NEW YORK, NY – September 22, 2021
There is madness surrounding the markets currently. With madness, it may be appealing to own a store of value such as gold. For instance, China’s Evergrande Group is facing a debt crisis following years of aggressive borrowing to fund projects in every Chinese province that house millions of Chinese citizens. According to Evergrande Group’s most recent financial results, the company had $89 billion in outstanding debt at the end of June 2021, about 42% of which comes due in less than a year. Meanwhile the company is using unfinished properties to pay bills to contractors, cutting pay for employees, and cancelling free meals that it used to provide to headquarters staffers. On the domestic front, several senior central bank officials are facing an ethics review following a report that several high-ranking officials made multiple multimillion-dollar stock trades. In addition, the budget reconciliation, which requires a U.S. Senate majority to pass, is receiving backlash from Democratic Senators Joe Manchin and Krysten Sinema. Joe Manchin said he would not support a $3.5 Trillion Bill “without greater clarity about why Congress chooses to ignore the serious effects inflation and debt have on existing government programs.” Speaking of inflation, it ticked slightly lower with the CPI reading 5.3% in August 2021 vs. 5.4% the previous month. This reading could have been affected by the resurgence of COVID in the form of the Delta Variant but it still remains to be seen whether inflation is transitory.
Midas Fund The Fund’s holding of Endeavour Mining plc, a gold producer focused in West Africa, performed well in the last month. Shares of Sandstorm Gold, a gold royalty company with 229 royalty interests across the world, 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 Williams-Sonoma, Inc., a retail company that sells kitchen-wares and home furnishings, 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.