January 23, 2023
Inflation was a consideration for investors in 2022 and worries of prolonged inflation have forced the Federal Reserve to adjust monetary policy accordingly. In June 2022, as measured by the consumer price index (CPI), inflation rose to a four-decade record 9.1% from a year earlier. Recently however, inflation may have begun to moderate. The CPI rose 6.5% in December 2022 from a year earlier. The course of inflation is likely to continue to impact the Federal Reserve’s thinking about whether or not to continue raising interest rates and may be an important storyline to follow in 2023. US Treasury 10-year rates have increased from 1.7% at the beginning of 2022 to around 3.46%. Meanwhile, the Federal Funds Rate was raised to a range of 4.25%-4.5% after Federal Reserve officials unanimously approved a 0.5% increase in December 2022 after four increases of 0.75%. So far, rises in interest rates may have not appeared to have a pronounced effect on employment or hiring. Employers added 223,000 jobs in December 2022 and unemployment dropped to 3.5%. Meanwhile, with signs of inflation potentially moderating, markets may be beginning to expect the Fed will pull back on aggressive interest rate hikes. A beneficiary from expectations of moderating interest rate increases may be gold. The price of gold has rallied since the end of December 2022, rising from $1,800/ounce to around $1,915/ounce.
The Fund’s holding of B2Gold Corporation., a Canadian gold mining company with operations in Mali, Namibia, and the Philippines, performed well in the past month. Shares of Olin Corporation, an American manufacturer of chlorine and sodium hydroxide, underperformed in the past 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. 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.
The Fund’s position in Medifast Inc., a nutrition and weight loss company, performed well in the past month. The Fund’s holding of Elevance Health Inc., an American health insurance provider, 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 economically sensitive sectors, such as communications, and cyclical sectors, financial services, and is underweight in defensive industries, such as utilities.
How to Invest in Gold?
Three alternatives investors often consider when seeking the advantages of gold are gold bullion, stocks of gold mining companies, and funds that invest in gold and gold-related securities, such as Midas Fund. Using a disciplined approach, Midas 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’s portfolio is focused on what we believe to be some of the best companies in the sector and so we view Midas Fund as currently well positioned to seek capital appreciation and protection against inflation.
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.