of lower performance based bonuses. Somewhat offsetting these expense reductions advertising increased by 187,000 as a result of lower than normal activity in the prior year. On next page, we show net income for the quarter of 41,000, as Frank said flat that compared to $0.03 per share for the same quarter last year and a $0.01 per share in the prior December quarter, okay. Moving to the balance sheet on the next page, our cash and securities totaled over 33 million and make up over 82% of our assets, that 19 million in cash and 14 million in securities keeps us in an excellent position to make additional acquisitions or investments like the one we have made with Galileo that Frank discussed earlier. As you can see on the next page, again we still have no long-term debt, company has net working capital of over 24 million. And finally as Frank mentioned earlier, I wanted to just talk about the -- during this challenging period for us, among the many projects that we are working on, we spearheaded what Frank call the 555 project. And keep in mind that many of our expenses are directly related to AUM and are therefore not controllable in a short term. However, the purpose of this project was to reduce 5% of our controllable expenses in five departments over five weeks. So [we deal in] operation, but we met that goal on April 1st and we will see the results of those cost reductions going forward during the year. And with that, I would like to turn it over to Susan.

Thank you, Catherine. And thank you for our shareholders for listening and I’d like to take just a couple of minutes to go over two significant events that occurred over the past quarter. U.S. Global value is to be performance and results oriented. And to that end, we are proud of the many Lipper awards certificate and [mindful] that accumulated since 2000. Our vision for the firm is to make people feel financially happy and secured and that their wealth is consistently growing and each of those illustrates how we have accomplished that for our shareholders over the long term. In addition over the past quarter, the funds maintained their long-term outstanding record among Lipper’s entire universe of nearly 10,000 mutual funds. And as of end of the quarter, four of our funds were ranked in the top 10% over ten years. Four of our funds also have an overall rating of three or four stars according to Morningstar. At the end of the quarter, the near term tax free fund was rated four stars. The Gold and Precious Metals Fund was the four star fund and the funds with three stars included the Global Resources Fund and the All American Equity Fund. Our focus on education also has been nationally recognized. Our marketing and investment teams have received numerous awards for excellent in education and we do look at as a goal to inform our investors and advisor universe that are out there. We do think that as Frank mentioned the ETFs will help us to better monetize about thought leadership like Facebook, Twitter and LinkedIn have helped us and other companies to monetize our brand. Two publications that have received awards here are free weekly e-newsletters. Each Friday our investor alert and advisor alert are emailed to investors and they summarize the previous week’s events on gold, natural resources and emerging markets. We believe that some investors are using our educational materials and are buying ETFs. So we are hoping to that this new project of ours will help our education and branding efforts to drive assets into our funds. As you can see on the next slide, we continue to reach new investors through the Frank Dodd [gold]. We do have an email subscription service for our gold now and through our commentary our infographics and our interactive charts and slideshows we do continue to attract new readers and we strengthen our partnerships with external websites and these also help expand our reach. One example that I would like to bring to your attention, in February Business Insider published 20 slides from US Global Gold presentation, they tweeted about the charts on Twitter and promoted the buying via multiple emails to their subscribers. Today this presentation has received almost 300,000 page views and these promotions help our web mentions grow over the first three months of 2013. Our web mentions have doubled to more than 1,200. These efforts are essential to expanding our brand as the interviews dimensions, the recommendations, they all offer opportunities to expand our reach to new investors. Our institutional sales team is also busy maintaining an active travel schedule these days and they are meeting with clients and prospects across the country each week and we occasionally team up with our portfolio managers and provide in-depth views of their funds throughout the United States. The team also attended key conferences over the quarter including TD Ameritrade which was well attended by 1500 advisors, the FPA Central Florida and Orlando and similar symposiums. Looking ahead, our sales team will be meeting with the clients at the (inaudible) Conference in Florida in June. And with that, I will turn it over to Frank, who will talk about trends in the local market. Frank?

