MILLBROOK, NY – February 23, 2022
Markets have been volatile recently with the prospect of war between Russia and Ukraine. The White House has warned that Russia could invade Ukraine “at any time” and, according to CNN, the Russians have positioned forces on three sides of Ukraine. The United States has already shut down its embassy in the Ukraine capital city of Kyiv in anticipation of war. Although the outcome is unpredictable, the price of gold rose to about $1,900/ounce apparently in response to these rising geopolitical tensions. Meanwhile, to curb inflation, Federal Reserve Bank officials are deliberating measures to tighten financial conditions by shrinking the Bank’s $9 trillion asset portfolio and raising interest rates. This past month, with the consumer price index registering a 7.5% increase year-over-year and the producer price index up 9.7% over the last twelve months, some Federal Reserve Bank officials are suggesting greater urgency to fight inflation. Overall, Midas believes that heightened political tensions as a result of the potential conflict in Ukraine combined with high inflation may support an environment that is bullish for gold. Investors may consider an allocation towards the bullion or gold miners as appropriate during these uncertain times.
Midas Fund The Fund’s holding of Endeavour Mining plc, a West African focused gold producer, performed well in the past month. Shares of Fresnillo plc, a Mexican precious metals mining company, 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 Robert Half International Inc., a human resource consulting firm, performed well in the past month. The Fund’s holding of AMERCO, a moving and self storage operator, 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.