US Global Investors Inc (GROW) 2021 Q2 法說會逐字稿

Hello, everyone. Thank you for joining us today for our webcast announcing U.S. Global Investors' results for the second quarter 2021. I am Holly Schoenfeldt. At the end of today's webcast we will be addressing questions that were sent in prior to today's call. If you have additional questions during the webcast, please send those to info@USfunds.com; after the presentation we will get back to you as soon as possible.

The presenters for today's program are Frank Holmes, U.S. Global Investors CEO and Chief Investment Officer; Lisa Callicotte, Chief Financial Officer; and myself, Holly Schoenfeldt, Marketing and Public Relations Manager. As always, we would love to offer anyone tuned in today one of our JETS (inaudible) packs. All you need to do is send us an email with your mailing address and we are more than happy to get one over to you.

Now onto slide number 4. 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-Q filing 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.

On slide number 5 you will see a quick overview of the U.S. Global Investors. We are an innovative investment manager with vast experience in global markets and specialized sectors. Founded as an investment club, the Company became a registered investment advisor in 1968 and has a long-standing history of global investing and launching first-of-their-kind investment products, including the first no-load gold fund. U.S. Global is well-known for expertise in gold and precious metals, natural resources and emerging markets.

Now on slide numbers 6, I will handed over to Frank Holmes, CEO and CIO, for an overview of the period. Frank?

Thank you, Holly, and thank you for all the shareholders who have been loyal and I love this (inaudible) air that Mary had created, a (inaudible) driving [wall], it's predominantly in simple and they are walking through their strength here in gold and assets, and also some of our investments that kind of impacted our year in 2020, which is a year that, with all this negative news, it ended up being good news for us.

So, bad news was good news because we experienced unprecedented growth in surging assets under management and our holdings in the critical space went up about 2,500% and (inaudible) [attainment] which had very good substantial growth in animation. Especially during the lockdown with coronavirus more people were looking for a film, looking for movies. So, we feel that we were in the right position last year. Next please.

Our top institutional shareholders, and I want to especially thank them, Diametric Capital, Perritt Capital Management, Royce Investment Partners, Prelude Capital Management and Heartland Advisors. And of you other loyal shareholders I have seen (inaudible) around and show up in stock certificates (inaudible) public recently.

So, it's interesting to see that this is a company that was formed -- as a military investment club by [Colonel Clark Galesworth] and it grew because his gold fund had to become a mutual fund and it's interesting how it's evolved.

But what U.S. Gold has done with a long history is start to adapt be as [on-trend] as possible. And in doing that we still maintain dividends. And we have been paying dividends since 2007. The Company has been paying on a monthly basis and we have good news regarding the dividend just increased.

So, we also have a share repurchase program. The Board approved a repurchase up to $2.75 million of its outstanding common stock in the open market until December 2021. And during the three months ended December 31, 2020, last quarter, the Company repurchased 15,000 Class A shares using cash of approximately $60,000. We may suspend or discontinue this at any time. And we buy with a quant model and it is bottom down days.

So, you can see we are very thrilled to say that Global has been able to roll, no doubt, in the past 12 months and predominantly that first initial growth came from the JETS ETF. Next please.

We've outperformed our other peer groups that are public, as you know T. Rowe Price, Wisdom Tree, Invesco. Invesco has the QQQ, WisdomTree is all ETFs, and Franklin Funds has ETFs and T. Rowe Price, which are all strong franchises and you need categories of the mutual fund ETF business. But for our microcap stock, growth has been significant. And I will show you what the leverage was, (inaudible) and it was. And so far you can see that the average assets, $2.9 billion. So, on a Q-over-Q basis they grew 45%. On a year-over-year basis they grew 450%.

Now the growth in assets drives revenue and that operating revenue is also at a major substantial turn, which you can see revenue for the quarter was 60% quarter-over-quarter and year-over-year it's 480%. And this was also net income, but a lot of this net income, this spectacular change was because we crystallized profits and reinvested them into our [adventure] investing into the critical space and I will give you more details about it. But the income was $16.7 million, that is up massively year-over-year and quarter-over-quarter. Next please.

