US Global Investors Inc (GROW) 2018 Q1 法說會逐字稿

Good morning. Thank you for joining us today for our webcast announcing U.S. Global Investors' results for the first quarter of fiscal 2018. I'm Holly Schoenfeldt. If you have any question during the webcast, you can enter them in the questions area of the control panel sidebar, which is normally to the right of your screen. Also you may download a PDF of today's slides by clicking on the red handout button. The presenters for today's program are Frank Holmes, U.S. Global Investors' CEO and Chief Investment Officer; Susan McGee, President, General Counsel, and Chief Compliance Officer; and Lisa Callicotte, Chief Financial Officer.

During this webcast, we may make forward-looking statements about our relative business outlook. Any forward-looking statement 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 described today in forward-looking statement. Any such statements are made as of today, and U.S. Global Investors accepts no obligation to update them in the future.

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

Thank you, Holly. As you can see in the first visual, with the stars U.S. Global is an innovative investor manager where hopefully you'll agree, especially after I walk through our thought process to investing in HIVE. And we do have a vast experience in global markets and specialized sectors, and I think that that helped us make that pivot move as strategically trying to jump into the Blockchain build-out globally.

U.S. Global was founded as an investment club. The company became a registered investment advisor in 1968. It was military, military -- a colonel in the Air Force that started the company, and so it had long, long history of global investing in particular for gold. And we are highly recognized for our expertise in gold and continue to win awards and recognition for that expertise.

Our strengths are we're a go-to stock for exposure to emerging markets resources and now digital currencies. We're noticing that the stock is moving up and down with HIVE and in HIVE is in sympathy with the movements of the Blockchain cryptocurrency or digital currency market. We're debt-free with a strong balance sheet with a reflexive cost structure, and we have monthly dividends and return on equity discipline. 2016, we're winners of the Mining Journal's America's based funds that was a global competition, and then we won other awards this year for recognition of the previous year's for the highest Sharpe Ratio by Lipper.

So we continue to show that expertise in the mutual funds and as I'll walk through later in the presentation, it's also changing that landscape that it doesn't really matter if you're outperforming the ETF, it's just cheaper is better and performance is not as critical. So it's how markets are changing and hopefully I can walk you through some of the things that have driven me to better appreciate this data mining and how it's showing up in Quants investing right across the spectrum to launching of HIVE Blockchain technology.

The top institutional holders of GROW, I want to thank them all for their courage and discipline and staying with us, their loyalty, so thank you and next is the dividends we paid monthly for 10 years. It's hard to believe that, isn't it, Susan? 10 years. And the current yield is as of the end of September when this was printed was 1.41%, but as the stock has appreciated, it's slowed down that overall yield.

We continue to purchase -- repurchase stock. As you can see the board approved a repurchase of up to $2.75 million of its outstanding common stock in the open market through to calendar 2015. For the 3 months ended September 30, 2017, the company repurchased 9,199 Class A shares using cash of $14,000. We may suspend or discontinue at any time, and as evidenced by regulatory filings, myself as -- Frank Holmes is purchasing shares of GROW pursuant to rule 10b-18 plan. We buy in down days, it's a simple algorithm that we've developed and used over the years, so it's a interesting mechanism.

Next is the balance sheet. As you can see the balance sheet has changed, particular the investment in HIVE Blockchain technology. We invested $5 million. It tripled and then it went up 500%, and then it went up and it kept going. So that little star at the top right-hand corner where you see the logo for HIVE is if you had current stock market prices and you brought it back, it'd be a much bigger balance sheet. We're not able to sell this right away, and there is no intention to sell it right away because of its uniqueness which I'll walk through in a few minutes.

The next visual is the earnings per share quarterly. Lisa Callicotte, our CFO, will walk through in more detail over this, but what's a real thrill is looking at past 5 years, that's a big uptick. And that's a success of fund in Canada that invested in Blockchain as a hedge fund model and so it's been -- more detailed, Lisa can give you on it, but the best part is a showing that our investment is sort of filtering through our income statement very modestly, but predominantly it's coming through on our balance sheet.

Our quarterly average assets under management remain stable. That's important. And then the digital data mining, from trading stocks to digital currencies.