Thank you, Susan. So in this visual I would like to point out to people is this whole idea this concept of managing expectations and like to us to try to make this objective as possible and really like to go back to the past decade and we look at the yearly volatility which is the math and what you can see is the non-event 70% of the time, it’s a non-event for growth to rise over 100% over 12 months and they can correct 50%. Its just recognizing why is that, well, we are known for our gold funds and gold funds have a plus or minus volatility of 35%. Oil has a plus or minus volatility of 35%. That means it is 70% of the time a non-event for those asset classes that rise 35% over 12 months or fall 35%. Interestingly, enough bullion is less volatile than the S&P 500. Emerging markets is plus or minus 30%. Well, our big revenue generators are gold funds, resources, our emerging euro fund, these are all significant in generating revenue, but the underlying asset classes themselves have an inherent volatility that we ignore and so we are very cognizant of having a very reflexive cost structure where salaries are low and bonuses are tied into fund performance and asset levels. And that's how we manage our world and we've also done that and we’ll log on the next visuals card counting. You can't do as in Vegas, but you can do it in the capital market and that's what's makes us so exciting as managing expectations and we like to share with investors anticipate and participate how often is GROW as a company gone up 10% or fallen 10% and the frequency of this taking n place over any 20 trading days. So I showed you the first visual was over 12 months. Now we shrink it that you can have how many times does it happen, we count the occurrences and then we do a probability. So it is a very high probability that growth is more volatile and investors have to their shareholders recognize that and that’s another reason why in our algorithm to buyback stock is to buy them down days because mathematically, it's much better for us to manage the return on capital model which we invest in companies that are confidence of the management of their return on capital model and we ourselves have to be. As you can see that the S&P, it doesn’t happen as often, so only 4% of the time that it can have spikes, over 20 trading days for corrections, but gold is very, very high plus or minus, 30% of the timing go plus or minus 10%. It's being cognizant this helps us in managing our affairs. Now the next visual is a very important one on managing expectations and managing expectations is coming back to their rolling 12 month period and it's understanding that all markets have their own elasticity of volatility and GROW because of it's asset classes and funds are extremely oversold and what this visual says that mathematically it is over 90% probability over the next 12 months for gold and gold stocks to rally from these levels. That means our asset levels to rally and that will generate revenue in the event that assets rise, our revenue rises and as long as we have greater performance, then we’ll attract more assets and other funds. So this is what's important for investors recognize is that we do go through these extreme oversold and over bought areas, but this sale off has been more extreme than even 2008 level. Now when it comes to gold, we have two demand drivers, the fear trade and the love trade, and it's very important to understand that the love trade is 50% of all the buying of gold, I repeat the love trade is 50% of the simple mathematical equation. However, 90% of the media coverage is on the fear trade. Now what we have seen in the past six months is that the fear trade and the reason for particular past three months is that fear trade has remain strong as for gold demand, a rational reason for owning gold, but the love trade which is highly correlated and tied to culture and GDP per capita in emerging markets. So we have witnessed that China’s GDP per capita income has slightly come off this quarter versus the previous quarter and we have seen that a 6% tax increase in India. So China and India which are 45% of the world’s population they are 40% of all the gold jewellery demand in the world. And when you have a slight slowdown or taxes rising on gold jewellery demand there is basically debt that demand, unless you have a big correction of price of gold. So this correction and this opportunity now has more than with a love trade than as in the fear trade. And the next visual I am going to highlight for you is follow the money; it’s unprecedented; cash injections from central banks. And central banks are being expected to solve all solutions of the problems of the world because most of these socialist governments have no fiscal policy disciplines and they are predominantly run by unions and that’s just the fact; it’s just what it is and you can see it in France, you can see it in many of these countries just the policies of protectionism, and get a high unemployment and refuse to streamline their regulations and they refuse to make their taxes more attractive to have capital, but anyone is successful, they want to tax him to oblivion and tax them as an individual or corporation or sector and business and that is what’s going on, and so the savior is suppose to be central banks. So central banks continue to pump money and in addition to that they are manipulating the yield curve; they are manipulating, but the positive as Warren Buffet said at the annual meeting last week it is greatest movie in the world, I don't know how it is going to end but right now with interest rates this low it is perfect and with banks lending money that is a great environment, where you