MILLBROOK, NY – September 19, 2022
Mortgage rates topped 6% recently, the highest level since 2008. Last year at this time, the average mortgage rate was 2.86%. The difference between now and a year ago may be due to the Federal Reserve’s attempt to suppress inflation by limiting borrowing through higher rates. The government estimates that the amount of new privately-owned homes sold has decreased 29.6% comparing July 2022 with July 2021. Meanwhile the supply of homes for sale has increased 28.2% over the same period. According to Redfin, a real-estate brokerage, homes on average sold for 0.3% below final list price and that home-touring activity is down 38% from the beginning of the year. Stock prices as measured by the S&P 500 have dropped 10% since mid-August 2022, as the macroeconomic trends appear to worsen. FedEx Corp., for instance, announced that it was closing offices and parking aircraft as the volume of package deliveries has declined. Other companies, such as Goldman Sachs, announced plans to cut jobs or freeze hiring. Meanwhile, inflation as measured by the consumer price index remains strong, increasing fears of further interest rate hikes.
Midas Fund The Fund’s holding of Sandstorm Gold Ltd., a gold royalty company with over 250 royalties, performed well in the past month. Shares of Evolution Mining Ltd., an Australian gold mining company with projects in Australia and Canada, 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 Magic The Fund’s position of Robert Half International Inc., a professional staffing services firm, performed well in the past month. The Fund’s holdings of Lam Research Corp., an American supplier of wafer fabrication equipment, 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.