Now it seems simple when you talk to money managers that basically download off of Bloomberg but have access to Bloomberg and look at our total assets. And I know some of the people do it on a weekly basis just even using GAAP refinance. And it's quite simple that (inaudible) our expenses, our revenue and take a look at $100 million of ETFs at 60 basis points, that means you are making $600,000 on revenue. At $2 billion that 60 basis points (inaudible) $12 million in revenue.

Well, that is a 12-fold increase and it absolutely points to easily, if you take a look at it, what's taken place with that growth in JETS and also grow OAU. So, with $3 billion in assets at 60 basis points, that is a delta swing of $18 million in revenue from less than $5 million in revenue and that's what's propelling and driving the spectacular growth.

Quarterly average assets under management, as you can see here, they were up substantially with the growth in JETS and OAU. And very important to GROW's shareholders has been the spectacular growth in overall marketable securities and assets we have on our critically improve our liquidity of our balance sheet.

On earnings per share, this is an old visual looking at the volatility -- and Lisa can comment more about some of the accounting and what happened with the swings we started to experience with HIVE and hopefully the new asset we have with HIVE is a convertible note with warrants will lower that volatility. But we did sell the shares and reinvest in the company to help the company also accelerate its growth in the blockchain industry, and for ourselves to lower our volatility. And this crystallized a huge gain for us.

And what's interesting to me is that it's basically a $5 million investment and we made an over 300% return on our money during this time period. And this is the same thing with JETS. When I look back at JETS, it took five years for JETS -- five years and about $5 million of marketing, branding, steady money, doing investment presentations all over North America, doing public relations. We run up the cost of doing all those webcasts we have, the marketing department, my time, compliance -- if you add it all up, it was about a $5 million investment over five years and now it has a much greater value to us.

But this is what it takes. And I remember when we launched our EUROX, which is basically a play on the creation of Eastern Europe in the late '90s, and the idea that the EU creation and a currency, that this would evolve that the Eastern European countries had a highly educated workforce and they worked at about a third the cost of Germany and Austria and France and Italy, that there would be a huge economic boom and there was. But it took over four years and that fund basically went from $4 million to $12 million back to $2 million and then went to $1 billion of assets.

So, we have seen these waves take place in these asset classes. But JETS is very unique because there is no other asset class really focused on the global airlines industry. So, you can see another visual to try (inaudible) appreciate the significance of JETS assets growing under management. And with the coronavirus (inaudible) assets fell significantly and lowered the stock price.

And then it was millennials, it was Robinhood investors all of a sudden started coming in and playing the [balance] that historically has taken place within to six to 12 months out in the airline industry [everybody] global crisis. This pandemic is going to be different, the previous crisis in 9/11, that they appreciated 80% a year later. After 2003 the Asian airlines had bounced back 120% due to SARS was a setback, but they bounced back. In 2008-2009 it bounced back 80%.

So, we saw and witnessed something like 25,000 investors from Robinhood, and at the time we were able to get an idea -- there was probably several hundred Robinhood shareholders who were purchasing JETS. And it was interesting as they just continued to come in and that (inaudible) coming in and buying allowed for price discovery. This the fact that the whales, the tunas, we basically really improved the ecosystem of all the shareholders, the different needs and wants, wanted to participate in JETS. And the volume traded went from 35,000 to 3.5 million.

And this is really important because the assets so far have remained quite stable even with whatever the negative news is regarding the vaccine rollout or the airlines -- countries shutting down for the past several months from [calendar year up], the overall volume on the (inaudible) still remains quite strong. All-American Fund reorganized in December to merge with Global Luxury and we also created a home (inaudible).

And I remember lots of naysayers think about luxury goods like -- our research on gold and understanding the role of gold and understanding the biggest demand driver for gold long-term has been the great [lux] trade. 60% of all gold demand is really for jewelry and it ties itself into luxury and (inaudible) research into the luxury industry.

And what we see in this past year is a luxury category has far outperformed the S&P 500 to the shock of a lot of people. It was a lot of writing to get this thing through, but we are very happy and we have the only mutual fund that is in the luxury category industry.

Now, gold, love the category of gold. While I notice, again, that gold is up, well not every day or every week, there must be something wrong. And I scratch my head over it because, for this century the gold bullion has been up 80% of the time and has been -- 16 out of 20 years it was positive. And it will outperform the next [visual pace]. It outperformed the S&P 500 by more than 2:1, and that's really important for investors to recognize gold and gold stocks are an important asset class.