can turnaround and friends of my just roll over to the 10 year jumble mortgage for 2.78%, third year mortgages basically just the 100 basis points about the inflation area, right that is taking place today, its unprecedented and you are seeing Europe just dropped interest rates and India just dropped interest rates. You are seeing the world is doing everything to try to stimulate all the activity and to create jobs and what is very important and best to recognize is that the Japan, Europe and America rolled over $8 trillion last year below the inflationary rate, so there burden for paying these costs are able to keep this process going on and anytime is this has happened it’s always been bullish for gold; we are now seeing Japan come out aggressively, the spot market is taken out, why, because they have the value over currency. And they have gone into a program that’s also spending $85 billion a month just like the Federal Reserve and doing everything to stimulate economic activity and there is a whole thought process operates to zero, zero interest rates and zero basically current invest, but G7 countries can all have meetings, they can collaborate, cooperate that if in any normal business its called a monopoly. It’s illegal for OPEC to function in America because it’s a monopoly, but basically the G7 is functioning as a monopoly with interest rates and currencies and that is historically when you get facts like that its just prudent to own gold. Now what we are seeing is that central banks from emerging countries are buying gold as part of their diversified portfolio and also for their first time central banks are buying equities. They themselves are in the hunt for higher yield and I think that this is a very sea change is taking place in the global capital markets. Now the next visual is another reason for this fear trade is the great rollover or rip off creates opportunity. Five year treasuries at 0.88 but inflation is running at 1.5 that means you are losing 62 basis points on your money and money market funds and 90 day treasury bills are 0.6 that is six basis points. So that means that you are just losing money every month basis keeping it in that so that's why we always want to create a stronger awareness of our near term short term duration tax and bond fund which is much, much higher than what you have for a money market fund. It is more attractive than three year CDs. It is extremely more attractive and it has liquidity, no penalties etcetera, because we are on a fantastic opportunity for investors to be able to participate in getting great stocks that are at decent dividends or buying back their stock because interest rates are so low when you do this choice, do I buy a stock paying a dividend or do I buy tax rate bonds which have a much higher yield than treasuries or I turn around and lock up my money in three-year, five-year CDs that have huge penalties that if I unwind because I need the money I lose all my interest. So I think it’s important for investors and we are seeing that's where the fund flows are going. On this whole [fear] trade central banks remain net buyers, this is important visual that shows you since 2008 particularly ’09 we are seeing central bankers increase their holdings, Mexico increased their holdings, Uruguay increased the holdings. Little tiny countries have been buying gold as part of owning euros, owning British Pound, owning dollars. They are also diversifying their holdings by owning bullion because they are also seeing that the major economic powers of Japan, Europe and America are monetizing their debt and doing things below the inflationary rate. Now what would change this? What would make the fear trade go away was what research has shown is the tipping point, the melting point is when they pay 2% over the inflationary rate. That means money market funds would go 2% plus 1.5% is inflationary rates. They would be paying you 350 basis points. Well what would happen to job creation if they did that, what would happen to car loans, because a loan for cars is so cheap and inexpensive that car sales are exploding on the outside. It would stop it all and there would be massive layoffs. So the governments are basically caught in buying, they are sort of monetizing their debt and that's why its imprudent and we always have advocated having 5% of bullion or gold jewelry and coins and another 5% in gold stocks. And you will get these runs and right now the fear trade is healthy and strong. What we find it most fascinating that over the past year tech stocks have lost more than gold, but anytime gold has a correction there's so much pervasively negative anti-gold but investors have lost $70 billion in the past 12 months in a decline in Apple and in Facebook which was a disaster that even IPO May of last year investors were down $28 billion. But what gets all the publicity of poor people are losing money and hedge funds are leaving, etcetera. Are the [GLD] which is down $18 billion. So it’s so important not to get caught up with the negative talking heads that do not create a balance because one of the things we try to always be balance is advocating a 5% [employee] and gold coin and jewelry and 5% in gold stocks and not a 100%, not 50%. A very modest amount because when gold explodes, it helps you to [boil] because there is usually something going wrong with the other parts of the portfolio. Now when we look at tech stocks, there is another visual to show you how much the tech stocks, the gold stocks themselves and the GLD have declined, the GLDs you see less than Apple and Facebook. Facebook’s had a big client since November but Apple is still been taking on the chin. Now we're also hear that gold is