(presentation)

Across the country, I spoke at the Denver gold mining conference at 1,100 professional CEOs and CFAs from all over the world that look at gold stocks and try to point out to them that this sort of sentimental -- this is our clever 1-minute video of using Trump sentiment analysis to short stocks and currencies, et cetera. It's been going on for a while in the gold space, and we've noted that and we see that some of these gold stocks will get hammered based on word choice.

We've known previously on research that was done 10 years ago that certain words that are in the headline news, that that stock used to take 2 weeks and then would decline from 11% to 40%. Now it happens in 2 hours. And the reason for that is 60% of the stock market today are Quants trading. The average hold is 4 days. Some of these particular tweet that it's commenting, it's usually 1 day. And it's just for people to be aware and especially the gold world, and that -- this particular set of slides and visuals is -- received the best presentation at the [LPMA] in Barcelona a couple of weeks back, and then they had several hundred attendees who are basically gold traders, jewelers, refiners from all over the world attended this event in Barcelona.

And this has really shocked people that these (inaudible) are basically running on sentiment analysis and word choice, but that's what Google is all about. It's NLP, natural language processing, but it's on steroids, it's all fast and that's -- within 1 second they're able to go short a stock. The same time, they will go along and it's in every category. So the idea of using data for consumer products, for marketing consumer products, breakdown from trading stocks in the short term period is so incredible to witness how it's changing the whole landscape of capital formation and funding and we're seeing this in the whole Blockchain technology in cryptocurrency, once again it's digital. What you're seeing is applying digital tools to be able to gather information from word sentiment and trade the stock immediately no matter what the category is, that's how it's evolving.

And I'm going to walk you through now to show you interesting psychology that did you know that for more than a decade gold has outperformed the stock market? I mean, it's more than 2 to 1, shocks people. And then guess what, in the year-to-date it's also outperformed. But you wouldn't think so when I'm asked go on so many of these TV programs because it's choosing negative, it's always the white gold is going to fall and that's what's really significant for me is a pervasive negativity towards gold as an asset class even when it's doing exceptionally well.

However, the cryptocurrency I noticed buy bitcoin overtakes buy gold as online search phrases and this was a article this week on Bloomberg, and what's important here is that on Bloomberg I would say it's about 80% of CNBC's, their programs are positive on bitcoin and Blockchain technology, 20% of the time they're negative, but they're 100% negative on gold. So it's just recognizing that this idea and sentiment is changing and it is growing with the naysayers everywhere.

The next visual is sort of Elvis is alive. It's sort of a cheeky response. I've been using this visual of explaining gold. There's 2 demand drivers for gold, there's the Fear Trade and there's the Love Trade. Used Elvis Presley for more than a decade, but recently the regulatory -- the (inaudible) of the world come out and say Elvis Presley is a public figure in no way related to U.S. Global Investors. I guess he's alive. But it just is this continuous growth of regulatory world and I was talking to at dinner this week with Doc Rivers, the coach for the LA Clippers and he was commenting that the NBA wants to go to 4 rests, and that would slow down the game.

And I said so what does that mean? He said it looks like traffic, the more cars on the road, the slower the traffic goes and the more rests on the court, then the slower the game goes, the fans don't come and I relate that to the more regulations, just slows things down. And sometimes it becomes irrational. Well, it's more important for you to recognize that this is spurring huge crowdfunding. This is spurring massive [angel] investing and this is why cryptocurrencies have raised $3 billion this year that there is -- and naturally there's a big push and rightly so that we can't get some type of regulatory rulemaking basically in this cryptocurrency world, especially these ICOs, they have surpassed IPOs. I mean $3 billion went into these new ICOs where there's governance of any form or any structure, but reason for that is that any time you put controls on a country's currency, you automatically get a black market. Any time you raise taxes too high, people want to get paid with cash or some other form that they will work with tradeoffs.

So it's just economics 101, I remember in the '70s taking that a learning would take. So I'm trying to make this sort of to recognize this works into this whole growth that's taking place in the Blockchain cryptocurrency world.

The next visual is something to always remember GROW has a big volatility, it's plus or minus 48% and it's still less than cryptocurrencies, but the gold stocks are plus or minus. What does that mean? It means 70% of the time it's a non-event for our gold funds, they go plus or minus 40% and that triggers for GROW. GROW is -- its cash flow comes from our resources and gold funds predominately, that's a big swing and you can see that pattern and now our volatility has expanded because we have this big investment in HIVE.

