EagleWing Research Newsletter on Gold Funds
December 1, 2000
GLOBAL FACTORS
Comparing Funds | Comments
Without a doubt, the biggest news of the month was the legal struggle over votes for the U.S. presidency. It appears to me that the prolonged legal court cases has begun to show themself in the falling markets due to the doubt of what will be decided by a few courts and lawyers. High tech stocks in general led the fall as many are down over 50% for the year, and the NASDAQ reached new yearly lows. Only two other items managed to push their way onto the radar scope. The failure of the international green factions to get anything out of the industrial nations during the environmental meetings in the Hague may have caused some concern, but it was difficult to determine which way it might affect economies and precious metals, if any.
The second was the continuing conflict in the Middle East between Israel and the Palestinians. Efforts were gathering to get the two sides together after they had spent enough time shooting at each other. Cooler heads were realizing that there had to be a peaceful solution somewhere. It can be safely said that the price of oil will be directly affected by any escalation in the conflict and any disruption in supply. Even the suppliers don't want to stop the flow of revenue derived from oil sales so I don't expect that to happen.
All stock market indexes for November were down as high tech and internet stocks continued their crash to reasonable values, which for many meant out of business. There were many economic indications of a slowing economy and the Federal Researve even announced that it would help soften any stock market panic by providing funds. Someone must think that this weakness in the stock markets is potentially more serious than most realize.
For the month, gold quickly dropped to a new yearly low at 263.9 but spent the rest of the month recovering back up to close at 270.1. Silver also fell to a new low at 4.61 before closing at 4.67. Both showed signs of reversing a long downward trend, and the new found vigor in precious metals spread to gold equities, most of which are under $5 and many approaching penny stocks. XAU advanced to 47.0 after reaching an all-time low of 41.3. The long bond advanced in the face of a falling stock market, closing the month at 5.61% and showing a consistent strength in U.S. debt even as the dollar lost ground.
The trade deficit for September was reported at over $34 Billion, another record with no stopping in sight. Oil closed over $33 as it remained in the low thirties most of the month. There were some signs of inflation, but they are well hidden. The euro closed at .87, up from .84 as the dollar in general showed signs of tiring. There was little if any organized support for the euro and most discussion was negative, yet it still went up for the month against the dollar. Gold still moved relative to the euro, so it's one indicator to watch.
COMPARING FUNDS
Global Factors | Comments
Funds ranked by percentage change in net asset value for November.
fn Fund 1 mo 3 mo 12 mo 2 yr 3 yr
3 INPMX Amer Exp IDS Prc Mtl A 8.4 -6.6 -15.7 -16.4 -20.9
13 MNTGX Monterey OCM Gold . 8.0 -11.6 -25.9 -29.3 -30.8
16 RYPMX Rydex Prec Metals . 7.6 -10.3
4 EKWBX Evergreen Prec Mtls B. 6.9 -9.3 -19.7 -19.4 -23.5
6 FKRCX Franklin Gold A . 6.5 -6.3 -13.1 -1.0 -0.6
24 INIVX Van Eck Intl Inv GoldA 6.1 -11.5 -27.9 -37.0 -42.0
25 VGPMX Vanguard Gold/Pr Mtls. 6.0 -5.9 -11.6 3.1 9.1
22 USAGX USAA Gold . 5.9 -11.1 -20.6 -16.6 -11.8
7 GOLDX Gabelli Gold . 5.7 -8.7 -20.2 -18.7 -13.6
12 MIDIX Midas Investors . 5.2 -10.8 -29.8 -38.6 -57.7
14 OPGSX Oppenheimer Gold A . 5.2 -9.7 -20.9 -14.6 -13.2
2 BGEIX Amer Cent Global Gold. 5.2 -12.6 -31.8 -37.8 -37.2
19 TGLDX Tocqueville Gold . 5.1 -8.5 -14.9 0.4
17 SCGDX Scudder Gold . 4.9 -7.3 -15.9 -11.3 -23.6
9 LEXMX Lexington Goldfund . 4.8 -11.9 -26.1 -27.0 -23.7
5 FSAGX Fidelity Sel Gold . 4.1 -12.8 -23.8 -16.2 -23.5
1 ASA ASA Ltd . 1.7 -14.0 -22.0 -18.3 -21.0
20 USERX US Global Gold Shrs . 1.7 -14.3 -34.8 -36.2 -57.1
18 SGGDX SoGen Gold . 1.4 -11.9 -27.4 -25.7 -33.8
15 PRPFX Permanent Portfolio . 0.3 -3.0 -2.9 -2.9 0.0
23 GRFRX Van Eck Gold / Res A . 0.0 -11.0 -23.9 -30.7 -36.5
8 FGLDX INVESCO Strat Gold . -0.8 -18.0 -24.1 -27.1 -43.3
21 UNWPX US Global World Gold . -1.0 -20.6 -42.6 -47.9 -55.0
10 STSLX Lexington Strat Silver -2.8 -16.8 -28.0 -25.4 -41.4
11 MIDSX Midas Fund . -4.9 -17.2 -40.3 -52.0 -63.4
The month of November may have shown us the low in gold equities for the next decade and maybe forever. Over the past year most have been crushed, with many now under $2 in value and searching for buyers. With this rally, almost all gold stocks advanced with gold funds taking advantage. However, as many hit yearly lows, some equities and funds did not recover fully. Some still managed to lose assets. On the other hand, both Vanguard (VGPMX) and Tocqueville (TGLDX) demonstrated a positive position over the last two years. That is much better than most internet stocks, but didn't make any news reports. This market is still a sleeper.