in a bubble and I would like to point to you that is going back and looking at what took place in previous cycles and as you can see that gold is far from being in a bubble. Far, far, far. When NASDAQ went in to a bubble, as you see, the blue line, it goes to an exponential move in 1990, went (inaudible) in June of 1998, you can see basically a huge spike in a relative basis. There is no spike. It's really no spike. There is no to me that there's been a bubble in gold. In 1980 when there was a bubble in gold, you had a predominant leverage that was just massive futures market leverage that went up 10 fold. If you are not having that today, you are having much more people buying gold with a GLD or gold coins which is cash and something our margins but that’s maximum two to one they can buy GLD. So with that I think it's important for investors to recognize all bubbles are created excessive leverage, concentrated in one asset class. We're not seeing that in this move in gold. Now let’s look at 70s in the next visual. Gold in the 70s went through a 44% correction. 44%. This one has been 28. So gold still then climbed massively as this visual slide will show you in that run in the 70s when they also had negative real interest rates. So I don't think it's the gold game is over as I pointed it to you on the map that it's extremely over sold and their savvy investors they’d be a country and investors, they are the ones who have been knocking our doors, taking a look at buying gold stocks and looking at growth as an opportunity to participate. Now we would like to take a look at the next visual, as I highly recommend Currency Wars that the author of this book goes to great detail to explain, what took place on an historical basis in the 30s, what’s taken place going back in the 1800, why gold plays a role and if they were to say lets start with a brand new slate, let’s we’ve made all these mistakes with money, let’s come back to our quasi gold convertibility they’d have to do basically convert the gold to $7,900. So I think that’s going to have for the short period, no. But if you look at M1 growth, gold rate should be $3600. If you look at M2, we are talking about $7,900 and I think he does a great job advocating his pieces and positioning it. The next visual is the love trade, and the love trade is highly correlated to rising incomes in our cultural affinity. The next visual shows you the holiday drive, it starts in the summer with Ramadan then it rise with the season of lights in India and then you have wedding season and then we have Christmas and then we have Chinese New Year, which is usually the peak and gold’s peak this year once again was just after the Chinese New Year gold started to sell off. So you had to sell off because after Chinese New Year your GDP is slowing down in that country after consumption. Even a little bit is important, however the Central Bank of China continues to increase gold and it's gone from basically having no position in the foreign reserves now its 1.5%. Now what I want to point to when gold tip the big sell-offs there has been a shift and weak hand is a strong hands. People jumping on the GLD, they go and trade the yen, short the yen currency play. What we try to educate investor that in yen terms gold did all time highs, so gold is money and gold is a currency, however that drop in the price of gold triggered huge buying in emerging markets. And it also triggered in the U.S. lineups. I was told in Canada that people couldn't buy tenth of ounce and half of ounce or one ounce gold coins, all they could do is buy five ounce wafers. That big drop in the price of gold triggered tremendous cash buying that there were lineups for half hour buying gold. To me this is a visual shown in the US mint shows a huge spike in demand for gold clients they stop selling super coins, they had to stop selling gold coins, as they go and as we produce them and to me this is significant as a triggered that gold is now moving into they call strong hands not the person try to play the currency. And then China, China has rushed to buy gold. As you see in Shanghai gold exchange because it’s highly correlated to the gold jewelry stores that that spike in demand is inversely correlated to the drop in gold. So as gold fell two standard deviations over 12 months the demand accelerated in Bangkok, Bangladesh, India, Dubai, Turkey, China, Vietnam. This is photo taken in a place in China and it is everywhere, and everyone is out there moving and I think its [partly] in the seed of the public is the first to be able to understand this moving gold and the general public is buying on sale. Now gold stock is the next result showing that gold stock offer higher dividend yields and are more attractive than they have ever been. It’s really shocking to show you that the 10 year government note that [Philadelphia XAU], the dividends are rising above that level and I think you are going to get a floor in these gold stocks that are paying dividends, and we also seeing one of our top 10 holding Alamos Gold it is one of the only gold company that is buying back their stock, has increased their dividend, they have a high margin business in Mexico, they want to make an acquisition, they bought the share, someone bid higher than them and they sold them, they have taken those proceeds to buy back their stock to also improve their return on capital. And at the beginning of this gold cycle what we saw with a smarter gold CDOs or free cash flow were not selling their gold, they were basically stockpiling it. (Inaudible) gold was doing it at that time. Goldcorp was doing it at that time. Those stocks went the highest price to book in 2002-2003 because they believed