EagleWing Research Newsletter on Gold Funds
June 1, 2000
GLOBAL FACTORS
Comparing Funds | Comments
Volatility increased in the U.S. markets as both the Dow Industrials and the NASDAQ had trading days of over 200 points up and down. Generally this is not a good sign for investors because the speculators are taking over. However, it's often a sign that precious metals will soon become an approved investment vehicle once again. Because high tech stocks have taken a plunge, they have lost some of their luster, and the market may look for something else to play with. At current count, over 400 new companies are waiting for an opportunity to sell stock in an IPO. This is an indication of the lack of interest in new high tech companies coming onto the market.
In the international market, not much has changed which would have an effect upon gold markets. In India, a major drought is hurting the average Indian farmer and his neighbors so much that the imports of gold have plummeted in that nation, where gold is a major means of savings. This could be causing the worldwide gold market to remain low.
The steady number of wars and passionate disagreements around the globe are not of such size to affect markets, and as long as the Pakistan/India and Israel/Arabs and Indonesian internal conflicts don't get heated up again, gold will respond to financial and currency forces instead. The current major force is the strength of the dollar, and it has apparently peaked against the euro as the euro increased in value from $.89 to $.94 in the past three weeks. Many experts are saying that the euro has been pushed down enough and is due for a rally against the dollar. In general, this is a good sign for the gold market, but it's not obvious yet in precious metals.
The U.S. long bond rallied, bringing the long bond rate back down near 6%, so the dollar is not dead by any means. For the month, gold moved from 273.1 to 271.7, a slight drop, and silver from 4.96 to 4.94. The XAU index edged up slightly from 54.7 to 56.2 after rallying above 62 temporarily.
COMPARING FUNDS
Global Watch | Comments
Funds ranked by percentage change in net asset value for May.
fn Fund 1 mo 3 mo 12 mo 2 yr 3 yr
12 MIDIX Midas Investors . 5.0 -4.5 -23.3 -46.9 -72.37
7 GOLDX Gabelli Gold . 4.2 -10.2 -7.4 -22.2 -55.95
23 GRFRX Van Eck Gold / Res A . 3.5 -1.7 -10.9 -31.6 -53.45
6 FKRCX Franklin Gold A . 3.5 -6.5 1.1 -7.4 -34.84
17 SCGDX Scudder Gold . 3.3 -4.4 -5.1 -21.0 -48.14
9 LEXMX Lexington Goldfund . 2.8 -11.6 -10.1 -22.8 -48.65
24 INIVX Van Eck Intl Inv GoldA 2.4 -6.1 -19.7 -36.3 -54.62
16 RYPMX Rydex Prec Metals . 2.2
11 MIDSX Midas Fund . 2.2 -12.0 -30.1 -51.8 -77.92
19 TGLDX Tocqueville Gold . 1.9 -9.8 -0.6
5 FSAGX Fidelity Sel Gold . 1.9 -12.0 -5.5 -19.4 -46.91
4 EKWBX Evergreen Prec Mtls B. 1.5 -9.8 -8.2 -27.3 -50.03
2 BGEIX Amer Cent Global Gold. 1.4 -11.4 -14.8 -33.9 -55.04
25 VGPMX Vanguard Gold/Pr Mtls. 1.3 -11.0 -6.4 -11.1 -39.09
22 USAGX USAA Gold . 1.2 -10.1 -8.6 -17.0 -39.80
14 OPGSX Oppenheimer Gold A . 1.1 -10.0 -9.7 -11.9 -36.61
13 MNTGX Monterey OCM Gold . 1.0 -5.1 -6.4 -23.3 -44.70
3 INPMX Amer Exp IDS Prc Mtl A 0.7 -13.7 -15.3 -27.2 -53.92
18 SGGDX SoGen Gold . 0.6 -10.6 -4.8 -26.4 -46.34
15 PRPFX Permanent Portfolio . 0.4 0.6 -1.5 -1.7 5.61
8 FGLDX INVESCO Strat Gold . 0.0 -4.2 -13.2 -29.8 -65.90
20 USERX US Global Gold Shrs . 0.0 -14.9 -15.9 -37.8 -74.91
1 ASA ASA Ltd . -0.4 -16.7 -4.5 -25.3 -46.00
10 STSLX Lexington Strat Silver -2.0 -11.7 -10.4 -25.2 -40.84
21 UNWPX US Global World Gold . -3.1 -14.9 -20.2 -42.6 -63.79
The month of May was not bad for most funds as most tested their recent lows and held. However, for the year 2000 and last 12 months, the results have still been terrible, not to mention the past two and three years periods.