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(11-30)
15 Permanent Portfolio . -22.7 18.00
25 Vanguard Gold/Pr Mtls. -39.1 7.08
6 Franklin Gold A . -64.8 8.14
3 Amer Exp IDS Prc Mtl A -66.6 4.67
17 Scudder Gold . -68.5 5.57
22 USAA Gold . -73.6 4.63
13 Monterey OCM Gold . -75.4 3.52
4 Evergreen Prec Mtls B. -75.5 9.15
16 Rydex Prec Metals . -76.3 16.58
7 Gabelli Gold . -77.6 4.82
19 Tocqueville Gold . -78.3 10.59
14 Oppenheimer Gold A . -80.3 8.10
5 Fidelity Sel Gold . -80.3 10.88
9 Lexington Goldfund . -80.7 2.38
12 Midas Investors . -82.2 1.81
24 Van Eck Intl Inv GoldA -83.0 4.17
18 SoGen Gold . -83.1 4.50
2 Amer Cent Global Gold. -84.9 3.67
1 ASA Ltd . -91.1 14.56
10 Lexington Strat Silver -91.7 2.08
20 US Global Gold Shrs . -92.5 2.40
21 US Global World Gold . -94.0 4.75
8 INVESCO Strat Gold . -94.1 1.32
23 Van Eck Gold / Res A . -94.4 2.10
11 Midas Fund . -95.7 0.77
Once again, many funds reached new yearly lows this month before starting a recovery. I repeat that from a historical standpoint, this is certainly a buying opportunity, and only a serious economic surprise could give gold another kick in the pants downhill. The question is how long will we linger around 270 before we see a breakout.
The following chart shows the approximate size of funds as measured in total assets under management in $millions. (As of November 30) 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. 294
6 Franklin Gold A . 201
1 ASA Ltd . 151
5 Fidelity Sel Gold . 117
2 Amer Cent Global Gold. 114
24 Van Eck Intl Inv GoldA 109
17 Scudder Gold . 82
22 USAA Gold . 71
14 Oppenheimer Gold A . 63
8 INVESCO Strat Gold . 58
15 Permanent Portfolio . 57
9 Lexington Goldfund . 44
21 US Global World Gold . 37
11 Midas Fund . 37
3 Amer Exp IDS Prc Mtl A 33
23 Van Eck Gold / Res A . 25
16 Rydex Prec Metals . 24
10 Lexington Strat Silver 16
20 US Global Gold Shrs . 16
7 Gabelli Gold . 13
4 Evergreen Prec Mtls B. 11
19 Tocqueville Gold . 10
18 SoGen Gold . 10
12 Midas Investors . 4
13 Monterey OCM Gold . 1
Our beta indicator 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
21 US Global World Gold . 1.77
11 Midas Fund . 1.68
2 Amer Cent Global Gold. 1.48
24 Van Eck Intl Inv GoldA 1.41
20 US Global Gold Shrs . 1.40
13 Monterey OCM Gold . 1.37
16 Rydex Prec Metals . 1.36
23 Van Eck Gold / Res A . 1.19
12 Midas Investors . 1.17
5 Fidelity Sel Gold . 1.09
8 INVESCO Strat Gold . 1.07
18 SoGen Gold . 1.06
3 Amer Exp IDS Prc Mtl A 1.01
9 Lexington Goldfund . 1.01
14 Oppenheimer Gold A . 0.98
22 USAA Gold . 0.97
1 ASA Ltd . 0.95
4 Evergreen Prec Mtls B. 0.90
7 Gabelli Gold . 0.88
10 Lexington Strat Silver 0.81
19 Tocqueville Gold . 0.77
32 Lexington Strat Invest 0.77
28 Fidelity Sel Prec Mtls 0.74
6 Franklin Gold A . 0.72
17 Scudder Gold . 0.72
31 Pioneer Gold A . 0.71
25 Vanguard Gold/Pr Mtls. 0.60
29 PIMCO Adv Prc Mtls C . 0.56
30 Morgan St DW Prc Mtls. 0.50
33 United Gold / Govt . 0.32
15 Permanent Portfolio . 0.14
*** 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. For comparison, some of the recently expired funds are left on this list.
INVESTING COMMENTS
Global Factors | Comparing Funds
Support for gold prices materialized in November as the trade deficit became more obvious. Meanwhile some support for the euro pushed it up a few points. The dollar's fall in terms of the dollar index indicates that there might be some weakness there, and gold is ready to rally at a moment's notice and for any excuse that the market can find.
Technically, precious metals, especially gold and silver, were primed to rally somewhat. Silver reached a low not seen for several years and gold was holding well above the 253 level after falling through 270. The question is how far will a technical rally carry them before some kind of economic news is necessary.
The strength in South African stocks relative to U.S. mines gave an early indication that an international demand for gold equities was developing, but the last week of November showed that they were no longer leading the pack, and the rally may be petering out. One good sign was the $3 loss on Wednesday, November 29, followed by a $3 gain the very next day. During the past year, most rallies were cut short by a falling XAU the very next day. We are seeing a reversal in this trend, indicative of traders who think more up than down. This would be bullish if it happens more than once.
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