MILLBROOK, NY – November 17, 2021
Inflation is a main story again with the Consumer Price Index (CPI) reading 6.2% higher year-over-year for the month of October. This reading is the highest in three decades and is the fifth straight month of the CPI reading above 5%. Price increases were seen across several categories such as autos, energy, furniture, rent, and medical care. Supply chain issues persist headed into the holiday season and demand for goods and services remain high. Due to the higher cost of living, the Social Security Administration decided on a 5.9% increase to Social Security and Supplemental Security Income benefits in 2022, the largest increase in four decades. The Federal Reserves main tool for fighting against inflation, raising interest rates, would make US debt service costs prohibitively expensive. As a result, inflation rates may remain high for the foreseeable future. Navy Federal Credit Union economist, Robert Frick noted, “We expected inflation would get worse before it got better, but not this much worse.” For months, Midas has cautioned investors that inflation may not be temporary. Investors may want to prepare accordingly with an allocation towards gold.
Midas Fund The Fund’s holding of Silver Lake Resources Ltd., an Australian intermediate gold producer, performed well in the last month. Shares of Agnico Eagle Mines Ltd., a senior Canadian gold mining company with operations in Canada, Finland, and Mexico, 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. 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 Warrior Met Coal Inc., a U.S. based producer and exporter of met coal, performed well in the last month. The Fund’s holding of Enova International Inc., a financial services firm that provides lending services to customers in the United States and Brazil, 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.