ROCHESTER, NY – May 22, 2023
United States (U.S.) Treasury Secretary Janet Yellen recently made headlines, writing in a letter, “our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit.” The debt limit is the amount of money the government is allowed to borrow, and changes to the debt limit must be decided by the U.S. Congress. The current limit is $31.4 trillion and negotiations on raising the limit among members of Congress and the President have gained more urgency since the Treasury Secretary’s warnings. Even closely approaching the default date can result in a downgrading of U.S. credit which may increase already burdensome borrowing costs. According to the Congressional Budget Office (CBO), U.S. interest payments on its debt is estimated to reach $663 billion in 2023. For comparison, the U.S. spent $747 billion on defense in 2022. From 2023 to 2033, the CBO expects net interest outlays to be the main contributor to the growth of total deficits. Meanwhile debt held by the public reached $24.25 trillion in 2022 or 97% of U.S. gross domestic product. The CBO estimates that by 2033 debt held by the public would rise to $46.7 trillion or 119% of GDP. For perspective, in 2006 Federal debt held by public as percent of GDP totaled only 35%.
Midas Fund The Fund’s holding of Evolution Mining Ltd., an Australian gold mining company, performed well in the past month. Shares of Centerra Gold Inc., a Canadian mining company, underperformed in the past month.
The Fund seeks primarily capital appreciation and protection against inflation and, secondarily, current income.
Under normal circumstances, in pursuit of its investment objectives, the Fund’s investment strategy is to invest principally in (i) securities (e.g., common and preferred stocks, bonds, convertible securities, etc.) of companies primarily involved, directly or indirectly, in the business of mining, processing, fabricating, distributing or otherwise dealing in gold, silver, platinum, other precious metals, or other natural resources (“Natural Resources Companies”); and (ii) gold, silver, and platinum bullion and coins; provided, however, that the Fund’s investment adviser, Midas Management Corporation (the “Investment Manager”), may invest in any type of equity security (e.g., common and preferred stocks) and in companies of any size, industry or sector, including both domestic and foreign companies, that the Investment Manager believes may achieve the Fund’s investment objectives. Up to 35% of the Fund’s total assets may be invested in fixed income securities of any issuer, including U.S. government securities, of any credit quality or maturity, although the Fund has no current intention of investing more than 5% of its total assets in fixed income securities rated less than investment grade (also known as “junk bonds”). The Fund concentrates its investments by investing at least 25% of its total assets in Natural Resource Companies.
Midas Magic The Fund’s position in BlueLinx Holdings Inc., a wholesale distributor of building and industrial products, performed well in the past month. The Fund’s holding of Robert Half International Inc., a human resource consulting firm, 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. Under normal circumstances, in pursuit of its investment objective, the Fund may invest in any security type (e.g., common and preferred stocks, bonds, convertible securities, etc.) and in companies of any size, industry, sector, including both domestic and foreign companies. 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.