Susan Filyk - IR Frank Holmes - CEO and CIO Susan McGee - President and General Counsel Lisa Callicotte - CFO

Welcome to the U.S. Global Investors webcast; U.S. Global Investors Earnings Announcement for Fiscal Year 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 the resources tab in the top 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 fiscal year ended June 30, 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 Lisa Callicotte, Chief Financial Officer. 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 filings 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. 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 year. Frank?

Thank you, Susan. Good morning everyone. As we said in the headline, we reported results and it weren’t as pretty and I am going to try to explain what takes place in simple terms. But the company is in a full court press of streamlining cost, and repositioning products and service, and we feel still confident during this trough in the markets that we could continue to pay dividends and buyback our stock as an opportunistic price. But let’s go and take a look at the numbers, we are boutique registered investment advisory specializing in natural resources and emerging markets and we reported a net loss of $0.01 per share on revenue of $18.7 million for the fiscal year ended June 30th. In the fourth quarter of fiscal 2013, the company had a net loss of $450,000 and that works at $0.02 per share. And what's important to recognize is that in that second quarter of this year, but however it’s our last quarter of the year, there was a huge drop in emerging markets, in resources. I am going to highlight that impact and what we are doing to try to respond as quickly and readily as possible. So as I mentioned in the press release, net assets were down and a big decline took place in the second quarter of this year. When you compare the snapshot from the previous year, the decline appears to be approximately $500 million of assets, where we went from having 1.62 billion to 1.16 billion and the bulk of this did take place in this quarter. As we saw the melt down in April, the first decline in bullion and ETF and that triggered gold stocks to decline and that triggered then gold mining companies to have a massive write-offs and also BHP et cetera and gold, and this impacted because we basically are money managers to get the revenue of a 100 basis points for the assets we manage and those assets all decline and then as we went to June the concern that rates will start to rise the taper in the QE3 punch bowl will be taken away by Bernanke had a huge rippling effect around the world and that impacted bonds in emerging markets. But sadly enough, as I am going show you in the presentation, money market funds did not rise and that’s been a big drain because historically we have seen these declines, but never have we seen a sort of continuous decline and it’s been very, very costly to be able to support money market funds and continue to see nothing but redemptions in the space as people saw higher yields or FDIC [distributed] products. So we were repositioning our products and services to shareholders and our [peak] position is to streamline fixed cost. Now let me just go along with the presentation and give you some visuals and put things in context of what I have to say. But I also want to welcome Lisa Callicotte, our new CFO who has many, many years of experience as we put in the press release. She will take care in more detailed financial questions and answering any thoughts you have and she will highlight some of the financial issues. But we are a boutique company and we will continue to be a boutique company and in the slide 5 we’d like say that our [gold] stocks were exposure of emerging markets and resources, and I will show you this in the past few months as resources have popped higher and then you see a response in growth stock. We are debt free and we have the strong balance sheet with the reflexive cost structure, [monthly] dividends and return on equity discipline. But this reflexive cost structures, which I have talked before still has delays, and what we saw in that last quarter, it was just difficult to adjust as quickly we had in previous quarters, and that’s why we are [stashing] our products and services, and have gone for the detail. What I would like to also point out to our institutional shareholders, Royce & Associates, Financial Investment Management Group, Perritt Capital Management, The Vanguard Group, BlackRock Fund Advisors. We’d like to thank them all for their real support as investors in our company. We continue as I show you a six years of consistently paying dividends. The yield is currently 2.8%. Share purchase programs and motion on slide 8. The Board approved and repurchased up to $2.75 million that’s outstanding common stock on the [overall] market through the calendar year of 2013, and as of June 30, the company repurchased 55,000 Class A shares on an average price of $3.15 using cash for 173,000. We use an algorithm that is used to buyback shares on down days in accordance with all applicable rules and regulations that restrict amounts and times of repurchases. This model of buying back stock and paying dividends can be [cancelled] in time and the Board on a regular basis [would] use it and we have a hearting discussion on what is the benefits of doing this on an ongoing basis. And at this stage we do feel tremendous benefits to be able to buy back stock at a very attractive price. Especially when we take a look at seeing some recent acquisitions in the space of small cap companies being purchased at 3% of assets and a huge multiple to cash flow and earnings. Now let's go and take a look at slide 9 please, the strategic partnership with Galileo. We completed the investment in Galileo, a global equity advisor by purchasing 50% of the issued outstanding shares. Michael Waring their CEO and Chief Investment Officer has done a great job. He has a 5-Star Fund Lipper Awards, he also has Morningstar Awards. I think this is all very important in the thesis of small caps specialists; they are able to have income with growth. So we look forward going into the next year in particular that is expanding his product line and beefing up what he is doing in the market space today. Looking over the next slide, you can see we have include a 50% of Galileo's assets in overall complex and with that I'd like to go on the next page, you can see our asset breakdown. What's important is that we do have a high percentage of the shareholders with our complex. The benefits to this is the royalty factor and further to that it is also easier when we want to streamline funds that we can contact to reach out to shareholders to explain, why we are doing it and what's the benefit for them in this process of making shifts and changes in product line and services. The next visuals’ on 12 and it shows you that the balance sheet remains very healthy and strong. The next is showing you the earnings, this is the first time we've had a dip, back to 2009 in the first quarter, which is basically marks the bottom that took place in the super market in the S&P 500, and we've had some erratic [clients] since then as the world has change and we've not had the sort of, unanimous, across the board rise in emerging markets resources. One country, one commodity runs for about nine months, and then there is a rotation that takes place. So, in the next visual I'd like to point that our annual pretax profit margin is also showing you that dip but the difference here is that in 