that at that stage the gold was too cheap. We are seeing many CDOs loose their jobs in these gold mining companies because they have not respected this return on capital, we've advocated, we've pushed for greater exposure what the total all end costs are and we are getting it now. So I think that the gold stocks are mathematically over sold and I think the fundamentals such as the discipline of paying dividends is going to increase rather than trying to just grow for the sake of growing that the management of these companies and Boards of directors are becoming more sensitive and that is a great buying opportunity. As this visual shows you gold is undervalued. I tried to explain to you it’s not above all and when you take a look at the US GDP since 1980 when gold hit its all time high corrected and it’s gone to new highs. It has still not grown on a relative basis to what the US GDP has, what the S&P has nor the debt in the US. The next visual is showing you the Frank Todd sort of the epic moments that I think we cover like in March of ’09 when we said that buy the stock market because we believe and our perspective is that government policies are precursor to change and we track the monitoring fiscal policies of the 7th biggest GDPs of the world and 7th biggest probably the most popular countries in the world and compare them. Back in March of ’09 we said that the $700 billion fiscal stimulus and interest rates dropping and changing mark-to-market rules and the ability to short stocks was very profound and significant for stocks to rise and they are up over a 100% from that date. And then we talked about not only -- recently about China that a significant change is taking place in China that the stocks are relative to emerging markets at the lowest PE ratios and we saw a price reversal take place in those markets and then the new (inaudible). We have written about Premier Li, why a significant Premier Li is as each Premier, basically you've got to think that the Premier is a President of the country of authority but the job here is financial stability and financial economics. It’s everything they do is about creating wealth because I started with Deng Xiaoping’s cultural, his true cultural economic revolution I would like to call it, 1978. The two pillars of all the growth we've seen in China is based on social stability and economic independence of the individual. And their policies have slowly each cycle, each this five year cycle have given more liberty to the individual Chinese citizen and have allowed them to create wealth. At the same time, it is built taking the government’s tax dollars and basically built cities, built railways, now underground subway systems, super railways, so this Premier is really quite fascinating because he went through a lot of hardships going through cultural revolution that took place under Mao and is very frugal, but at the same time understands economic independence. And in this visual on the suit that he was wearing that the demand for that suit was basically six months backlog and his wife is Hollywood, you've got to think of you may not know her but in China she would be a movie star, folk singer star, equivalent with Chinese people and the two of them showing up when they walk off the plane together. Previously you only saw the Premier walk off their planes like here we have President Obama walking out of Air Force One. China has now gone through a change and it's about the husband and wife team and she is very sensitive to the role, the community, the people. She is very much liberal mindset this way for the people, to the hearts of the people and his job is about economic prosperity and growth. He is the only guy that’s come out and said I am following freight train, I am following loans and I am following GDP growth. We do not hear that of the administration out of Europe, political leaders and we're not hearing that in America, but this is what Premier Li has done. Now if we go back in history when we look at Premier Zhu and what did he do that was significant for economic development? He transferred $500 billion of farmland to the farmers, which they have been able to get titled and sell and trade. Unheard off. It's the largest land transfer to the citizens in the history of mankind. Now subsequent Premier Wen, he turnaround and said there is too much of a disparity on the income levels between the urban city centers and the rural area and he said there are no taxes, no income taxes on the farmers. So he shrunk basically that disparity in income and he also put more money in to school systems to help educate the farmer. So you are seeing this sort of transition that what Premier Li do and I am going to comment on that. One of the things he has been doing is you are seeing since his coming is money supply has been rising and this urban consumption pattern is growing and is very significant and we've been tracking that besides this gold, (inaudible) as you follow the luxury companies. We just heard presentations from the CEO of BMW and Renault and all these companies stock was -- and General Motors the significance of the growth in China. The high end cars, low end cars is following the consumption pattern that building over up slight rail of the equivalent to interstate highway systems that Eisenhower did in America, they are now building fast rail trains that go up 117 miles an hour, and they were delayed, when the train accident now this back of full tilt of that expansion and subway line systems that equal New York City going through 20 cities in China, it’s just unheard off and so with that it's tremendous consumption for consumers. Now one of the big factors which work we are so blessed