MILLBROOK, NY – October 20, 2021
According to the personal consumption expenditure (PCE) index, which shows changes in U.S. consumer goods and services, consumer prices jumped the most in 30 years, increasing 4.3% year-over-year in August. The PCE is the Federal Reserve’s preferred measure of inflation, and Chairman Powell admitted, in contradiction to his previous message of inflation being transitory, that the pressures contributing to higher prices should continue into next year. In periods of inflation, gold may be a sought-after store of value. Moreover, gold continues to be one of the most heavily traded assets on the planet. Recent data from the World Gold Council shows that gold is the second most liquid asset, following S&P 500 stocks. Unfortunately for consumers, inflation may be here to stay, and investors may want to prepare accordingly with an allocation towards gold.
Midas Fund The Fund’s holding of Kirkland Lake Gold, a gold producer with operations in Canada and Australia, performed well in the last month. Shares of Wheaton Precious Metals Corp., a precious metals company with 23 streaming agreements with operating mines, 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. Using a disciplined approach, the 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 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 AutoZone, Inc., a retailer of aftermarket automotive parts and accessories, performed well in the last month. The Fund’s holding of Medifast, Inc., a global health and wellness 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 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.