In June the Fund was down 3.9%, slightly ahead of the FTSE Gold Mines Index. So far this year the Fund is down 19% after +80% in 2004.

In June, gold, silver and palladium were down, but continue to build bases above the April low. Shares continued to be volatile, typical of a recovery phase for a sector that was subject to near-panic liquidation in April. We reduced Thistle Mining, Southwestern Resources, Ivanho and Aurizon and added to Placer and Randgold (where the news flow, as for all our major holdings, has lately been encouraging). Our overall asset allocation (17% metals, 83% shares) remained the same last month, consisting of a diversified 59 stock portfolio of major, medium-sized and junior gold and mining company shares active in North America, Australasia, Africa, Russia and other countries, as well as a large physical position in the metals.

The Fund's holdings of intermediate and small cap mining stocks - a large part of the Fund - have been lagging the large caps. There are signs that this is changing. Baker Steel's two principals continue to tell us they can see "outstanding value re-emerge in the market".

Short term factors to affect gold will be: a break out above USD400, a continued squeeze on South African gold production (half of the mines are unprofitable, itself a great support to the gold price), a weaker USD and continued Chinese buying through the China Merchants Bank.

We remain confident that higher prices are in store for later this year and the panic dumping of April 2004 will be seen as insignificant a blip on a chart as the double-digit corrections in each of the last three years now appear.

Asset Allocation (as at 30/6/04)	Top 10 Holdings (49% of fund)
Gold and resource shares: 83%	1. Silver Bullion 13%
	2. Placer Dome 5%
Silver, gold, palladium: 17%	3. Randgold 5%
	4. Mvelaphandra 4%
Cash 0%	5. Harmony 4%
	6. Palladium 4%
	7. Northern Orion 4%
	8. African Minerals 4%
	9. Goldfields 3%
	10. European Gold 3%
Asset Allocation (per month)