"U.S. Global Investors (NASDAQ: GROW) -- a mutual fund management company which focus on resources and emerging economies -- will benefit as declining interest rates in the U.S. also boost emerging economies and demand for resources," says Ken Kam.
The editor of Marketscope explains, "When the Federal Reserve wants to lower interest rates, it can print more money, but it cannot control where the new money will go. Fed policy makers intend for the new money to stimulate America's economy.
"But there is no reason the money has to stay in America. The U.S. dollar is accepted around the world and this means that when the Fed cuts interest rates, the new money stimulates the economies of others countries as well as ours.
"The last cycle of interest rate cuts stimulated worldwide demand for all sorts of natural resources that modern economies need to grow. Since natural resources often come from developing countries, the demand for natural resources spurred an emerging markets boom.
"U.S. Global Investors rode the boom in commodities and emerging markets to deliver some of the best returns among mutual funds for the past five years. As interest rates rose, GROW ran into some headwinds. Now, with interest rates dropping, the same factors that drove GROW's success in the last cycle look like they are set to repeat again.
"Mutual fund investors will be attracted by the long-term record of GROW's mutual funds and the short-term performance that looks likely to come. GROW remains on out list of 'Best Ideas'."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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