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The “Oprah Effect” And Gold

CEO & Chief Investment Officer @ U.S. Global Investors

October 22, 2015

gold and oprah Many short sellers of Weight Watchers no doubt felt too down to look in the mirror this week after company stock unexpectedly ballooned nearly 170 percent.

You can thank (or blame) Oprah. The influential former talk show hostess bought a 10 percent stake in the weight management company, sending its shares up from $6.79 to $18.25 in as few as two trading sessions.

This is hardly the first time one of Oprah’s endorsements, whether verbal or monetary, has lifted a struggling business or product. There’s even a name for it: the Oprah Effect.

No matter your opinion of Oprah—her politics, her tastes—you have to admit that she’s a phenomenally savvy businesswoman, whose rags-to-riches success has helped make her one of the most powerful women in not just the U.S. but the world. As such, it’s important for investors to pay attention to her and other such “smart money” influencers. Their decisions often have the power to move markets.

So what’s moving gold right now?

Quite a lot, actually, from widespread doubts of a 2015 interest rate hike, to strong seasonal demand in India and China, to Russia’s military action in Syria. Gold also received a huge endorsement recently from billionaire Paul Singer, CEO of Elliott Management Corp., who said that the precious metal “should be a part of every investment portfolio, maybe five to 10 percent.”

(I always recommend 10 percent: 5 percent in gold stocks, 5 percent in bullion, then rebalance every year.)

But as I discuss in a previous Frank Talk, perhaps the most significant mover of gold right now is the weakening of the strong U.S. dollar against other world currencies. Gold and the dollar share an inverse relationship, and for the past year, the greenback has been putting pressure on the yellow metal, not to mention other commodities and natural resources.

Now that the dollar is showing signs that it’s starting to turn, however, gold is starting to turn heads.

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Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc. http://www.usfunds.com/

Frank Holmes is the CEO and Chief Investment Officer of U.S. Global Investors. Mr. Holmes purchased a controlling interest in U.S. Global Investors in 1989 and became the firm’s chief investment officer in 1999. Under his guidance, the company’s funds have received numerous awards and honors including more than two dozen Lipper Fund Awards and certificates. In 2006, Mr. Holmes was selected mining fund manager of the year by the Mining Journal. He is also the co-author of “The Goldwatcher: Demystifying Gold Investing.” Mr. Holmes is engaged in a number of international philanthropies. He is a member of the President’s Circle and on the investment committee of the International Crisis Group, which works to resolve conflict around the world. He is also an advisor to the William J. Clinton Foundation on sustainable development in countries with resource-based economies. Mr. Holmes is a native of Toronto and is a graduate of the University of Western Ontario with a bachelor’s degree in economics. He is a former president and chairman of the Toronto Society of the Investment Dealers Association. Mr. Holmes is a much-sought-after keynote speaker at national and international investment conferences. He is also a regular commentator on the financial television networks CNBC, Bloomberg and Fox Business, and has been profiled by Fortune, Barron’s, The Financial Times and other publications. Visit the U.S. Global Investors website at http://www.usfunds.com. You can contact Frank at: [email protected].