NEW YORK, NY – August 19, 2021
With U.S. government transfer payments for unemployment and similar programs currently totaling around 15% of GDP against income loss of around 7%, the American consumer’s buying power has been pumped up while production and supply have been hobbled. We believe this imbalance is causing the shortages and price inflation we are now seeing throughout the economy and reflected in the 12 month inflation measures in July of a CPI increase of 5.4% and PPI increase of 9.4%. As one economist stated, “[t]he result is perhaps the strongest sellers’ market that we’ve seen since . . . 2007, with suppliers hiking pries for inputs into factories at the steepest rate yet recorded and manufacturers able to raise their selling prices to an unprecedented extent, as both suppliers and producers often encounter little price resistance from customers.” It currently appears that the United States government is adopting some of the same aggressive monetary and fiscal policies of ultra-low interest rates, unfettered spending, and massive borrowing that in other countries have eventually caused economic crises.
Midas Fund The Fund’s holding 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 Silver Lake Resources Ltd., an Australian gold mining company with operations in Western Australia, 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 Credit Acceptance Corporation, a provider of finance programs to automobile dealers to assist in selling vehicles to consumers, performed well in the last month. The Fund’s holding of Medifast, Inc., a global health and wellness company, 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 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.