But bullion, bullion is the same volatility basically as the S&P 500, but most of the time on television programs et cetera it's always as gold is so volatile and risky when actually it's not, and that's why I like to point this out to investors let's all go managing expectations. But as we weave into the story of why do we go into Blockchain technology, I think that's -- it's important to sort of understand some basics and that's why the next visual is so helpful and insightful.

(presentation)

Banks are now engaged in Blockchain proof of concepts. The Blockchain could disrupt everything and I just give you an idea that you can see the CME is front and center and they partnered up with the London they call the World Exchange for refining gold and to basically give you a coin is backed by gold. Nasdaq launched a futures market trading on bitcoin in Sweden and it too was a raving success. There was a substantial conference that was in Houston last month that had Microsoft, Mackenzie and all the major energy companies speaking at how they're going to put their data in the energy space in America as the more data in Texas on energy than there is in rest of world combined. How do they put all that together and to be able to transmit data quickly and quick and inexpensively.

The next visual showing that the major banks have become bullish on cryptocurrency even when the -- when we have CEO saying it's corrupt, it's fraud, financial institutions filed 2,700 patents of blockchain technology. And what bitcoin has done is it basically is like e-mails under the Internet, it's opened up the eyes of how you can actually transmit money, you can transmit contracts, you could trade stocks 24 hours a day. One of the biggest source of money going into Mexico or Philippines is remittance by workers in America. And they said money is the simple largest, cleanest form of foreign currency going to those 2 countries and it's coming back for Americans' work effort, Filipinos or Mexicans working here sending back to their families. Well, you send back $100, it's really expensive under Western Union. Under a bitcoin format blockchain technology it would be maybe $1 per $100 versus $25.

So you have something that's really remarkable that is going to be a revolution at the back office to all the banks and financial institutions. But what's really woken up the world to blockchain technology has been bitcoin. And so what is bitcoin? And it's always the big question we get asked.

(presentation)

So next question is, well, bitcoins had a spectacular run and it must be a bubble. And this [bubblology] has been around for a while and it's a good question to ask because it's had this incredible move. What people don't realize is that bitcoin is a limited number of coins. It's not like governments continue to print money. It's capped and so what does that mean? Well, basically, Metcalfe's Law suggests that crypto prices could keep rising and that was the math that was to explain the value of the cable company.

So as more people use cable, the value of cable went up geometrically or exponentially and this was also for the adoption of cell phones. The more people that used it, therefore the value of the cell phone network rose geometrically. It was easy then to finance towers for fast-tracking more, remember we used to get dropped calls all the time when we first had cell phones, and as the banks were reluctant to lend and all of a sudden the valuations, it was a better security to lend against and also from a cash flow point of view, so they started building more towers. Then there's technology that allowed them to be able to have less dropped calls. But it was a combination of both.

So this is -- Metcalfe's Law is important because as more users are signing up to use bitcoin, the prices go up geometrically. So some people are saying that it will $10,000 by yearend and it will probably go to $100,000 faster than you speak as more people use and adopt it. You can buy 1 coin and you can then have it broken down in fractals for buying at Subways, at Starbucks, et cetera. And that's the hard part that lot of people don't realize and guess what, neither did I. I was just shocked by how fast my learning curve has been. And I've had to, to really understand what's taking place.

The next visual is just to sort of validate what I just shared with everyone. This is a recent press release that showed up on coinbase digital wallet users has more than doubled since the beginning of the year. That's 100,000 users in a single day. I mean you just think that -- and what's really important for listeners is it takes 5 minutes to open this account, 5 minutes. You can't open a brokerage account or a bank account in 5 minutes and that's part of the phenomena with millennials and the idea of so much friction and red tape, they just move away, they just go somewhere else.

And I think this has lended to the idea of ICOs, you can make money in ICOs, you can make money in -- and there's something like 2,000 now, it's doubled in the past year, $3 billion has gone to these initial coin offerings, ICOs and it's -- there'll be scandals there, here, but it's really -- it's not the issue. The issue is that it's going to grow and crowdfunding is big, it was estimated to be $50 billion globally last year. That's a big number and I've been to events at San Antonio Angel Investing and seeing the bankers, the lawyers, all the back of the room, 1-page presentations, 10 slides, and the legal documentation stuff is at the back of the rule and there's no big $500,000 cost of a prospectus or $0.25 million, that doesn't exist in that world.