And what we have seen here as also very important is for all shareholders and investors to recognize the DNA of volatility. My previous year intention, that bullion has the same DNA as the S&P 500; however, most of the talking heads in general platforms and media talk negative about gold is too risky, but it really actually has less volatility per 10-day trading days.

Now Bitcoin is another animal. That volatility is huge on a daily basis, over 10 days and four days. But also really shocking is Tesla. And Tesla is in the luxury goods fund. And Tesla has tremendous volatility and has captured the imagination and is now part of the S&P 500. Gold stocks are more volatile than bullion and the stock market, but oil is also very volatile and is three times as volatile as the S&P 500. And the reason why I wanted to put oil there is oil is the biggest line item for the airlines industry.

So, the DNA and volatility of oil inversely has a DNA and volatility passed on to the airlines industry. So, what we saw in the past year is many people trading that volatility. And so, [not only] then to go down 3% in a day. So, part of that ecosystem growth is practical investors looking for the 12-month run.

Those investors are short the various airlines, like there was a big short position on American Airlines because he had (inaudible) equity ratio. And then they turn around and put long JETS. So, they shorted American Airlines for $10 million then they hedged the bet by going long $10 million on JETS ETF.

So, we have many different people participating, but this next (inaudible) report which we are looking at is very significant. It didn't come out until mid-April and it basically allows you to take a look at the growth in passenger travel.

And every day the TSA publishes how many people they basically tested before they allowed to fly and through security. And that security checking process is highly correlated to the airlines' enthusiasm and sentiment. So, what we saw is that April was the all-time low of less than 90,000 people flying a day. And there is a serge to like 1.3 million people flying a day.

Now this is still way off from a year ago when we had 2.7 million people flying a day. But we did see a big growth going into the year-end and then it slowed off here into mid-April -- this had dropped on a daily predominantly because a lot of Europe shut down and Canada shut down and this impacted the daily flow of any type of cross-border traffic. But what you do see is that whenever this is above [15 day] moving average, more interest, more volume trading in the JETS ETF.

The average number of daily COVID vaccine tops 1 million. I recently got a vaccine and what a great experience. It was like driving through a Mac -- not a Mac, going through to get my Big Mac -- going through a McDonald's drive-through facility.

Literally they line cars up in queue at the Alamodome Stadium 50 cars at a time, tight, tight, tight -- that a motorcycle, basically motorcade, took the cars around to the other side of the dome stadium and they look you over, if you want to walk in to get it or you went through and I stayed in my car, I drove right through. They put a -- zapped a needle in my arm, asked a bunch of questions, took my temperature, waited 20 minutes. While I was filling out forms, they told me to come back February 18 for my second needle.

I mean it was an amazing, incredible logistics experience. And this is what makes America great. They (inaudible) the local military and the police were there. They orchestrated it all as though it were seamless. And our (inaudible) data points of people getting the vaccine. And I hear what other companies have said, a disaster -- like Canada and what they did.

They actually don't even have any vaccines yet. So, America is way ahead of that. And I think as we start to get (inaudible) take place in the number of people getting ill and the number of vaccines rising there will be a tipping point, there will be an inflection point. And I believe that will be the next big wave in JETS.

This is the caseload that has rolled over in the US looking at new Corona cases, looking at the seven-day moving average and the one-week average. So, this data comes out on a daily basis, the CDC and then from ISI and it's just really helpful for tracking. But still the general media just have nothing but negative narratives. Whatever it is that's something negative regarding the rollout of the vaccine or people getting sick or the age of people getting sick, it still seems try to dominate the sentiment.

What I want to share with you, I remain very positive and constructive for this year. Case growth has rolled over worldwide also. The seven-day moving average it's up (inaudible) since February 1, so this is very positive. Next please.

On the next HIVE blockchain. I have mentioned this before; we were unable to (inaudible) recognized early the SEC was not going to allow an ETF for Bitcoin to go through out of concern over money laundering laws and [KYC] laws. And so, we had all this knowledge, so we participated in the [ceding for] institutional investors to co-invest in in the launching of [entire] blockchain technology. I went on as the Chairman who took a major substantial shareholder position in the company and it was an incredible joyride.