2009, we just weathered the storm and did not expect Q1, Q2, and Q3, what they would do to the money market fund space. What's important for investors to recognize and grow is that this has always been an important product for us because of our strong shareholder base as direct with us. So that they can move into our money funds or back into equity funds, however, they deem that we balanced our portfolios etcetera but the difference is that the rates have been artificially kept low and it basically cost you around 30 basis points for a fund to exist excluding our management fee and when you have a $100 million fund, you have to have $300,000 minimum basically just for it to be open and what you are seeing is that interest rates still maintaining a one basis point has become a real distraction on our cost and a distraction and seeing the shareholders themselves are frustrated with such a low yield and they have been shifting money, we've been fortunate to see money move into our near-term tax free fund and I'll comment a little more on that sort of product with alignment and we're seeing that people go out with this fear that took place back in 2008, 2009 going to FDIC to [share] products for one-year lock ups, our three-year lock up, term deposits. So that overall [assets] have been declining and has been causing a tremendous amount of resources to support that and that’s why we're making a strategic shift to say let’s start our core competence and we do not know how long these rates will rise but we've seen a tremendous, substantial rise in the long-term, five-year, 10-year, 30-year mortgages however nothing in repo market, especially since Frank-Dodd, there has been articles written that the capital markets are broken, brokers have come out and basically borrowed cheaply to use the repo market. So repo rates basically remained at two basis points, 90 day Treasury bills are four basis points. As I mentioned earlier, the basic economics is you need 30 basis points to breakeven. So when you have a $100 million, $200 million, $300 million funds, and you are aiding and supporting them, it's just a tremendous distraction of both human resources and financial resources. So that’s why we're making that shift as we go forward. So let’s go on to page 15 and I'll come back and just to show you on a relative basis, I mentioned the growth for us, it's important to take a look at our returns on our equity and they declined and they declined predominantly because of the resources and emerging market decline and our income, our dividend shows here as 1.9. The other number is still slightly different but in all, this has to do with price fluctuations and the stock has had a nice rebound from year-end and I am going to comment on that. When we go back since June of the past decade, we still outperformed the small cap market base, the Russell 2000 on an annualized basis but with tremendous more volatility. This is as looking at the end of June. However, when you take a look for the prices now, it's outperformed the Russell 2000 even more so. As you can see, it looks pretty nasty on slide number 17. Over 12 months, GROW has a huge [pop], as resources start to pop in the seasonal gold cycle and then they start to decline, especially as you saw going into this last quarter and I think it's important to see the correlation that goes with gold assets as is substantially high and higher now than (inaudible) was the emerging markets. The next visual is showing you what the pop recently in this past quarter, oil prices and gold prices and copper prices and the Global PMI turning positive, has shown up in GROW. Their responsiveness of how much our stock has popped. It's almost 50% in the past few months. So we do correlate these assets and we are a position for lot of I call boutique asset managers that tell me that whether to play on gold assets. In addition, that they have always got a decent yield for this past six years. Now I would like to show you what really drives this on slide number 18, the massive liquidation in financial goal had a huge impact and this showing you that the SPDR gold ETF was the leader of the pack in April, how much decline and then we had another drop in June but the big, big liquidation basically took place in the second quarter of this year, which is our fourth quarter as our fiscal year. Now going on the next visual, I was trying to put within context that even though the price of gold declined with the liquidation ETFs bullion prices, gold coins, spiked to record numbers, same thing for silver and it doesn’t seem to have abated to serve in enthusiasm and the opportunistic buying of buying gold coins, gold jewelry has been very robust and strong. Now the next visual 29 is trying to give you an idea of the domino effect that’s taken place that gold companies are getting leaner and they are now we are seeing massive write-downs of $23 billion. However, during this process it impacted all of our equities during the quarter and you saw we just see big companies Barrick, (inaudible), IAMGOLD, Kinross, Yamana and Gold Corp these write-downs basically and lower gold prices [create] falling gold equity prices which for us is lower revenue. The next visual we are showing you that fears of QE3 being pored over in the second quarter of this year slowly trigger massive outflows in funds. I mean, you can just see the numbers of all funds and more so when you look at the gold [benefit]. Although yields and long-term bonds and markets rose, money market funds remain unchanged this is the frustrating part there our money market fund but we finally said okay, which is one (inaudible) we no longer going to be able to support this, the funds are smaller but the fix cost of maintaining it have just got attractive. But what this visual show you that since April and you can see in particular in June and July, and particularly June, this rise it took place in a 30-year mortgages and you can see here treasuries you can take a look at treasury bills unchanged in fact slightly lower, but the cost never went away. And then the other factor that’s really been important to us is the formation of capital model is changing. Fund flows and growth in assets is growing [ETF], we get beautiful recommendations, hundreds of thousands of recommendations and you go to these websites and always see advertisements of gold and ETF, resource ETF, emerging market ETF. So that that investor out there, there is a huge shift taking place, I still think it’s early in that context of correlate that field because I would like to be ahead of that curve but as still we take a look at the benefits that you are seeing with the ETF space that the investors perceive as their benefits is the key factor and the IRA space is looking at that they want to charge a 125 basis points of managed money, so they really cut off with trying to find ETF of under 100 basis points, that do provide some type of attractive returns so they can charge the fees and that’s the big shift after looking at marketing and fund flows, the IRA space, the broker space that is using ETF as a proxy to be able to charge their fees. So the growth strategy for 2013 as I mentioned earlier was to acquire assets. Streamline cost and products and service and reposition products in the suite of ETFs. We have filed for the ETFs since Susan McGee, our President and General Counsel will comment more in the presentation on that process. So, let's go to 26, which is most important to investors is what are we doing to maintain margins and cash flow and that's also a most important thing to us and