You have a Ph.D. making a good pitch and immediately they're able to raise $10 million and those who want to put in, do the paperwork at the back. You had prominent bankers, CEO of J.P. Morgan locally, the lawyers, the accounting firms, I just knew all these people and I was just so surprised how this crowdfunding has accelerated. And then -- and this whole journey of me learning more about the space is to go to Consensus, which is the largest conference in New York and it's usually where the big gold mining conference has been. Well, I went to this one in May and it just really blew me away when the keynote speaker was Abigail Johnson, the Fidelity CEO, a little over $2 trillion in assets and she urged digital currency more accessible for individuals and institutions. She has a rig in her office. She's been minting her own coins. Her employees all have accounts as open architecture for coinbase.

And so in this sort of journey -- and in this process that I was watching, as I was getting ready to launch our gold equity ETF GOAU, and New York Stock Exchange had invested in coinbase and I found out that USAA just up the street from us had invested in coinbase. In 2015 where the market value was $75 million, today is a unicorn with a value of $1.7 billion. And so there's something that'd been happening here from this crowdfunding to the CEO of Fidelity advocating bitcoin and so with that, it made me much more comfortable.

And then I went on to coinbased and I showed the next visual, I just go currency wallet, you can buy and sell, it gives you the market value to cap. It's very simple and easy to open.

And the next visual is the simple one that show you that USAA, which is the largest military insurance company in the world is a major employer in San Antonio and it has truly a global reach for all of its military soldiers around the world in over 100 bases. So I think that when you see that Fidelity members are tracking their bitcoin wallets online, and this is a visual to show you that this is how it shows up. And they've written that I guess code that allows to bleed into, showing you that you have bonds, equities, mutual funds, ETFs, and guess what, you own some bitcoin or Ethereum or Litecoin.

The next visual, who accepts bitcoins as payments? This is another one that really impressed me when I found Starbucks, Microsoft, Tesla, Square, Dell, you could see Shopify, Bloomberg. We use Bloomberg in the office, they're all using a gift and you -- to e-gift, you can buy at GAP or Amazon, they do the conversion. And just recognizing that Wikipedia, you could donate the money to Wikipedia and they'll take bitcoins. So there is something that's going on -- there's something 40 major corporations are using it.

And then a couple weeks ago there was a story in ZeroHedge, I think it was a recopy of an article that was in The Wall Street Journal that in Texas, someone bought a house with bitcoins and it was a couple of million dollar home that was purchased with bitcoin. They merely convert to dollars, but the fact is that you can do that. So that led me into getting a call from my friend -- a long-term friend, Frank Giustra, that said to my young guys and my Fiore Capital, they have this great idea they're telling me, but I really don't understand it. I just in detail, do you know anything about it? And I was fortunate because I wanted to launch a blockchain cryptocurrency ETF, but all you did was run into cul-de-sacs.

So I met with what's called LaunchPad in Ontario, the OSC, talked to lawyers in the U.S. and SEC lawyers, and it just -- they were so concerned about AML anti-money laundering laws superseded the launching of any pure bitcoin ETF or ethereum ETF. And so with that, I had mentioned earlier, I went to the presentations and I noticed that when I was looking at TEDx, there's not one TEDx conversation on gold, there's not one TEDx on investing, but there are 2 pages on blockchain and cryptocurrency and that means you have 2 million people from 180 countries a day downloading TED Talks and looking at these presentations and they're very educated.

So there's something big happening, there's something big that's happened right underneath my nose and when I would talk to other people outside of my son and godson, it was this is big, especially my godson that had been involved in these cryptocurrencies and had done exceptionally well. So he made sure that I had to go some of these conferences and it was eye-opening for me. And so when the HIVE opportunity came along, I said I'd be -- I'm very, very interested in this and especially when I found out that the strategic relationship is with Genesis Mining and Genesis Mining is the largest miner in the world. Three guys; one is 28, the CEO, who finished as a math whiz, who finished university math by the time he was -- finished grade 12; then the other Mark -- two Marcos, and the other Marco was a Ph.D. in theoretical physics, and so you have a interesting group, the private company that is controlling GROW to having leading people using those services, especially at cloud service to the biggest buyers, but we need these computer graphic cards that process and validate transactions.

