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Executive
Summary: In November, the fund advanced by 9.85% outperforming the FTSE Gold Mines Index and bringing the year to date advance to +20.4%. Over the past month the FTSE Gold
Mines Index rose by 9.0%, gold bullion advanced by 6%, silver
rose by 7% and palladium rose by 14%. Since
inception over 2 years ago the fund is up by 94.2%,
with a Compound Annual Growth Rate (CAGR) of 27.3% p.a.
Over the same period gold advanced by 42.8%
or a CAGR of only 14%.
In
November, the fund outperformed the FTSE gold mines index by about 1% and gold by almost 4%. The gold mines index continues to be volatile and geared to the gold price. The fund has a large weighting in mid-cap stocks which are more geared to gold than the large capitalisation stocks which hurts the fund during gold price declines but helps the fund in times of rising gold prices. The portfolio remains concentrated with the number of names represented at 46.
Company
News. Emperor is acquiring DRD's stake in Porgera and Tolukuma thereby unlocking some DRD value. Ballarat Goldfields has raised A$45m new equity to finance its gold projects in Victoria, Australia. Michelago has agreed a reverse takeover of Golden China. Gold Fields has bid $330m for Bolivar Gold. Harmony has sold 5.4% of Gold Fields.
Macro
News. Gold rose strongly during the month breaking the $500/0x barrier and setting a new 23 year high. Gold is advancing in all major currencies not just in US dollars indicating a genuine bull movement rather than just a currency adjustment. Traders say the move is fuelled by both physical purchasers and investment buying. Global economic growth continues at a strong sustainable although uneven level. The US continues to surprise the pessimists but there are signs of slowing in the UK and the continent remains stuck in low gear. China is now 20% bigger than anyone thought with a rapidly growing middle class that might buy gold.
Outlook.
Interest in gold is certainly increasing with the listing of Gold Bullion Securities on the Paris Euronext and trading started in Dubai in December. Countries are becoming more interested in holding physical gold. Russia has indicated that it will increase its official reserve gold holdings from 3% to 10%. In this type of market expect exploration companies and smaller capitalisation stocks to do best.
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