we being a large shareholder and that continues to buy, in addition to GROW buying back a stock I myself and during open periods have been buyers in down days. So I'm also concerned with the cash flow and where we are going with the company. So I don't want to point out here investors to cost for the buyers to maintain that gap on fund expenses for small funds and money market funds are becoming a financial burden and most important distraction for the adviser. Costs are now at an annualized rate of $600,000 or $50,000 per month and when we take a look at a key factor, we would like to look at number 27, is the revenue per employee, now the industry as a whole asset management company pushes something like $900,000 of revenue per employee and many of these other fund groups have outsourced their TA which were in the process of doing and we have seen like a price I believe that have this in-house but when you take a look at fewer price of [Janus] funds, there are pushing between $600,000 and $700,000 of revenue per employee and U.S. Global is down to $280,000. So, we acquire more assets or we become leaner in our cost structure and that's what we are doing at this stage because the process of due diligence acquiring company is much longer than anyone would ever expect in the process of cutting costs, streamlining products, it is light and faster and that's we must do in this sort of economic environment. The next visual 28 is additional considerations, more (inaudible) place to streamlining, reposition products and services are most important in the customer needs. And then the 1940 Act which is basically the deal with the SEC’s regulations and rules and regulations and being a money manager and with open ended mutual funds and EPS for that sake, and then we take a look at state law and there's different factors to consider, as the public company and public mutual funds and then more of a class and more of a benefits. So in that process and in an analysis and streamlining or reorganizing our products and services on page 29, we've demanded the termination to liquidate the U.S. Treasury cash fund and give an alternative money market fund to our shareholders and convert the U.S. Government savings fund to an ultra short government bond fund and price that fund like we've done at near-term at $2 NAV. It's $1 NAV. There is no yield but at $2, we're able to lower the penny volatility substantially to a $10 or $25 bond fund, at the same time being able to provide a very attractive yield. If rates do continue to rise, this yield will adjust pretty much more rapidly than a long-term bond fund. And this is of better interest and we've done detailed analysis for, we call the couch potato, I am showing investors a rebalancing, owning a portion of our assets in near-term and it's been a great way to diversify your portfolio and lower your volatility. One of the factors to take a look at our near-term, which is basically an all preferred tax free fund is merging with our tax free fund and that saves us money because we have to support both these funds and we dropped the cost of capping the expenses so that we're price competitive in the marketplace to attract the assets to that critical number. So basically, if you're charging 30 basis points, you need $100 million to breakeven and that’s a key factor when we look at all these funds in each product line. The other significant change is the partnered with U.S. Bancorp, the transfer agency. They are able to get substantial, massive, I will call, [tons] of scale and it is actually a saving for our investors now to get those economies of scale, the employees in our transfer agency are great employees, they’ve done a spectacular job. But going forward all the regulations and rules for my laundry rules, et cetera, and just become very, very costly for any small investment advisor. And as a partner and outsource with U.S. Bancorp, we think it's a significant strategic decision for us and U.S. Bancorp is a substantial bank and does have an expertise in the transfer agency and also into this whole space of understanding mutual funds. And then we to increase our administrative fee and one other things we do charge is a 8 basis points of administrative fee, but because we cap funds and support and guarantee, cost structures, et cetera. We’ve never really earned that 8 basis points, it's been effectively fixed and the same thing is, now outsourcing and mention that relationship that the quality of the customer service is at the highest end, then it is possible requires services to be able to manage the additional responsibility and that’s where the trust, agencies will come and approved increasing that administration fee. Now let’s go to slide number 30, cost and cash flow benefit for the advisor, by streamlining products and services, it will take a hit of $620,000 and the estimated cash flow going downstream, it's about $1.2 million and just the cost down as set of funds as I mentioned and maintaining, is this just hundreds of thousand dollars and to reposition of product and to exit the product is also cost you hundreds of thousand dollars. And the best part is that it will be behind us and the next visual is important this process of our product line, is the consistent track record and achievements of near term tax free, not only Morningstar ranking and ratings but Lipper for preservation of capital and very tax efficient because of the low turnover, what we're showing to investors is a growth in [EUROX] has been steady, it’s not had a down year, as you can see touch wood, in the past since 2001. And I think that that's really quite significant for investors looking for stable yield. And when you do a $2 NAV what you're seeing here on slide number 34 is that there's hardly any penny volatility. The yield is the same and for shareholders that are really conscientious where they're parking their money having lots of short-term volatility with the interest rates that they've had in the past few months this is the great place for investors to put their money. As you can see hardly any movement even though there is a tremendous change in the three year, five year, ten year bond market. [EUROX's] is still – credit quality is important and that's the same thing that's going to take place with our new -- ultra short government bond fund. It will be of a highest quality when it comes to a credit rating the U.S. government agencies the government bonds. The next visual showing you the benefits (inaudible) when you compare and discover opportunities to prove your yield what we were so impressed with is there on a tax equivalent basis having a bond fund with less than about a three year average maturity was giving a yield with a 10 year bond was government bond was taking was offering investors. So we feel not only the structure and the element of what we're doing are of a great benefit to shareholders. And the other one is communicating and educating like the couch potato I was showing having 50% in short-term tax free and long-term All American equity fund which basically is the S&P 500 that’s the moderate benchmark used to be and by having 50% in each and balancing each year tremendous drop in volatility and a nice increase in overall performance for investors, especially those investors that are looking at retirement dollars. So now I'd like to turn the presentation, I hope I tried to address what we have taking place of U.S. Global to cut fixed costs, to streamline product lines and reposition product lines. And now I would like to turn it over to our new CFO, Lisa Callicotte.

