February 1, 2024
Prominent financial commentators are currently pointing to a looming potential problem: the U.S. debt load. As discussed in prior Midas MarketScopes, the credit rating of the United States was downgraded from AAA to AA+ in August 2023 by Fitch Ratings due to a lack of progress in containing the growth in public spending. JPMorgan CEO Jamie Dimon recently echoed some of the concerns laid out in Fitch’s credit rating report, calling the U.S. debt situation “a cliff” and said that “we’re going 60 miles an hour [towards it].” Black Swan author, Nassim Nicholas Taleb, also expressed worry, saying, “So long as you have Congress keep extending the debt limit and doing deals because they’re afraid of the consequences of doing the right thing . . . eventually you’re going to have a debt spiral” and, “a debt spiral is like a death spiral.” Similarly, at the 2024 Annual Meeting of the World Economic Forum in Davos in mid-January 2024, attendees expressed worry about the United States’ economic situation. David Rubenstein, co-founder of the Carlyle Group, warned, “If the United States can’t get its fiscal act together, at some point, people are going to do what they did to the British pound and Dutch guilder years ago.” As doubt grows concerning the sustainability of the U.S. debt load and stability of the U.S. dollar, an allocation towards a safe haven asset such as gold may be prudent.
Midas Fund (ticker: MIDSX)
The Fund’s holding of OceanaGold Corp., an Australian gold mining company with operations in the United States, Philippines, and New Zealand, performed well in the past month. Shares of Endeavour Mining PLC., an English mining company with operations in Africa, 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 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 Fund’s 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 (ticker: MISEX)
The Fund’s position in AutoZone, Inc., an automotive parts and accessories retailer, performed well in the past month. The Fund’s holding of U-Haul Holding Co., an American moving truck, trailer, and self-storage rental 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 20% 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.
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Cautionary Notes
This release may contain certain “forward looking statements” as defined under the U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may,” “should,” “plan,” or the negative of such terms, and similar expressions identify forward looking statements, which generally are not historical in nature. Forward looking statements are subject to certain risks and uncertainties that could cause actual results to materially differ from a Fund’s historical experience and its current expectations or projections indicated in any forward looking statements. These risks include, but are not limited to, equity securities risk, corporate bonds risk, credit risk, interest rate risk, leverage and borrowing risk, additional risks of certain securities in which a Fund invests, management risk, risks related to the negative impacts from the continued spread of COVID-19 on the economy and broader financial markets, and other risks discussed in each Fund’s filings with the Securities and Exchange Commission. You should not place undue reliance on forward looking statements, which speak only as of the date they are made. Each Fund undertakes no obligation to update or revise any forward looking statements made herein. There is no assurance that each Fund’s investment objectives will be attained.
Certain information contained herein has been obtained from third parties. While the Funds believe such sources are reliable, the Funds cannot guarantee the accuracy of any such information and does not represent that such information is accurate or complete.
