EagleWing Research Newsletter on Gold Funds
March 1, 2000
GLOBAL WATCH
Comparing Funds | Comments
February cut the rally out of the gold market just as it looked as if a trading floor had been established at $300. The surge in early February appeared to have unleased the gold bulls, but it completely ran out of steam and gold could not hold above the 300 level. About half of the gold funds were already lower than or testing their January lows, but were still above the 52 week lows set last fall. Optimism quickly turned to pessimism again in the gold pits.
Russia regained control in Chechnya but the rebels still are not giving up. Meanwhile the nation prepares for the late March election under relatively stable conditions. With the favorite Putin in control, we can expect the Mother country to push for more international power, especially around its borders. There are many sensitive points around Chechnya and the Iranian border which could easily flare up.
Kosovo, Indonesia, and Pakistan were mostly quiet and the slide in silver and gold could not be blamed on any international crisis. The slide seems to be caused only by the lack of buyers in the market to match the sellers willing to unload above 300. The short sellers and central bank sellers have regained their strong position after the recent rally threatened to take them out.
The U.S. continued to maintain a monthly trade deficit of 25b for December and the trend has no indication of changing as the yearly total approaches 300b. Meanwhile, 30 year bond rates fell toward 6% and finished the month at 6.13%, far below the recent 6.74%.
The only serious sign of inflation has been the year long increase in the price of oil, and this will eventually filter through the economy, causing other price increases. Chairman Greenspan warned about the possibilities of inflation, but has only given weak warnings about excessive prices in the stock market. Meanwhile the Dow slipped under 10,000 as the NASDAQ tried to hold firm.
For the month, gold moved from 283.2 to 293 after surging over 316 during a two week rally. Silver fell from 5.28 to 5.05 and lost any sign of momentum. The XAU index surged in the rally from 60.3 to over 68 before ending the month at 59.7. Gold funds were mixed, after most participated in the short rally before falling back.
Another gold fund stopped trading as the Morgan Stanley Dean Witter Precious Metals fund (METBX) merged into a natural resources fund in late January. That leaves us with 27 funds on our list.
COMPARING FUNDS
Global Watch | Comments
Funds ranked by percentage change in net asset value for February.
fn Fund 1 mo 3 mo 12 mo 2 yr 3 yr
1 ASA ASA Ltd . 6.2 -2.8 23.0 -8.0 -43.5
16 PPMCX PIMCO Adv Prc Mtls C . 5.3 -7.3 -10.3 -26.6 -63.0
3 INPMX Amer Exp IDS Prc Mtl A 3.7 -4.9 -1.1 -18.5 -58.7
20 SGGDX SoGen Gold . 3.3 -10.2 2.0 -18.7 -46.4
5 FSAGX Fidelity Sel Gold . 3.3 -5.7 5.2 -11.4 -49.4
14 MNTGX Monterey OCM Gold . 3.1 -8.6 -6.7 -20.7 -50.7
6 FDPMX Fidelity Sel Prec Mtls 2.9 -6.9 4.1 -7.2 -51.3
2 BGEIX Amer Cent Global Gold. 2.8 -11.7 -7.4 -26.3 -58.5
17 PRPFX Permanent Portfolio . 2.7 -3.3 -2.1 -3.3 5.4
25 GRFRX Van Eck Gold / Res A . 2.6 -13.0 -15.2 -32.8 -59.5
9 FGLDX INVESCO Strat Gold . 2.5 -5.2 -11.3 -32.1 -72.0
23 UNWPX US Global World Gold . 1.7 -10.7 -15.9 -36.8 -62.5
21 TGLDX Tocqueville Gold . 1.0 -4.7 13.2
24 USAGX USAA Gold . 0.7 -7.0 1.9 -5.9 -42.9
4 EKWBX Evergreen Prec Mtls B. 0.7 -7.4 -0.1 -21.5 -52.9
22 USERX US Global Gold Shrs . 0.6 -10.6 -7.8 -37.9 -76.3
13 MIDIX Midas Investors . 0.0 -14.3 -16.6 -45.8 -78.2
10 LEXMX Lexington Goldfund . -0.3 -9.3 1.0 -13.9 -50.5
26 INIVX Van Eck Intl Inv GoldA -0.8 -12.3 -18.8 -32.9 -58.9
12 MIDSX Midas Fund . -0.9 -16.3 -21.7 -49.7 -80.8
8 GOLDX Gabelli Gold . -1.1 -9.4 1.9 -12.9 -58.1
19 SCGDX Scudder Gold . -1.6 -9.8 -2.8 -21.0 -54.4
11 STSLX Lexington Strat Silver -1.7 -2.4 -0.4 -27.5 -39.1
18 RYPMX Rydex Prec Metals . -1.7 -12.1 -7.1 -26.9 -56.3
15 OPGSX Oppenheimer Gold A . -3.5 -8.5 4.8 -2.8 -36.5
7 FKRCX Franklin Gold A . -4.3 -8.3 13.9 -3.3 -38.9
27 VGPMX Vanguard Gold/Pr Mtls. -7.7 -11.6 11.3 -1.3 -41.4
February gave us a very promising rally, extending the price of gold abouve 316 for a short time, but eventually failing to hold above 300. Every fund participated in the rally, but as gold fell toward 290, every fund also fell back. Gold equities lost any luster they had from the rally. A major exception was Stillwater Mining, a major beneficiary of the recent runup in palladium and platimun.