here in this country is a citizens card, and in China, there is two citizens cards and it's called the [hukou] and that hukou citizen card is one for the people who live in the country and one that live in city centers. Russia also had a similar card system and China has this system, if you are in a rural area, and you go to the city to get a job you can work, you can live in a government, not a government housing, but a corporate housing for building up the skyscrapers, but you can't get the social benefits, you can't bring your family in and go to school and get healthcare benefits etcetera. Because this is only for your world citizenship and the thoughts were that’s Premier Li is going to change that and bifurcated two citizen cards, it's going to become one, and just like in America they believe the illegal immigrants in this country while allowing they become Americans this will unleash huge buying for homes especially in Latin America that Central Americans that live in America illegally that upon chasing that the citizen rules that you will get greater consumption spending and house buying whereas the same thing is stock in China, and China right now has been building government subsidized housing that is just you have to put money down, but you put down less money last, year they build 5 million units and under Premier Li it is going to 10 million units. So we are tracking this because we think it is very significant for commodity demand and one of our top holdings in the China fund is the company that is involved in the building of this government subsidized homes and the stock has been on absolute pair 45 degree angle which I love to see from months and it’s also interesting to see every negatives or positive in China, Beijing was well publicized all the pollution, what we have this drawn in America in the 60s and we had it also in the London. You can see small pictures of London and New York City and LA and who is source to the wind power, solar power farms that have been built. And so we participated in some of those stocks and they had spectacular growth. So there are opportunities out there and that's our job is to find those opportunities they are taking place with government policies. Now the next visual is say that it's been for contrarian investors is the time to take a look at the resources because what you can see here is that energy stocks and material stocks have been the most under owned. They are almost 15% of the S&P 500, but when you look at mutual fund ownership and ETF ownership is less than 3%, underowned, underlocked, underappreciated because they all needed, you need energy, you need basic pictorials to make a car to buy a hair drier, it doesn't that you need this basic pictorials and we feel that is the economic stimulus is taking place with what falling interest rates both are here to stabilize. HSBC just mentioned they (inaudible) $5 billion, restructured their bank, they made money and they say that Europe is stabilized. Europe is very important because Europe and trade between China and Europe is greater China and America. It’s hard to believe that but it’s true. So any stability or economic expansion in Europe has a very profound impact in China which then has a very big impact on commodities. I'm trying to share with you is that these asset classes are underloved, under appreciated and the dividend yield is higher than 10-year government note and they have been rising. So the growth in this asset price when you look at energy has been MLPs. MLPs have had spectacular growth as an asset class because it is building out all the infrastructure necessary for the great energy discoveries due to our modern technology and who doesn't, who is a country that allows the sort of innovation to find a solution to a problem, the energy. It’s America, it’s America that's created fracking, it’s America who has done it over and over and that's what make America special and they have the unique formation of capital model called MLPs to build that out and what they are offering yields so it’s a much more attractive than 10-year, 30-year government bonds, 30-year government mortgages is you can get a higher yield in owning MLPs. So I think of these asset classes overall are underloved, underappreciated and as I have shown you mathematically it do for a rebound and I think the next rebound is going to be even bigger than we've seen before. And with that we are going to participate differently than we've ever done before because we will have our suite of ETFs, our active ETFs to participate in this sort of shift that's taking place and our mutual funds to be able to come out with a policy of paying dividends. And so as we quickly push here for as we go through the regulatory hurdles that we have to go through and disclosure etcetera and accounting for monthly dividend payment for equity funds. So that's our vision for growth, stay tuned to this movie program and this movie script is not over. Now let's open up for Q&A.

Thank you, Frank. Now we will take some questions. To ask a question please type your question in the dialogue box at the bottom of the screen and click submit.

One of the questions, I would like to share this with Susan and now Susan is institutional class was lowered to $1 million to be more competitive. Are you seeing any success with that and your expense ratios are higher than average is that because of you also have many small retail investors and do you advocate that they have 5% in gold equities that just basically when you take a look at the average retail investors that means you are going to have small accounts and the regulatory costs are higher. Is that reason why or is there other factors?