So they are the leader in the world. And when I mean the leader, they do 25% of all theory and validations and create new coins, and they also do 10% of all bitcoins in the world. So they are the 800 pound gorilla, and they would be the strategic relationship with this new company and they would own about 30%. And that gave me lots of comfort because I flew over to Zug and Zug is like Silicon Valley for cryptocurrency, digital currency in the world and I went to Munich, drove from Zug to Munich, and Zug is just outside of Zurich by the way, and then drove over to Munich, met the principals, saw what their vision was and why they're in Iceland where they're doing property mining is where it's safe jurisdiction, is green energy and the cost of electricity has to be very, very cheap to be competitive and that cool weather. So they're also in Sweden, they're looking any of the Nordic countries and there's many rational reasons for it, but I think that Genesis was really important and try to understand and what is this blockchain mining as it's called.

(presentation) (technical difficulty)

I'm sorry about that glitch. We'll get it figured out so that it runs smoothly. It's really important to understand what is mining of the blockchain and it's a 1-minute clip and it's very, very informative and we get this -- when people review this, they can see it, but it was sort of the instinct for me was meeting Marco Streng in the next visual, he is the co-founder and CEO of Genesis and you can see him on [PEDIX] if you go to -- start typing Marco Streng, PEDIX you can watch his presentation as he speaks about him being in school and hearing a ping on his computer because bitcoin went through $1,000. But I think the next visual will show you that U.S. Global has announced the strategic investment in HIVE Blockchain technology and I became the chairman and we put in $5 million and we own -- directly I put in $5 million for U.S. Global and then I put additional myself and went on the board.

And what's important is the -- is this relationship with Frank Giustra and in the respect that Fiore, particular because Frank in this new company, but he was behind Silver Wheaton and I remember the feeling of Silver Wheaton understanding that it was the first streaming royalty company in the world. It was the only royalty company dedicated to silver and there was no other royalty company at the time in Canada. It was a unique proposition with high revenue per employee, high margins, high cash flow returns of invested capital and we saw that investment go from $3 million to $30 million to $300 million to $3 billion and now substantially greater than that and it has the highest revenue per employee in the world. It is listed on New York Stock Exchange.

So it's this first mover advantage and I think the best what I identified and shared with Frank is that this is a unique opportunity. It's -- we're not going to be able to launch a crypto-ETF or put things like this nature of fund, the only other product that's out there is a '33, '34 Act, a corporation trust that's bought bitcoins, and it trades at a 40% premium. And this would be just a unique proposition and we would be mining brand new coins, virgin coins, untainted, and there are more drivers like mining 24 carat gold jewelry and so I became very excited on that investment.

So next is the -- showing -- introducing the HIVE chain -- the HIVE Blockchain technology. This is an article that showed in Bloomberg and the HIVE has bitcoin investors buzzing and the big reason for that buzzing is that there is no other public company in the world at this stage that people can go and buy and the stock market and get a clean way to play anything on cryptocurrency. There's just nothing. And I think it will stimulate the idea of other companies coming up, but no one has the strategic relationship with Genesis which is so important from a competitive advantage. That spread of having a -- basically it's a motor around our business and it went from $0.30 to $1.50, and immediately institutions came in for a (inaudible) deal that doubled our exposure to coins, and then it moved again and doubled again and we did another $30 million -- over $30 million each time funding to graphically expand the business model.

And if all things work out, forward-looking mean it's always risk forward-looking, but if they do work out, the revenue of this company will go from $1 million a month to a $1 million a week and the cash flow and the margins are so robust that based on performance, it -- and hash rates today and Ethereum and other currency prices today, it could generate $25 million of cash flow. So that's why I think it started to have this explosive move and we saw institutions coming in that really understood NVIDIA. NVIDIA announced last night it's $120 billion market cap, they're the biggest -- Genesis is the biggest buyer of NVIDIA GPU cards, they are as I mentioned earlier, the 800-pound gorilla, and we're riding that and this is a way -- a simple, clean way to play this growth and it's datacenters in these unique locations. Next visual.

