As at 31/7/03 the Fund remained fully invested in a diversified portfolio of major, medium-sized and junior gold and mining company shares active in N. America, Australasia, Africa, Russia and many other countries, as well as an increasingly large position in the metals themselves (13% silver + 19% gold = 32% of total) at month end.

In July, we increased physical gold and silver again (metals have lagged shares). Silver broke USD 5/oz before retracing somewhat. We increased exposure - yet again - to silver producer Coeur d'Alene (now 8% of the fund) and Miramar Mining, Resolute Mining and Thistle Mining (through a convertible). We received shares in Ballarat Goldfields, an exciting prospect. We sold Lion Selection.

Financial institutions are waking up to the gold bull market, but actual investments are small, implying demand for investments that we already hold. Gold's bull points improve by the day: abundant central bank liquidity, WGC exchange traded funds, Chinese gold market liberalisation, renewed corporate activity (Ashanti/AngloGold/Randgold) and some (unofficial) inflation targeting in Japan and elsewhere. Newmont, the world's largest gold mining company, predicts USD 450 gold next year. We feel that gold must break USD 400 to justify some of the recent share rises and we caution investors that failure to breach this level may cause a share correction.