Thank you, Frank. Good morning. Now I would like to summarize our result of operations for fiscal year ended June 30, 2013. Beginning on page 39, we recorded total operating revenues of $18.7 million for the year, which is down 22% from $24 million we reported last year. The decrease is primarily due to following reasons. Mutual fund advisory fees declined $2.7 million or 19% under two main components, management fees and performance fees. Management fees decreased $4.8 million due to decrease in assets under the management related to market depreciation and shareholder redemptions, mainly in the natural resources and emerging marketing funds, this was offset by the company paying out $2.1 million less and performance adjustments, in fiscal year 2013 most in 2012. Transfer agency fee revenue decreased $976,000 or 27%, as a result of decline in the number of shareholder accounts and transactions. Distribution fee revenues declined $1.3 million or 31% and admin service fees revenues decline $329,000 or 30% both as a result of lower average assets under management. Moving on page 40, total expenses for the year were $19.1 million and decrease of $2.2 million or 11%. The decrease is primarily for the following reasons. Employee compensation and benefit decreased $671,000 or 7% due to lower performance based fee balances and fewer employees. Platform fees decreased $1.3 million or 33% as a result of lower assets held through the broker dealer platform and advertising decrease $320,000 or 27% as a result of decreased sales and marketing cost. And on page 41, we see our operating results for fiscal year 2013. We had an operating loss of $442,000 in the current year down $3.1 million from prior year. Other income, which is income or loss related to our investment including our equity method investment increased $439,000 compared to prior year. The increase is due to increase investment income related to changes in trading securities and our equity earnings in Galileo. Net loss after taxes for the year is a $194,000 or 1 penny per share compared to $0.10 earnings per share reported last year. Moving on to the balance sheet on page 42, you can see that we still have a high level of cash and cash and securities combined to make up 82% of our total assets. And on page 43, you notice we still have no long term debt and we have a net working capital of $23.3 million, our current ratio of 13.6 to 1. With that, I'd like to turn it over to Susan McGee.