(presentation)

Thank you. You can go back and watch the clip earlier on, it's embedded in the system on Genesis Mining, and basically a rig and what they do, it's a very insightful, clean way to become more informed on this particular type of investment we've made. And this investment exploded, it went to a $1.5 billion market cap. And why? I'm asked why. There's no other company in the world that is offering investors at this date a revenue cash flow generating model that is playing this except -- and predominantly now when you look at small corporations, it's hedge funds, they're trading these currencies as hedge funds that are -- and there's Silicon Valley that's behind coinbase and New York Stock Exchange investing through Silicon Valley, but there's really no public company and this is the first public company.

When I look also at the model, it's very -- reminds me of a royalty company. So I'm very excited about this opportunity. It's going to be very volatile, that's biggest thing I want to share with investors. And we don't have liquidity and if we want to sell and so I think it's January, February. And so myself, I just believe this is a huge opportunity.

And so with that I'm going to turn it over to Lisa Callicotte, our CFO, to give you more detailed analysis of the income statement and then any financial analysis.

Thank you, Frank. Good morning. Before I summarize our results of operations, I'd like to discuss the accounting treatment related to our direct and indirect investments in HIVE. USGI through its wholly owned subsidiary U.S. Global Investors (Canada) Limited directly owns 10 million shares of HIVE. These shares are included in investment security available for sale on our balance sheet. And unrealized gains and losses on available sales securities are excluded from earnings and recorded in other comprehensive income as a separate component of shareholders' equity until realized.

And these shares are restricted for resale until February 2018 and are also subject to Canadian insider regulation. USGI Canada also have an investment in the Galileo Partners Fund. This is our indirect investment. At September 30, 2017, USGI Canada owned 30% of the Galileo Partners Fund and the Partners Fund owned 6.7 million shares of HIVE.

The investment in the Galileo Fund is accounted for under the equity method of accounting. Under this method, the company's proportional share of the fund's net income or loss, which primarily consist of realized and unrealized gains and losses on investment decreased by fund expenses is recognized in USGI's earning. Therefore our direct and indirect investments in HIVE are accounted for very differently and we will see that as I summarize our results of operations for the quarter ending September 30, 2017. Beginning on Page 39 --

By the way, sorry to interrupt you. The Galileo Fund is a [2 plus 25].

Yes.

And that's just really important to recognize. So it's embedded gain for a small fund is extremely profitable. You would have to have a multibillion dollar fund -- mutual fund to compete with what a small fund like this is generating.

Beginning on Page 39, we recorded total operating revenues of $1.49 million for the quarter. This is a 25% decrease from the $1.98 million reported for the same quarter last year. The decrease is primarily due to a decrease in average assets under management, mainly due to net redemptions and market appreciation, and it was somewhat offset by an increase in our ETF average assets.

Our operating expenses for the quarter were $1.97 million, which was an increase of $19,000 or 1% and primarily due to increases in expenses related to our ETFs. We have an operating loss of $479,000 for the quarter ended September 30, 2017, versus income of $31,000 for the same quarter in the prior year.

On Page 40, our other income is $1.7 million for the quarter compared to $250,000 for the quarter ending September 30, 2016. The $1.5 million of this increase is related to our investment in the Galileo Fund accounted for under the equity method of accounting. Net income attributable to USGI after taxes for the quarter is $1.27 million or $0.80 (sic) [$0.08] per share versus a per share of $0.02 for the same quarter in the prior year.

Moving on to Page 41, we see that we still have a strong balance sheet. We own our own building. We have cash and marketable securities at $25.4 million that combined to make up 71% of our total asset. As you can see, trading securities decreased $2.2 million mainly due to the liquidation of trading securities to purchase available sales security. Investment securities available for sale increased $11.5 million. This is the line item that includes our directly owned HIVE shares that were valued at $11.4 million at September 30, 2017. And this value includes an unrealized gain of approximately $9 million that is recorded in other comprehensive income as a separate component of shareholders' equity.

As you can see on Page 42, we still have no long-term debt. The company has a net working capital of $13.1 million and a current ratio of 12.6 to 1.

