MILLBROOK, NY – June 22, 2022
Since the beginning of year through mid-May 2022, the stock market has been volatile, and declining, with the S&P 500 Index down over 17%. Bond prices have also declined as interest rates have risen, and yields on the 10 year U.S. Treasury have risen to levels not seen since 2018. The economy is strong, The stock market, as represented by the S&P 500, is down nearly 21% for the year so far. High inflation, rising interest rates, and concerns about corporate profits appear to have damaged investor confidence and compressed valuations. In response to continued high inflation and ultra-low unemployment, the Federal Reserve appears to be aiming to slow down the economy and announced an increase in its benchmark fed funds rate by 75 basis points. The central bank reportedly plans to hike rates four more times this year and officials forecast the benchmark rate to reach a range of 3.25% to 3.5% by the end of 2022. Perhaps as a result, a recent survey by the Conference Board notes that more than 60% of CEOs expect a recession in their geographic region in the next 12 to 18 months. Among investors, sentiment is similarly negative. According to the AAII Investor Sentiment Survey, for the week ending 6/15/2022, 58.3% of investors indicated having a negative or “bearish” sentiment. Although expectations of a recession may be high, the actual probability of a recession may be lower. Typically, in a recession, unemployment will increase. However, U.S. job openings remained close to record levels in April 2022 and the unemployment rate recently dropped to 3.6%, close to a 50-year low. With the recent broad market selloff over recession fears, there may be opportunities to invest in some of the world’s strongest companies at attractive prices.
Midas Fund The Fund’s holding of Maverix Metals Inc., a gold royalty and streaming company, performed well in the past month. Shares of Hummingbird Resources, a West African gold miner, 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 of Medifast Inc., a nutrition and weight loss company, performed well in the past month. The Fund’s holding Meta Platforms, Inc., a technology and social media company known for its Facebook platform, 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.