I mean, I share with you this went from $30 million to $1 billion in assets in 2017 and then came the 2018 winter for crypto as Bitcoin fell from $19,000 down to $3,000 and it bottom basically also the same time when gold bottomed. It was in February March and February of 2019 when JPMorgan came along with their Stablecoin. Which is interesting I share this with you because the Stablecoin is the backbone of Ethereum, [high] blockchain is the only crypto mining company mining Ethereum.

What's interesting is that we don't have any anti-money laundering problems because newly mined and get [Virgin points] and we sell them or we bank them. So, HIVE this last year had spectacular performance. And it had a [physical] performance and you can see here the HIVE crypto searches hit record high on Google. That's usually a positive sign for interest. But it also hit for Bitcoin, it also hit for Ethereum, which is a very bullish indication still widely strong. Next please.

What we saw I said last year is that Bitcoin dominated the media because it had a [teachers] market open and allowed the hedge funds to certify in Bitcoin; they not only want to go to an exchange over the concern of packers, so they won't find the teachers market has a position in Bitcoin, it was up 300%. But interestingly enough, Ethereum was up 475%. Well, this translated into huge volume profits for HIVE.

HIVE was costing like $150 a coin and the coin [centers] -- next slide please -- and this made us the record of all the crypto mining companies. We had the biggest profits on a per share basis overall, we announced this summer. And HIVE has nearly rocketed 2,400%. Next please.

HIVE also demonstrated its liquidity. It's become the most liquid of all the crypto in Canada, it traded 1.8 million shares. In the US over-the-counter it traded almost 0.5 billion shares. And in the general market when we add it all up it was well over 2 billion shares. It is the most liquid technology, the most liquid stock also on the Vancouver Stock Exchange in Canada. And it is ranked number four of all stocks in the US traded over-the-counter.

So, it's very, very liquid -- next (inaudible) please. And what we saw here was just massive growth and we had to run quickly to upgrade all of our [GDP] chips, this is known as the mad [Patton] of chips. We have upgraded it, but during this process U.S. Global sold 10 million shares of HIVE. We locked in the gains.

I never sold any shares personally. And the proceeds were reinvested in a private placement of unsecured convertible debentures plus warrants. The debentures mature in 60 months and bear interest rate of 8% paid monthly. Well that translates into $100,000 a month of cash flow coming into U.S. Global. And the volatility of convertible debentures is a lot less than the shares. Next please.

HIVE, as I mentioned, is the most liquid stock and, very importantly as far as [beginning] to grow. And just recently announced an ATM which means it can sell shares whenever it wants to raise up to $100 million. So, it can sell shares at [up days] without a period of overhang. This is only going to accelerate our growth. Next please.

So, HIVE last year outperformed Riot, it outperformed the Grayscale, (inaudible) performer. (inaudible) Bitfarms and Marathon, so to me this is a remarkable turnaround in HIVE which U.S. Global marketing team was helped out. The resources of U.S. Global have been unprecedented in helping this company reposition itself as it builds its stock. We have seen over $1 billion of finances go into the other stocks in our industry where there has been massive dilution, and even Riot is over 300% dilution and Marathon is over 800% dilution. And HIVE has been like 10%.

So, as investors, as money managers we are very conscientious. We don't have a Bitcoin ETF, there is none. But this has been our proxy in playing this space. As you can see, the rise in Ethereum, our cost of [producing] -- aligning with green energy and isolated screening is roughly $150 a coin and trading at $1,600 is a very high gross margin. And we will do everything to reinvigorate and expand our growth profile.

Now one of our other key investments, and I am on the Board, was the creation of Thunderbird as a creation of Tim Gamble and in particular Frank Giustra. And Frank Giustra was the founder of Lionsgate Films. He left that years ago and he re-created with Tim the creation of Thunderbird.

And Thunderbird has gone through its own sort of evolution and is now the biggest animator of Canada in animation and (inaudible) animation have grown dramatically. Interesting enough, they also need (inaudible) chips. They need the chips that we also mine our coins with and the data centers.

But more importantly is that Thunderbird -- is the CEO has done a remarkable job in telling the story and in building this company. And last year he won an Emmy for The Last Kids on Earth. We have won recognition for many other things. So, Thunderbird has huge growth in revenues, over $100 [billion] now, growth in free cash flow.

