July 16, 2012

By Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investors

Fred Hickey, who writes The High-Tech Strategist investment newsletter, noted in his recent monthly letter that while China is a major buyer of gold bullion, they rarely buy gold mining stocks and this is one of the main reasons for the record gap in the performance of gold versus the gold mining stocks. Fred further notes that principal buyers of gold stocks are U.S. investors who are complacent, delusional and believe that the U.S. Government's paper based Dollars are a "safe haven". At some point though, Fred believes this crowd of investors will lose faith and will be searching for cheap ways to own gold and there is no cheaper way to own gold than by owning gold stocks.

Source: This was excerpted from "Speed Up or Slow Down—Don't Exit the Commodities Highway," U.S. Global Investors' Advisor Alert, June 15, 2012, www.usfunds.com.

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