On the first question yes we did lower than minimum account balance on our three institutional share classes from $5 million to $1 million and that has been very successful, particularly with the advisors out there. They do like to deploy a little bit of money at a time and the $1 million minimum allowed them to meet some of their investing strategy. And on that note we are going to be adding institutional classes to two more of our funds, the golden precious metals fund and the emerging euro fund. So those should be available at the end of the summer and then on the expense ratio as we do pay particular attention to the fund expenses trying to keep expenses as low as possible, and on small funds it is a challenge. We have some fixed expenses that are spread over a small asset base and therefore these two higher expense ratios and what we would prefer. As Frank mentioned earlier in the presentation, we do have a significant retail base and a significant direct retail base and these investors tend to have smaller accounts. So smaller accounts tend to drive those expenses that are related to transfer agency costs.

Thank you. I have some other questions here. Will Galileo funds be available to US investors later? We will consider that definitely. Their model of monthly dividend paying small cap value is very attractive to us and so we're looking at that. At the same time we're looking at that relationship and it's going to, as we mentioned earlier, at BTS, who will be a better model for us coming out with that. The next one is do you own some BRK shares? (Inaudible) reasons. So if it's not in the top 10 holdings, I am sorry, we can’t comment on that. Can you talk what the offshore funds are? I hear ones there was a dividend. One of the funds are dividend oriented and so one of the part there is having, it's a different model marketing offshore funds and so we are focused on that on a monthly dividends for that fund by having a small fund of 5.5 million. The expense ratios are higher, so those expense ratios are going to drop, demand is going to drop. Any management (inaudible) so that they remain very competitive and attractive. So that they can be able to pay out that 6% yield of 50 basis points a month. So that’s something that we’ve had conversations with. We are sub-advisors of those funds to the group in Bermuda. Timeline for EPS (inaudible) roll-outs, will it be replicating current open end strategies. Well the timeline is subject to regulatory process. Correct Susan.

That it takes 9 to 10 months to get through the regulatory process for [ETF].

And we hope to have things filed by the end of this month for that and I think when it comes to looking at that. It would be similar but I think when you go to rules based, you create a little more boundaries and I guess there is greater opportunities such as I don’t know exactly what the ideas because one of the things in the space of ETFs is personal advantage is critical and how you bifurcate, your need that one of things that really woke us up was just seeing PIMCO’s Total Return Fund. We could not off their mutual fund with ETF and bring in $10 billion of assets. You can have a lower management fee because you don't have enough paying 40 basis points all up to a distribution platform fees. So automatically you are more attractive for those retail investors and it seems that’s where investors are going for growth. So will it replicate? Yes, but not a 100% because the rules based still gives us that flexibility to be able to rebalance and we have to make sure they had a unique aspect that they are going to the assets and that’s going outperform. So when it comes to gold, our job will be outperformance, the big HUI Gold Index and the GDXJ. We are seeing like the GDXJ is just phenomenal that gold stocks that never meet our fundamental models, go up only because of money folks, that’s all, and you want to be cognizant of it and we follow performance and (inaudible) going to GDXJ, we see the dogs in that ETF rising with nothing to do with the work we have done on fundamentals only because of money flows. So we have to become very cognizant, so we think having that ETF that we will be able to much more easily compete and beat that ETF and attract assets for it. And I think the ETF suite management fees will be at the same price, lower price, there will be price that will be competitive, that’s a key for you, it's been competitive. But we find it really quite interesting that many of the MLPs even the new bond funds we saw come out are 85 basis points management fees and they are not paying this platform fees. So if you are at 85 basis points, it doesn't really take that many assets, I think Susan we calculated that you need $20 million and 85 basis points to breakeven.

And 20 to 70.

And if you are going at 40 basis points you need something like $50 million, the 40 basis points you need something like $40 million of breakeven on those types of products but we are not going to just give it away because we are going to be active, we are going to have to active basis, so we can’t turnaround and just make it to compete with [Eye Rock] shares but we do believe that in our model because we are back testing it we think before we come out with it for going back five years, 10 years looking at different cycles that we will have a competitive advantage because that’s most important thing investors. Other questions, Susan.

Thank you for the questions. This concludes U.S. Global Investors earnings webcast for the third quarter of 2013. This presentation will be available for replay on our website at usfunds.com. Thank you all for your participation today.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.