Thank you, Lisa and good morning. For the next few minutes I'd like to highlight, just a few key points with you today. As you know one of our value at the U.S. Global is to be performance and results oriented. And we're pleased to say that our funds continue to deliver some long term solid results to shareholders. The next few slides will highlight these (inaudible) since 2000, our funds have received 29 Lipper Performance Awards, certificates and top rankings, and as of June 30, we had two funds, the Global Resources Fund and The Emerging Europe Fund, we're in the top 12% of the entire mutual fund universe for the 10-year period. Two additional funds hold the top Lipper Leader Rating. The Global Emerging Market Fund ranked at five for tax efficiency for the three and five year and overall time period. The Near-Term Tax Free Fund rates at five for preservation and tax efficiency for the three, five and 10-year and overall time period. Funds that rate at five by the Lipper Leader Rating System are in the top 20% of the category. And as you can see on the next slide, four of our funds had an overall rating of three or four stars according to Morningstar. We believe that this outstanding historical performance has helped U.S. Global attract attention from many investment advisory firms looking for companies that have experienced in our niche market. We have one new strategic relationship that I am pleased to share with you and that is with Transamerica, which added the global resources fund with premier provider lift. This lift is used on more than 1,000 registered reps at Transamerica. U.S. Global Fund is the only resources fund offering on the firms’ lift and we believe that this will offer considerable potential for fund flows through the Transamerica System. U.S. Global’s marketing and investment team continue to be recognized for excellence in our communications through our investors and our advisor clients. This focus on educating investors is one primary way we proactively brand and market our funds. As we believe a key to building assets is through reaching out to curious investors and building awareness about investing in natural resources, gold and emerging market. Syndication of content continues to gain traction. One recent example of business insider is to Frank’s The World of Gold presentation and for yesterday the webpage has received over 200,000 page view. There is considerable public relations activity over the quarter as well. Our investment team conducted nearly 40 interviews via TV, web, radio and webcast, and in addition U.S. Global has received more than 1,000 web mentions and 124 newsletter recommendations. We have an example of the [borrower] marketing that we believe helps build the U.S. Global brand, after our Dow - Then and Now info-graphic was featured in the investor alert, our reader tweeted the info-graphic to Mad Money’s Jim Cramer on twitter. Jim Cramer quickly re-tweeted the link (inaudible) of 600,000 followers. And finally to help our sales team reach new prospects and build relationships this fall we’ve joined a few national events including the Financial Planning Association’s experience in October and our [Schwab] National Impact Conference in November. This an addition to our systematic and strategic approach that we use to contact our advisor client offering timely special commodities report to help implying to their investors how commodities perform in a rising interest rate environment. As Frank mentioned earlier, we have filed an exemptive application with the SEC to be able to sponsor ETF. The initial registration and listing process can be quite lengthy and we are anticipating coming out with our first ETF in 2014. And now I would like to turn it back over to Frank, who will lead you through what investors should expect for global markets over the next several months. Frank?

