ROCHESTER, NY – March 22, 2023
Stock market news has focused on the recent collapse of Silicon Valley Bank and Signature Bank. Silicon Valley purchased long duration U.S. Treasurys and government-backed mortgage bonds when interest rates were low. As a result of the Federal Reserve’s campaign of aggressive interest rate hikes to combat inflation, the value of such long term bonds decreased and in Silicon Valley Bank’s case, by a total of more than $17 billion. While the bonds would eventually mature at par, Silicon Valley depositors lost confidence in the bank and started withdrawing their deposits from the bank. With the value of its assets having decreased significantly, Silicon Valley was not able to raise the cash in order to meet the withdrawals. While the Federal Deposit Insurance Corporation (FDIC) does insure deposits, it only insures an amount of up to $250,000. Most of Silicon Valley’s clients were corporations that had more than that amount with the bank. In total, approximately 94% of Silicon Bank’s deposits were uninsured. In seeking to quell further panic, the government announced that it would cover the uninsured deposits of Silicon Valley. Other banks also felt the reverberations caused by the failures of Silicon Valley and Signature Bank, specifically regional banks. Regional banks are being impacted by the fear of deposit withdrawals towards larger, potentially safer banks. In the midst of this panic, the price of gold has reached near six-week highs above $1,900. As a store of value, gold may be considered a safe haven from the uncertainties in the banking system.
Midas Fund The Fund’s holding of Dundee Precious Metals, a Canadian-based international mining company, 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.
Midas MagicThe Fund’s position in Alphabet Inc., Class A, a multinational technology holding company, performed well in the past month. The Fund’s holding of Nexstar Media Group, Inc., a large local television and media 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 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.