MILLBROOK, NY – April 20, 2022
Inflation increased dramatically over the last twelve months. The Consumer Price Index (CPI) increased 7.9% – the highest rate since January 1982, when the country was facing a recession. Meanwhile on an Employment and inflation conditions are currently pressuring stock prices. U.S. initial unemployment claims dropped in March 2022 by 28,000 to 187,000 — the lowest since 1969. Federal Reserve Chairman Jerome Powell summarized the current labor market by saying, “What you have is 1.7-plus job openings for every unemployed person . . . . So that’s a very, very tight labor market. Tight to an unhealthy level, I would say.” U.S. inflation data showed another large increase year-over-year, with the consumer price and producer price indexes increasing, respectively, 8.5% and 11.2% in the 12 months through March 2022. During the first quarter of 2022, about 40% of stocks the Russell 2000 index and 50% of stocks on NASDAQ experienced declines of at least 20%. In this environment, Midas’ focus on quality companies with strong returns on assets and positive free cash flows has proved rewarding.
Midas Fund The Fund’s holding of Hummingbird Resources plc, a gold mining company with operations in Mali and Liberia, performed well in the past month. Shares of Osisko Gold Royalties, a gold royalty company with 140 royalties, streams, and precious metal offtakes, underperformed in the past month..
The Fund seeks primarily capital appreciation and protection against inflation and, secondarily, current income 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.
Midas Magic The Fund’s position in Credit Acceptance Corporation, an auto financing company, performed well in the past month. The Fund’s holding of Lithia Motors Inc., an American automotive dealership group, 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.