With that I'll turn it over to Susan McGee.

Thank you, Lisa. As you can see on this chart, majority of our mutual fund assets are in emerging markets in natural resources and 30% are in domestic equities and fixed income. And as for distribution, we have more than 3/4 of our assets coming from retail investors and the other 25% from institutional investors. Our sales and marketing efforts have continued to focus on our mutual funds, including those concentrated on gold, natural resources in emerging market and our exchange trade funds.

In June of this year, as Frank mentioned earlier, we launched our first gold ETF, the U.S. Global GO GOLD and Precious Metal Miners ETF. And in September we launched the sister ETF under the ticker symbol G-O-G-O, GOGO. It was launched on the Toronto Stock Exchange in partnership with Galileo. It's our first ETF to appear in the Canadian market and we're especially pleased to bring our longstanding experience that we have in gold mining investment to Canadian ETF investors. GOGO joined JETS and GOAU, our U.S. listed gold related ETF, for our offerings of smart beta solutions. We do believe that investors appreciate the expertise that we offer and we're pleased that Thomson Reuters Lipper recognized us with the Lipper award for 2017. Investors can find more information about all of our funds on our website usfunds.com.

The company and our funds continued to receive an invaluable amount of viral publicity which we gained through media interviews. Frank Holmes often shares his insights with financial outlets like CNBC Asia, Bloomberg Television, BNN TV in Canada to name a few. We continued to receive recommendations by influential newsletter writers as well along with sharing and syndication of our award-winning original content by third-party publishers. The newsletters have loyal followings and they do receive millions of visitors each month. Frank Holmes CEO blog, Frank Talk continues to grow on popularity as well. His commentary is often featured by prominent publications, which include Forbes, Seeking Alpha, ValueWalk, Business Insider, these have millions of monthly visitors.

Our investment team continues to travel around the world to share our thought leadership and we do interact frequently with loyal followers through Facebook, Twitter, LinkedIn, Instagram and (inaudible). Kitco News, the biggest gold website in the world with an audience of 10 million monthly visitors in partnership with The Street continues to feature the Gold Game Film Show with Frank's weekly gold market analysis. Since we began the show, we aired 134 video episodes of the Gold Game Film.

All this coverage helps us leverage our brand by reaching millions of readers, viewers and potential investors. Our website, usfunds.com, was visited over 500,000 times from September 2016 through September of this year by investors from all over the world. We are known for our timely and balanced market insights and thought leadership and we have been awarded several STAR awards by the Mutual Fund Education Alliance. We added 3 more awards this year including the Best Overall Retail Communication within the small funds category. The MFEA STAR Awards recognized excellence in investor education. And our weekly free Investor Alert newsletter has been named the Best Electronic Newsletter 6 times. So to date the company has earned a total of 83 STAR awards.

The investors can sign up at usfunds.com and join over 40,000 subscribers who are receiving our award-winning Investor Alert and Advisor Alert e-newsletters and our CEO blog, Frank Talk.

So now I would like to open it up to questions.

And as a reminder to our audience you can enter your questions in the control panel on your screen. And we do have a few questions already, the first of which I'm going to give to Lisa Callicotte and that is what are the lockups on the HIVE share?

Like I said, we have 2 different kind of investments. One is the directly owned 10 million shares of HIVE and that is restricted until February 2018, but it is also subject to Canadian insider regulation. The Galileo Partners Fund has actually multiple tranches and they have differing restrictions and those are going to be lifted through about mid-2018.

Another one I can go to Frank, and you kind of touched on it briefly, but are you worried that bitcoin and the cryptocurrency space is a bubble? Can you explain?

I think on Investor Alert we commented on this a couple of weeks back that Metcalfe's Law -- there's another law called Reed's law and I was recently presenting at -- in Toronto, Ph.D. in behavior finance, so Money Matters showed up and he's played this space based on Metcalfe's and Reed's law which is really interesting to me, and he was commenting that as I said earlier that it's a geometrical -- most of these charts you see, Bloomberg et cetera, they're not logarithmic charts, they're linear charts. So it looks like a bubble. When you plot this -- a logarithmic chart, it's a normal course. So I don't think it's a bubble. Who will survive, that's always the great question like in the '90s there were so many companies out there like Ask Jeeves. They're history, relative to -- Yahoo is almost history. Google came out of nowhere and became the 800-pound gorilla and they just stayed back. When Google came out there was no Facebook. And in 10 years whereas Facebook growing. So I think we don't know which currencies are going to survive, which will -- and now there's a push by governments. Putin wants to have his own currency, cryptocurrency, and I think you're going to see more and more countries get around this idea of a digital currency. So I don't think it's a bubble to the degree that a lot of people just believe from looking at a linear line.