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(5-31)
15 Permanent Portfolio . -19.3 18.03
6 Franklin Gold A . -74.3 8.03
12 Midas Investors . -82.3 2.11
13 Monterey OCM Gold . -83.2 4.12
19 Tocqueville Gold . -84.4 10.71
17 Scudder Gold . -84.6 5.71
7 Gabelli Gold . -85.3 4.91
18 SoGen Gold . -89.6 4.98
9 Lexington Goldfund . -89.8 2.58
23 Van Eck Gold / Res A . -89.8 2.36
1 ASA Ltd . -91.8 15.31
24 Van Eck Intl Inv GoldA -93.1 4.76
5 Fidelity Sel Gold . -93.3 11.84
4 Evergreen Prec Mtls B. -94.1 9.52
25 Vanguard Gold/Pr Mtls. -94.2 6.30
11 Midas Fund . -94.7 0.95
22 USAA Gold . -95.1 4.87
2 Amer Cent Global Gold. -95.9 4.21
14 Oppenheimer Gold A . -96.2 8.43
8 INVESCO Strat Gold . -97.3 1.58
3 Amer Exp IDS Prc Mtl A -97.8 4.55
10 Lexington Strat Silver -100.0 2.49
20 US Global Gold Shrs . -100.0 2.80
21 US Global World Gold . -100.0 6.29
After most funds set a new low in April, only three set new lows in May. When almost every fund is near its 52 week low, its an obvious sign that the gold market and gold fund markets are ready for any reason to rally.
The following chart shows the approximate size of funds as measured in total assets under management in $millions. (As of May 31) 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
25 Vanguard Gold/Pr Mtls. 262
6 Franklin Gold A . 199
1 ASA Ltd . 159
16 Rydex Prec Metals . 137
2 Amer Cent Global Gold. 131
5 Fidelity Sel Gold . 128
24 Van Eck Intl Inv GoldA 125
17 Scudder Gold . 84
22 USAA Gold . 75
8 INVESCO Strat Gold . 69
14 Oppenheimer Gold A . 65
15 Permanent Portfolio . 57
21 US Global World Gold . 49
9 Lexington Goldfund . 48
11 Midas Fund . 46
3 Amer Exp IDS Prc Mtl A 32
23 Van Eck Gold / Res A . 28
10 Lexington Strat Silver 19
20 US Global Gold Shrs . 18
7 Gabelli Gold . 13
4 Evergreen Prec Mtls B. 12
18 SoGen Gold . 11
19 Tocqueville Gold . 10
12 Midas Investors . 5
13 Monterey OCM Gold . 1
The price of gold and gold equities began to show signs of leveling off and forming a base, and most funds actually gained for the month. This increased the total net assets under management slightly.
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
11 Midas Fund . 1.44
2 Amer Cent Global Gold. 1.27
23 Van Eck Gold / Res A . 1.23
20 US Global Gold Shrs . 1.22
24 Van Eck Intl Inv GoldA 1.22
21 US Global World Gold . 1.21
16 Rydex Prec Metals . 1.11
13 Monterey OCM Gold . 1.08
1 ASA Ltd . 1.08
3 Amer Exp IDS Prc Mtl A 1.08
7 Gabelli Gold . 1.03
5 Fidelity Sel Gold . 1.01
32 Lexington Strat Invest 1.01
14 Oppenheimer Gold A . 1.01
12 Midas Investors . 1.00
18 SoGen Gold . 0.99
28 Fidelity Sel Prec Mtls 0.98
9 Lexington Goldfund . 0.97
31 Pioneer Gold A . 0.94
19 Tocqueville Gold . 0.94
6 Franklin Gold A . 0.92
22 USAA Gold . 0.91
4 Evergreen Prec Mtls B. 0.90
8 INVESCO Strat Gold . 0.84
25 Vanguard Gold/Pr Mtls. 0.80
17 Scudder Gold . 0.76
29 PIMCO Adv Prc Mtls C . 0.74
30 Morgan St DW Prc Mtls. 0.67
10 Lexington Strat Silver 0.54
33 United Gold / Govt . 0.42
15 Permanent Portfolio . 0.19
*** 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 six months. When the market turns, I would expect the funds at the top to make the biggest moves.
INVESTING COMMENTS
Global Factors | Comparing Funds
For the month, most funds seemed to be trying to set a base, although a few were still in a slide to new lows. The XAU managed a nice rally in early May, but then gave up most of its gains. Reversing the long term trend back up is not easy.
One good sign is the apparent weakness in the dollar relative to the euro, since gold has been sliding with the euro as if they were tied together. However, with the euro up over 6% in the past three weeks, gold has not shown any indication of joining the euro and may not respond. The gold market needs a shot in the arm before it can get going on its own.
The drought in India has been having a direct affect upon the amount of gold imported and certainly has a bearish effect on the overall world market prices. India is the largest consumer of gold and silver in the world and a weak market there, if sustained, will undoubtedly keep gold from rallying very much, if it can find a reason to do so.
Most gold equities have been falling consistently for months but now seem to be bottoming, as seen in most funds. Perhaps this is a good sign, but I've said that before.
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