Thank you, Susan and thank you Lisa. Slide 54, is to manage our expectations and we always try to help investors anticipate before you participate, before you go buy growth stock recognize it has tremendous volatility, it has investors are looking at gold and investors looking at emerging markets as indirect way of playing it, people look at our capacity and our ability as a brand and what we have done. So we have value investors, growth investors, gold investors. So you will see that they come and go with different reasons et cetera, and it just adds that volatility. Because when you look at gold stocks, you can see that this plus or minus 35% is the annual volatility, that means 70% of the time is the non-event for gold stocks to go plus or minus 35%, oil to go plus or minus 35%, emerging markets to go plus or minus 30%, and the S&P is 17%. Interesting now bullion is less than all of them. However, the most volatile of them all is U.S. Global Investors, and that’s another reason why in our model to buyback stock it has been on down days because of this excessive volatility and to be able to catch that opportunity as we basically approached our price to book value. Now I would like to go on to the next visual to try to put, this is another a way of looking at volatility to anticipate or [precipitate] how often in the course of over a 20 day rolling period has GROW gone plus 10% or down 10%. So it is just happened 50% of the time. It can be tremendously volatile, and that’s another reason why we have bought and have a model and my self included that I would buy stock only on down periods. The next visual is showing you that this where the opportunity is that you can see on a global asset positioning compared to historical data that emerging markets energy commodities and materials are under [logged] and under owned. And historically when it becomes such as swing of being under owned, you get these rallies like seeing oil rally and seeing the price of gold rally through the summer. The other visual, the next is important, but we’d like to try to comment on trying to understand volatility to use it to your favor is that gold as an asset class will become extremely over bought and it will also decline to become extremely over sold. The fundamentals on stocks versus the [center] better markets, the same thing happens with gold. And it has to do with currencies and movement of currencies and real interest rate, that is what do you earn on treasury bill versus inflation. Interesting enough that right now on a 90 day [treasure] on America, you earn four basis points. That means you are loosing money. Anyone buying a 90 day treasury bill is loosing money when you compare to what the CPI number is, and this is an important factor, and try to understand fundamentals versus emotional center [bed] and the liquidation that took place by large hedge funds getting out of gold in April, did have a big impact on a relative basis, that I think steps it up. But the bottom almost took place at the beginning of the annual 35 years seasonal pattern of we see what we call a love trade where 50% of all gold demand is for jewelry and it starts off every summer with Ramadan, and exactly again this year it’s taken place. So we are seeing a rebound and gold stocks still have another 35% capacity here to get back to just to me not to become over bought. So with that, we’d like to point to investors that we always advocated that investors have a 5% waiting to gold, up to 10% waiting into gold stocks. We’ve advocated 5% gold and gold jewelry, 5% gold stocks. But maximum overall, if you didn’t have jewelry you about 10% in gold stocks and you had the other portion in the S&P 500 equipment type of funds. And by that rebalancing your performance did well and what this is visual showing you that even with the two year decline in gold stocks, [UO] performed over the long period of time only in gold stocks. And now this recent rally in a past couple of months, this gap has widen because the S&P has declined and gold stocks as a whole are up something like 28% for the past couple of months. So I think it's important for investors to appreciate, you don't put all your money in gold, gold is basically portfolio insurance and the key factor is to rebalance your holdings. The next is to remind investors when it comes to gold, because I pointed out that we still have co-related particular past year of gold is understand that fear trade and the love trade. The fear trade it has to do with interest rates and monetization of debt and the love trade has to do with jewelry demand. They are both 50-50 of the equation. And what we’ve seen is they still follow the money, there are unprecedented cash injections from central banks, it appears the U.S. is pulling out of that, but it doesn't stop the other countries, they are still maintaining particular in Japan, massive monetization of debt just try to stimulate their economies. When we look at the great rollover of debt, we saw last year over $8 trillion in the U.S. has rolled over at negative interest rates. So now $8 trillion when you combine Japan, Europe and the U.S. is $8 trillion was a rolled over all offering investors a negative real rate of return. Long-term, this has always been an attractive portion in the rational region to have this exposure to goal. This is the visual showing with the five-year treasury bill yield is 1.57 raising it to minus 43 basis points for on your money. The next visual showing you is central banks remain net buyers of gold, even with the big decline central banks continue to buy gold and same with investors. Retail investors, out of nowhere started buying gold at maximum amounts all around the world when the first big break took place in April. What will make us really concern about gold as an assets class from the fear trade position is looking at real interest rates and the magic melting point, we gave many presentations, you go to our website at usfunds.com to get a more detailed explanation but basically whenever the government in the U.S. is paying a 2% over the inflationary rate, commodities sort of take it out on a chin a particular goal and silver lose their attraction as money. Next visual is showing you both, the rise in gold doesn’t look like a bubble when you compare to what happened to oil and you look at this is going back to [Brent] in 1998, you may go back to, that’s got to be the bubble that sort of taking place for oils in 1980. NASDAQ was 1990 and just trying to comparing previous bubbles and if you look at bubble of oil and how many months later in your relative analysis, and what you see is that we're far from exponential move. We've had exponential moves in oil. We've had exponential moves in NASDAQ but we've really not had an exponential move in gold. Now corrections. In the 70s, we've had some substantial corrections in gold when gold used to be paid at basically $35 under President Nixon, the convertibility of gold and dollars was removed and you had gold went to $100. You had it corrected before by the end of the decade, it declined to $850. During that whole period, you had substantial corrections and at one period, you had a 44% decline. So this recent correction even though it's so painful to us and for our investors it is not the magnitude that took place in the 70s and I believe it’s because of the love trade, because when you look at the map in the 70s and ‘72, ‘73, ChIndia, China and India was actually known as ChIndia is 40% of world’s population, but back in the 70s, they only have 2% of global GDP. And now they are over 22%. But they are 40% of world’s population and they can buy gold for the love trade, as I would like to call it for jewelry and I think this is a significant different factor that’s taken place from the 70s is this demand and that’s one reason why gold is way above 850 is because of this jewelry demand equation. And after this, I’ll talk about currency wars and the devaluation like we are seeing right now in the rupee, a gold selling all-time highs when you compare gold in rupee terms and it is interesting that government is doing everything this year with adding taxes from 6% to 8% to 10% to try to stop gold imports but is unable to stop the love trade. The (inaudible) hard is much more important and also Indian people as a whole really don’t trust the government, the politics and the corruption and the last factor to take a place India, India has been in this huge elections like they are in and welfare, doing everything by giving away money, free money, free money, free money to try to capture votes and anytime in country has these programs rather than solid infrastructure of creating jobs and versus giving away free benefits, [seems] that the value of country’s currency, its sounds good to be able to help the poor but it’s much better to rather than give them something free is to do give them a job, give them and pick them a shovel, and give them job opportunities to have that pride of ownership of being able to come home with a paycheck, and I think that that’s just taking place in India as the politics is going through election cycle. Now currency [wars] believes that the only way to reset all of these