Another question for Lisa; will growth exposure to HIVE directly affect the U.S. Global mutual funds at all?

Well, the U.S. Global Investors funds and our ETFs do not own shares of HIVE. But some of the Galileo fund, including the fund that we are invested in at USGI Canada is investment in HIVE.

But it's not a mutual fund, it's a special-purpose fund.

Right.

And it's dedicated to that. And it think that the regulatory regime is just different in Canada, and we had mentioned this the other day at the board meeting is that net credit investor can start in Canada with only $25,000, they don't have to write a massive check. It's rules like that are making difference and so the formation of money, but it's easy to create a special-purpose fund in Canada only for credit investors that you can put on the platform like you do in the U.S. for mutual funds for fund (inaudible). And the responsibility is upon the broker that is talking to their client to put money in. That mechanism is not here in the U.S. So it's just a different mechanism. And so for that it's -- they have a different set of guidelines and rules.

One more question for Lisa. When can HIVE gains if any be realized?

Well, USGI and the Partners Funds will have to actually sell the HIVE shares in order to realize gains. And as we discussed, there are restrictions related to resale and regulatory restriction. So really the timing of realizing the gains cannot be determined at this time.

One last question for Frank. With many investors' attention shifting away from gold to bitcoin, what do you think that means for your gold-focused mutual funds and ETF?

I think that this whole ICO market is not really a threat to the gold. I think it's much more a threat to investing. I think it's a much bigger that the crowdfunding that retail millennial, it just doesn't have a whole lot of tolerance for 2 days waiting to open an account to so many checks and rules to trade stocks versus they can trade ICOs 24/7 and it's inexpensive to trade. And it's just, as I mentioned earlier, we have a big phenomena taking place in millennials. They're now bigger than baby boomers. You have hooked up sites. You have -- so you have social values and beliefs that change dramatically. They're just recently started buying, they're predominantly renting because they want to be able to move. They want to be able to move from one city, move from Austin to San Antonio, then from there move over to LA or something. So more of a transient world. And when they make money, they want to have this travel and experience around the world. So it's a different world. And I notice this question being asked today is how fast can you sell, how fast can you sell, how fast can you get out? It's remarkable to witness when you talk to Genesis and they own 30%, they're talking about a $5 billion company. And most people, they just can't believe, especially my age money managers, it's got to be a bubble, it's got to be negative. And they're oblivious, they're actually oblivious to what is taking place with millennials who are now bigger and popular in overall the demographic numbers than we are. And so from their spending patterns, social patterns, investing patterns, from -- you can get well simple ask to run your -- trade your stocks, you can put -- bleed into your mutual funds, all that stuff, all of your smartphone. Most of my friends don't have their whole portfolio on their smartphone. Susan, do you have all your portfolio in your smartphone?

I have the app.

you have the apps. So it's not that many people, I just hear it. So it's a different world and how we evolve, what's most important is I'm excited because rather than get delayed and disappointed and spend tens of thousands of thousands of dollars trying to get legal documents to try to get a product out there, we're now participating in this huge growth sector. And the stock trades at so liquid. Do you know the stock has traded $700 million of the stock? I mean, in the past month the average price has been $450 and trading 6 million shares a day, I mean it's very, very liquid. Institutions like Fidelity have come in and done private placements and bought shares that was filings you could see that they were participants in the $1.50 funding. So there's something that's really important to recognize, this is first mover, a word goes, I don't know, but I'm really happy and I think that I've seen it before like I mentioned on Silver Wheaton, $3 million, $30 million, $3 billion, now it's over $10 billion.

Thank you, Frank. And thank you for all the questions that came in today. This concludes U.S. Global Investors' webcast for the first quarter 2018. This presentation will be available on our website at www.usfunds.com. Thank you all for your participation today.