And so, I think it is one of those [unique] investments and it's up 150% over the past year. And I think it's a clearly undervalued entertainment stock which most likely will get listed down in the US. And afterwards I think it will go through a big re-rating. Next please.

Now I am going to turn it over to who's hard-working -- my sidekick here is Lisa Callicotte -- making sure all the numbers line up and we have a big balance sheet to be able to grow with. Lisa?

Thank you, Frank. First I will start with our financial highlights. We had another very strong quarter. Operating revenues increased approximately 60% compared to our previous quarter and 480% compared to the same quarter last year.

Our quarterly net income increased $14.7 million versus our September quarter and $17.7 million compared to December 31, 2019 quarter. Average assets under management was $2.9 billion for the quarter ending December 31, 2020 and that is up 45% from the previous quarter and 450% from the same quarter last year.

Now I will give you more detail as a result --- and results of our operations for the quarter ending December 31, 2020. On slide 38 we recorded total operating revenues of $5.2 million for the quarter, which is an increase of $4.3 million or [$482,000] from $887,000 at the same quarter last year. The increase was primarily due to increases in assets under management, especially in our JETS ETF.

Operating expenses for the current quarter were $4.6 million, an increase of $3.2 million or 232% primarily for the following reasons. Employee compensation and benefits increased $2.6 million or 412% mainly due to increased bonuses due to utilize gains and improved fund performance. And general and administrative expenses increased $629,000 or 95% primarily due to increased ETF fund expenses.

We see our operating income for the quarter December 31, 2020 was $519,000 or an improvement of over $1 million compared to the same quarter in fiscal year 2020 (sic - see slide 28 - 2019) which was a loss of $511,000.

On slide 39, we see other income for the quarter was $21.2 million and $15 million of that is related to the sale of the HIVE shares. Income from continuing operations was $16.7 million, an improvement of $17.7 million for the quarter ending December 31, 2019. Net income attributable to USGI after taxes for the quarter is $16.7 million or, as you can see on slide 5 -- 40 this is equates to $1.10 per share, which is an improvement of $17.7 million compared to a net loss of $1 million or a loss of $0.06 per share for the same quarter of fiscal year 2020.

Moving to slide 41, we see our balance sheet is still strong and includes high levels of cash and unrestricted marketable securities that combine to make up 81% of our total assets. As you can see on page 42, we still have no long-term debt.

As we discussed earlier, we reinvested $15 million of the proceeds we received from selling our HIVE equity investment to HIVE Ventures. Even after reducing our December balance sheet with this investment, the Company had a net working capital of $10.3 million and a current ratio of [2.7:1]. With that I will turn it over to Holly.

Thank you, Lisa. All right, as you can see, starting on slide 45, a majority of our mutual fund assets are in emerging markets and natural resource while 20% are in global equities and fixed income. As for distribution, more than three-quarters of assets come from retail investors with 18% coming from institutional investors.

On slide 46, our sales and marketing efforts have continued to focus on our mutual funds, including those concentrated on gold, natural resources and emerging markets, as well as our exchange traded funds. The Company and our funds continue to receive an invaluable amount of viral publicity gained through media interviews. Frank Holmes often shares his insights with financial outlets like FOXBusiness Television -- which he will be on this coming Monday, February 8, so be sure to tune in -- Bloomberg Radio and Kitco News just to name a few.

On slide 47 you will see that we continue to receive recommendation by influential financial news underwriters as well, along with sharing and syndication of our award-winning original content by third-party publishers. The newsletters have loyal followings and receive millions of visitors each month.

So, we would like to thank those publications that continue to recommend our funds, including MoneyLetter, Money Morning and Selections & Timing, just to name a few, along with new publications that have featured our products such as ETF Global, ETF Database and Global Economic Intersection.

Frank Holmes' CEO blog, Frank Talk, continues to grow in popularity as seen on slide 48. This commentary is often featured by prominent publications including Forbes, Seeking Alpha, Kitco and Equities.com each with millions of monthly visitors.

Kitco News, the biggest gold website in the world with an audience of over 30 million monthly visitors, continues to feature the gold (inaudible) show with Frank Holmes Gold Market Analysis. And in addition, Frank has become a frequent guest and commentator on both gold and digital currencies on Stansberry Research with host Daniela Cambone.