deficits and monetization of debt-to-gold ratio or the amount of gold is outstanding is approximately $7,900. So I think its worth to take a look at in that context. We are not saying gold is going to $7,000 over this period of time, in a short period of time, we have never done that, but we do believe it’s just prudent to have some gold in your portfolio and two is to rebalance it. Now the love trade, what drives the love trade at rising incomes in a cultural affinity? So we’ve seen a high correlation of GDP per capita in emerging markets and GDP per capita has basically gone flat, was taken place in India and China in the past 18 months has not been steady 45 degree growth in GDP per capita and that shows up in the consumption of gold even though the consumption of gold remains robust and strong, it does not have that 45 degree angle tilt and that does impact because when we look at gold hit $1,900 an ounce, we had the love trade and the fear trade show up to the door at the same time. It was where the stars were aligned. The fear that U.S. dollar had been downgraded by rating services, Obama was fighting Congress to increase the debt ceiling and it was in the summer and you had the beginning of the love trade season and was the beginning of Ramadan and you had rising GDP per capita in India, the Middle East, and China it was very robust two years ago and that took gold to 1,900. So here I’d like to point out that Ramadan started earlier this year almost at the bottom of the inflection point of the rally in gold that we are witnessing. The next visual is showing you the rush, China’s rush to buy gold on lower prices. The left hand chart is showing the [economics], you see the economies trade the gold, it trade, but Shanghai’s percentage of trading is very low. However, Shanghai takes delivery and the economies doesn’t take delivery, one is the financial trade, one is jumping in and jumping out helps short-term correcting it, whereas what we are witnessing in China is actually taking delivery of the gold and you are seeing that the consumption of gold by investors and by people who are buying jewelry etcetera increased substantially in the second quarter of this year. The next visual is showing that gold stocks get pounded down so great that the yield on gold stocks surpassed the 10-year government note. I have never seen this before. The value has been how to depressed these stocks were and many of these gold stocks, some will cut the dividends but the majority of them slash their CapEx dramatically and selling assets, we are seeing assets being sold in Australia by gold fields (inaudible) etcetera and they too are cutting fix cost, streamlining and they are slowing back under at the idea of supply coming into the marketplace and we think that over the next several years the supply from the new gold mines is actually going to decline. And but the world is going to continue that things and the love trade is not going to go away and governments are going to wrestle with not managing their economies properly. So I think the demand for gold will stay healthy. The next visual is showing you that the Chinese stocks looks so cheap last year, when we took a look at, when we wrote a report October 22 with spectacular rally the PMI numbers start to slow down and what U.S. spoke and we published on a regular basis, we like to look at the PMI of one-month versus three months as a reflection because in our data point analysis its usually a precursor for demand for copper, for iron ore and recent numbers that you see in Germany PMI turned positive, France's turn positive, the Global PMI is positive, U.S is positive and China just turned positive. And I also think it's very important to recognize the new leadership, the new Camelot, this is so different that China when the leaders traveled around, they never traveled with their wife, there's never photo ops with their wife and President Xi, is wife is a basically a paparazzi star, as a musical star in China, she is beautiful, she is talented and she has a huge following. So this creates a complete different look and as you can see the President when came up and he is waving at all of his citizens his suite sold out it's never happened before in China. It's just the same happened in America that if anyone is a media star or let's say whatever they're wearing as we see especially in the UK with women clothing, with the princess whatever she wears gets -- sells off the racks. The same thing is seen as a phenomena in China, it is changing and it's hard to people to recognize what is taking place with it and he himself follows, his comment on it, and we comment on it, three major economic data points in helping him make decisions. So he looks at railway traffic and he's looking at electrical demand, and he is also looking at the significance of the job creation which is important for China. So what you see now is global imports has been rising. But what investors don't realize is that the growth of Europe is more significant to manufacturing for China, because the Europe buys more from China than America does, we export more. And in that oil trade, yes we import many things, but nothing compared than a relative basis to other countries, I know the block, the trading block of Europe. So as Europe, particular Germany and France starts to turn up, this is more positive and we're now seeing a couple months later, the PMI trading up in China and we're seeing the PMI staying strong in the U.S. So we think we're in due for a modest upturn. We're seeing Baltic shipping rates, also turning up and I think that’s another significant factor and here is showing it in oil imports. They continue to surge to new heights in China. And then China’s changing urban consumption. You read – this is Insider and it's interesting how much coverage they have in China, tourism, and when you're in Europe, now you're seeing many signs now in Chinese. You never saw that before. Even, locally at the [Ultimate Mall] I mentioned here in San Antonio, there is a fantastic (inaudible) Mall. Two of them between Austin, San Antonio and they use to have signs in Spanish because the particular, the huge Mexican tourist trade that came up to shop. You now see trades for credit cards in Chinese and you see many of the stores filled with Chinese tourists they are shopping the same thing you're seeing in Vegas. So the rise of the middle class in China, even though it looks small, when you have $1.4 billion people and you have $1.3 billion people -- $1.2 billion people India, Chindia's is 40% of world's population, all you need is $100 million people making $100,000 a year and what do you see, their [government] stock making 52-weeks highs, Carters' stock making 52-week highs. Michael Kors, which we own in our portfolio, is making 52-week highs. So the rise of the middle class is very important and also gold consumption. There's a tracking system of looking at the consumption of gold in grams as you compare Hong Kong to mainland China, overall GDP per capita and you can see that Hong Kong is substantially greater than mainland China but mainland China rise of the middle class continues to grow. Now another thing that the average investor is not aware of is that on old facet of communism is to have two social security numbers. And basically it says that if you live in the rural area, you have one social security number and if you live in urban area you have another. And if you go from a rural area to the city centers you cannot get free education free healthcare. And if you're in the urban area vice versa you can’t move to the country and all of a sudden get medical care and education. So you have many of the migrant workers that live in the rural areas that are building out to city centers, they cannot move their families there to basically have a new life, but there is just huge macro tsunami of urbanization taking place. So the only way for China to survive an old legacy bureaucracy is everybody called the Hukou and the Hukou is to say get rid of two different types of social security numbers and make it one and that is what's start with the new populist political leader, also the corruption is now making television, that's never happened before, the corrupt leader that’s on television everyday and how they're trying to cleanse it, keep transparency for corruption. So there is a change taking place and I think and talking to analysts in our own Chinese connection internally believe that one-third of China’s population, when it becomes one social security number, you will see a huge economic boom taking place especially in city centers. We think that this will be the legacy for leadership and we think that’s very positive. We’ve published the case on commodities and the rising rate environment and try to educate investors not to be threatened by it, and please feel free to connect with us at usfunds.com from twitter to Facebook to Linkedin and I think best way to significant up for Frank Talk and for the Investor Alert and now I hope I've tried to cover all the issues that we've had to deal with in being in the resource sector and the financial sector and what the changes we're doing and open up to Q&A.