The Position indicator gives the relative position of a fund between its 52 week high and low. Its high is represented by +100 and its low by -100.
fn Fund pos nav(2-29)
1 ASA Ltd . -24.1 18.38
17 Permanent Portfolio . -31.5 17.92
21 Tocqueville Gold . -41.4 11.87
5 Fidelity Sel Gold . -45.4 13.45
27 Vanguard Gold/Pr Mtls. -45.5 7.08
7 Franklin Gold A . -45.5 8.59
20 SoGen Gold . -45.7 5.57
6 Fidelity Sel Prec Mtls -45.9 9.54
8 Gabelli Gold . -48.5 5.47
4 Evergreen Prec Mtls B. -59.5 10.56
24 USAA Gold . -60.7 5.42
22 US Global Gold Shrs . -64.2 3.29
14 Monterey OCM Gold . -64.7 4.34
3 Amer Exp IDS Prc Mtl A -65.1 5.27
10 Lexington Goldfund . -69.9 2.92
16 PIMCO Adv Prc Mtls C . -73.2 4.20
23 US Global World Gold . -74.0 7.39
11 Lexington Strat Silver -75.0 2.82
19 Scudder Gold . -75.9 5.97
2 Amer Cent Global Gold. -76.8 4.75
15 Oppenheimer Gold A . -79.1 9.37
9 INVESCO Strat Gold . -85.9 1.65
25 Van Eck Gold / Res A . -92.1 2.40
12 Midas Fund . -96.7 1.08
26 Van Eck Intl Inv GoldA -97.1 5.07
18 Rydex Prec Metals . -100.0 3.94
13 Midas Investors . -100.0 2.21
High positive numbers represent a fund near its 52 week high and negative near its 52 week low. Two funds set new lows in February as all were ending the month in decline.
The following chart shows the approximate size of funds as measured in total assets under management in $millions. (As of February 29) This is only an approximation as the size changes daily with new purchases, redemptions, and nav changes. Relative positions of the funds don't change much. The largest remain the largest.
fn fund assets
27 Vanguard Gold/Pr Mtls. 294
7 Franklin Gold A . 213
1 ASA Ltd . 191
2 Amer Cent Global Gold. 148
5 Fidelity Sel Gold . 145
26 Van Eck Intl Inv GoldA 133
6 Fidelity Sel Prec Mtls 107
19 Scudder Gold . 88
24 USAA Gold . 84
15 Oppenheimer Gold A . 73
9 INVESCO Strat Gold . 73
23 US Global World Gold . 58
17 Permanent Portfolio . 57
10 Lexington Goldfund . 54
12 Midas Fund . 52
3 Amer Exp IDS Prc Mtl A 37
25 Van Eck Gold / Res A . 29
18 Rydex Prec Metals . 28
22 US Global Gold Shrs . 22
11 Lexington Strat Silver 22
8 Gabelli Gold . 15
20 SoGen Gold . 13
4 Evergreen Prec Mtls B. 13
21 Tocqueville Gold . 11
16 PIMCO Adv Prc Mtls C . 8
13 Midas Investors . 5
14 Monterey OCM Gold . 1
Most funds lost assets under management as gold fell under $300.
The in-house beta measures the relative volatility of a fund's net asset value(nav) movement over 52 weeks as compared to the gold fund group average, 1.0. This number indicates volatility but does not specify the direction of movement, so it is only a measurement of relative activity of the fund.
fn fund beta
25 Van Eck Gold / Res A . 1.27
14 Monterey OCM Gold . 1.19
1 ASA Ltd . 1.19
2 Amer Cent Global Gold. 1.18
22 US Global Gold Shrs . 1.14
12 Midas Fund . 1.12
32 Lexington Strat Invest 1.11
5 Fidelity Sel Gold . 1.10
20 SoGen Gold . 1.09
26 Van Eck Intl Inv GoldA 1.09
8 Gabelli Gold . 1.08
6 Fidelity Sel Prec Mtls 1.07
31 Pioneer Gold A . 1.04
21 Tocqueville Gold . 1.03
23 US Global World Gold . 1.03
7 Franklin Gold A . 1.01
18 Rydex Prec Metals . 1.00
3 Amer Exp IDS Prc Mtl A 0.97
24 USAA Gold . 0.90
15 Oppenheimer Gold A . 0.90
4 Evergreen Prec Mtls B. 0.90
9 INVESCO Strat Gold . 0.87
13 Midas Investors . 0.83
27 Vanguard Gold/Pr Mtls. 0.81
16 PIMCO Adv Prc Mtls C . 0.81
10 Lexington Goldfund . 0.81
19 Scudder Gold . 0.74
30 Morgan St DW Prc Mtls. 0.73
33 United Gold / Govt . 0.46
11 Lexington Strat Silver 0.34
17 Permanent Portfolio . 0.21
*** Funds that diversify with government treasuries, bullion or natural resource stocks generally have a lower beta and are less volatile compared to a portfolio concentrating on small capitalization mining companies. These numbers have remained stable, changing little within the past three months.
INVESTING COMMENTS
Global Watch | Comparing Funds
The recent fall in gold prices can not be easily blamed on international events as were influential in the past. The Russian cleanup in Chechnya continues with no real end in sight but it has become a part of the status quo along with Kosovo.
With interest rates falling back from a peak over 6.70% to a more recent 6.13%, it may have been an indication of a strengthening dollar, which slowly edged up to 111 yen. A strong dollar, even in the face of the large trade deficit, is bad for gold prices.
President Clinton made short remarks about buying back a large amount of U.S. treasury debt, which can be deflationary. This may or may not have had an effect on gold last week.
On the other hand, the rise in palladium and platinum prices since last summer has been substantial, and are only two commodities which are indicating potential inflation in the next year.
|