And speaking of (inaudible) definitely been a higher demand for content uprooting this space. So, on the next slide you will see a short video that our team produced which (inaudible) explains the difference between Bitcoin and Ethereum.

(video playing)

All right, now onto slide 51, at quarter end we like to look into the most visited Frank Talk Blog posts published over the past year. On this slide you will see that the most visited articles are as follows: Number one, These Are My 10 Favorite Junior Mining Companies; number two, These US Companies Have the Highest Debt-to-Equity Ratios Right Now; and number three, Is the Gold Rally Overdone? Here's What History Says May Come Next. You can sign up for the Frank Talk Blog for free on our homepage.

And another popular piece that our callers enjoy is the top 10 gold producing mines. And on the next slide we will play a shortened version of this video. The full thing can be found on our YouTube page.

(video playing)

On slide 53, all of this coverage helps us leverage our brand by reaching millions of readers, viewers and potential investors. Our website, usfunds.com, was visited over 455,000 times from December 2019 to December 2020 by curious investors from all over the world. U.S. Global is well-known for timely, balanced and positive market insights and our thought leadership. The Company has been awarded numerous Star awards by the Investment Management Education Alliance over the years for excellence in investor education. Our total now stands at 90 awards.

Our subscriber base continues to grow organically and we currently have over 100,000 curious investors following our investment newsletters, social channels and the Frank Talk Blog. Investors can sign up at usfunds.com and join these subscribers who receive the award-winning investor alert e-newsletter as well as Frank Talk.

We also continue to see a large following across all of our social media platforms. And I encourage you all to check us out not only on Facebook and Instagram, but also on Pinterest, Twitter and especially YouTube.

And now as we wrap up today's presentation, we will address some questions that were sent in. And, just as a reminder to our audience, if you have additional questions for us, please do not hesitate to email those to info@usfunds.com.

And our first question will be for Frank which says, can you talk a little bit more about your outlook for the growth (inaudible) expense new year?

Well, we get the most inquiries. We had an AGM and I think in 24 hours 900 people came onto it. There's not 900 people on [this call]. And I think investors with remarkable growth, the videos and the Global investors show us (inaudible) new supply as a proxy. Those that are afraid to build an exchange, to open an account and buy a crypto coin that may have been touched by a hacker, they just do not want to play that. So, they use (inaudible) proxy and that's why we met both retailers and institutional investors.

When we launched HIVE it was thanks to Fidelity in Canada that on three different tranches they totaled up over $100 million investing filling out this vision. But we only (inaudible) Ethereum and also another big deal that basically explains five reasons why we think Ethereum prices can go up dramatically. If you use the ratio between Ethereum and Bitcoin, some have forecasted maybe 10,000 -- that would be a huge profit center for us. And so, we are very excited about that opportunity.

But there are risks. COVID has really created risk (inaudible) equipment, there is a shortage, a GPU shortage, the chips (inaudible) car industry, for the gaming industry. And so, for us it's just securing that we have the latest in technology to be able to mine the only source to the [energy], that is another important part. But whereas our peers, our massive dilution and are sourcing coal as a means, so we have been very ESG focused.

So, I think these crypto prices are going to trade higher, is just going to remain much more volatile and one has to be able to stomach this volatility to participate in that and ultimately HIVE is the go to spot for them. Next.

Thank you. This one is for Lisa. It says will you consider breaking down operating expenses per aspect of the business?

Well, we really consider providing investment advisory services as one service, rather than looking at it as providing different services to different clients or products that we have. And this is especially evident in our team approach to researching investment decisions. And our largest expense is compensation expense.

And due to this collaborative style employees really contribute to all products. So, therefore we feel that it's most appropriate to discuss operating expenses for advisory services as a whole rather than treating them (inaudible).

I don't think our peers do that.

I don't think so either.

By line item. So no, I think we've got more important things to spend our time on for -- sort of get growth and capital.

Another one for Frank. It says, with all the interest in silver in the news, are you seeing more inflows into (inaudible) assets and a related kind of sector?

You know, it's interesting now there is -- much more money came into gold even the first half of the year than there was in the second half. And the same thing we experienced with our own gold funds. And bullion was up more than the S&P again last year, but the gold stocks traded off, which is really sort of weird for me because the gold stocks still continue to show the [median] is free cash flow yield and the S&P lost it, 20% of the S&P slashed [their dividends on a percent] and are basically contracting.