Thank you, Frank. We have time for a few questions. (Operator Instructions) I will start with two questions for Susan McGee. First one, if you liquidate the treasury cash funds and change the strategy of the government security savings funds will you still have the money market fund available for U.S. Global shareholder?

Yes we will be offering a third party money market fund as an exchange vehicle for our funds shareholders and we expect all these transactions -- the two, our two money market fund transactions to be completed in December and at that point that their party money market fund will be available.

I think it was importance of third party money fund will also make it easy for investors just like today to switch into our funds because the relationship is with U.S. Bancorp.

Thank you. And you mentioned the fund restructuring taking place at the end of the year when will (inaudible) TA change take place?

We are expecting that conversion to be completed also by December.

Thank you. The next question is for Lisa when do you expect the cost savings and increase in administrative fee revenue to take effect?

The initiatives related to the admin fee won't be fully implemented until December 2013. We think that there will be a positive effect beginning calendar year 2014.

Thank you. The next question is for Frank, with regard to fund flows in Canada have those mirrored the fund flow in the U.S. and how it has impacted Galileo's fund?

I think it's -- and looking at Galileo's five star fund; it’s been much more stable on a relative basis of money jumping and jumping out. It is the trepidation of fear takes place in America does have an impact in Canada, and so the fund flows slowed down, and looking at and talking to Michael Waring, did not experience a huge redemption that's taken place in the asset management business here in U.S. and initially not go some of the other large asset management companies that share with me that, their bond fund flows which have been huge for the past five years and four years particular have come to a halt, and now they're experiencing net redemptions since May, June and July and August, and it's spread the fear of rising interest rates, interesting enough his line up is not experienced that.

Thank you. Thank you for the questions. This concludes U.S. Global Investors earning webcast for the fiscal year 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. These conclude today’s conference. Thank you for participating. You may now disconnect.