May 20, 2021
Over the 13-week period ending April 24, 2021, seafood prices were 18.7% higher compared to the same period the previous year. Baked goods such as doughnuts and rolls cost about 7.5% more, meanwhile, fruit and processed meat are priced 7.5% and 7.0% higher, respectively. In total, 50 of the 52 categories tracked by NielsenIQ are more expensive now compared to a year ago, with only butter and milk remaining unchanged. These higher prices have been in part driven by higher raw material costs. Corn, soybeans, and wheat are all near their highest levels since 2012 and 2013. The Bloomberg Commodity Spot Index, which tracks 23 raw materials, is now at its highest level in nearly a decade. In addition, transportation costs and labor costs have also surged. The consumer price index (CPI) is reflecting the higher prices seen at grocery stores, with the year-over-year April CPI reading coming in well above market expectations at 4.2% vs. 3.6%. This level is the highest since 2008. Similarly, April’s price producer index read a 6.2% year-over-year increase. With higher prices at grocery stores, Americans are beginning to feel the pain of inflation.
Midas Fund The Fund’s holding of Steel Dynamics, Inc., one of the largest domestic steel producers and metal recyclers in the United States, performed well in the last month. Shares of Dundee Precious Metals Inc., a Canadian gold mining company with operations in Bulgaria and Namibia, have underperformed in the last month.
The Fund seeks primarily capital appreciation and protection against inflation and, secondarily, current income through investments primarily in precious metals mining and other natural resource companies, as well as gold, silver, and platinum bullion. Using a disciplined approach, the Fund seeks to emphasize gold and other natural resource companies offering financial strength, expanding production profiles, strong free cash flow, and promising exploration potential. The Fund currently is invested in a global portfolio of primarily large and medium gold and diversified mining companies, precious metals royalty companies, and ETFs holding gold and silver bullion.
Midas Magic The Fund’s position in Medifast, Inc., a global health and wellness company, performed well in the last month. The Fund’s holding of LCI Industries, a supplier of components to the recreational vehicle industry, hindered the Fund’s performance in the past month. Each of Mastercard Inc. Class A and Alphabet Inc. Class A currently comprise more than 10% of the Fund’s net assets.
The Fund seeks capital appreciation. Relative to the S&P 500, the Fund’s portfolio currently is more weighted in cyclical companies, such as financial services, and is underweight in economically sensitive and defensive industries. The Fund generally focuses on companies that appear to have strong operations showing superior returns on equity and assets with reasonable valuations.
How to and Why Invest in Gold?
Gold investors have, essentially, three basic alternatives: (1) bullion; (2) individual equities; or (3) funds that invest in gold and gold-related equities (e.g., gold mutual funds, exchange traded funds, etc.) Equities of gold mining companies may offer greater upside than direct ownership of the metal itself due to operating leverage. Operating leverage arises when the percentage gain in a gold mining company’s earnings is greater than a percentage gain in the price of gold — a result of operating costs declining as a percentage of revenue per ounce of gold mined.
Potential benefits of an investment in gold and gold-related equities may include, among others, portfolio diversification, low correlation with the overall U.S. equity markets, serving as a hedge against other financial assets, and potential price appreciation fueled by demand from the jewelry industry, industrial markets, and central banks.
We believe that a reasonable allocation to a gold mutual fund in a conservative, diversified portfolio would be limited to 3%, or up to 10% for aggressive investors.
This release may contain certain “forward looking statements” as defined under the U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may,” “should,” “plan,” or the negative of such terms, and similar expressions identify forward looking statements, which generally are not historical in nature. Forward looking statements are subject to certain risks and uncertainties that could cause actual results to materially differ from a Fund’s historical experience and its current expectations or projections indicated in any forward looking statements. These risks include, but are not limited to, equity securities risk, corporate bonds risk, credit risk, interest rate risk, leverage and borrowing risk, additional risks of certain securities in which a Fund invests, management risk, risks related to the negative impacts from the continued spread of COVID-19 on the economy and broader financial markets, and other risks discussed in each Fund’s filings with the Securities and Exchange Commission. You should not place undue reliance on forward looking statements, which speak only as of the date they are made. Each Fund undertakes no obligation to update or revise any forward looking statements made herein. There is no assurance that each Fund’s investment objectives will be attained.
Certain information contained herein has been obtained from third parties. While the Funds believe such sources are reliable, the Funds cannot guarantee the accuracy of any such information and does not represent that such information is accurate or complete.