But gold stocks, no. So, they have growth in revenue, growth in cash flow, growth in free cash flow, growth in dividends. So, I think gold stocks are no doubt the best buy that is out there to protect against inflation. And I have written about this. I just don't believe it is 1.4% inflation. I see where food prices are.

I see what it costs to build a deck on your house, lumber prices are up 40%. And I'd go through a whole bunch of other inflations, and I know some are law firms, they increase their prices every year by 3%. So, 1.4% (inaudible).

So, I think that gold will continue to be a unique asset class. The biggest thing for investors to be aware of is the [CEMM], the sort of -- MMT, modern monetary theory -- I inverted that so I'm dyslexic today. But --- what you are seeing in the teetotal countries are unity monetary policy to stimulate their economies.

It's all different but there is massive money printing. So, you are seeing real estate prices [wise]. You are seeing -- I know in San Antonio it's over 10%. You are seeing in some of the pockets 17% (inaudible) growth in real estate prices.

And you are seeing food prices also if you look at corn, wheat, any of the major commodities, these are up substantially. Steel prices, they are up 70%. So, if you are going to have an infrastructure boom in construction you are going to see inflation have to start trickling through unless they change how they calculate CPI.

So, I think smart investors will be increasing allocation towards gold. I am happy with gold a year where the [Senate] will do and is focused on the gold royalty companies or those companies that have momentum and revenue and cash flow and free cash flow yields.

Perfect. Another one for Frank. It says a comment came in from one of our shareholders noting the impressive performance of the JETS ETF and its inflows. Would you say that this supports GROW's stock being grossly undervalued?

Well, for many reasons, the last time we had $3 billion -- over $3 billion now -- in assets the stock was over $10 and it was very volatile. One of the things that will continue to be volatile because the underlying (inaudible) assets volatile, HIVE is volatile. So, it does sort of trickle-down, then we're going to have that volatility because, as I mentioned earlier, anyone can calculate our total assets every week and do [what I did] with that revenue, that run rate is. We do everything to keep our costs in control.

And something changed from this time last year. Going into March of last year we were cutting people, we are going to cut more. And so, the magic of what took place with JETS and GOAU, both these ETFs explored the upside. Now I think GOAU has a much tougher task because there are so many different types of gold funds. And for the speculators, they buy and trade triple bull and triple bear. But for the asset allocator at the family office, we have seen [new] money, stable money come into GOAU and (inaudible) some symbols would do.

Now for JETS, the biggest thing there is that it's the only way of participating in the growth in the airlines industry. And we're looking at launching in other jurisdictions and products. So, stay tuned to that as we (inaudible) opportunities for JETS. It's only halfway up from previous cycles where you had (inaudible), and I think it's because the buyers this time, it's just delaying that usual V-shaped bounce you get in the category. So, there is once more to the upside.

And as for all those Robinhood shareholders that came in, and they -- [so much] making news, they don't know what they are doing. All I know is that there were 25,000 of them enjoyed a 50% lift that took place in the first wave of JETS. Now in the previous cycles we shared into the research arm when the airlines went through these big surges from crashing and then climbing out of the valley to share in that industry.

They have three big corrections of more than 10%. So, it is not a straight line up leading to a 120% lift. You get sort of the zigzagging. And so, we have had the first big run, then a correction, then the second run, and then we are going through the correction. And I think we will get another big run after that.

Perfect. Thank you, Frank and Lisa. And thank you, everyone, for (multiple speakers).

One last thing, (inaudible). One shareholder asked -- inquired on if the JETS ETF as an asset class, I just (inaudible) everyone how easy [and healthy] the revenue. And that is worth over $100 million, so why don't you sell it? Well, then we would sell with the revenue and the growth is going to come from. So, I don't think that's a wise decision at this stage of it. But what is interesting is that it is worth $120 million, then that is itself at $8 a share excluding all the other assets and investments we have in cash. So, yes, I do think we are undervalued.

Perfect. All right. Thank you, Frank, and thank you, everyone, for tuning in today. This concludes U.S. Global Investors' webcast for the second quarter of 2021.

Thank you, everyone.