In September, the Fund rose 9.9% (the FTSE Gold Mines Index was +7.3%, gold and silver +2.2% and palladium +5.2%. In 2004, the fund is -10.9% after +80% in 2003. As of 12/10/04, this 10% shortfall has been substantially closed. Our sector - a volatile one - is once again tap dancing in the footlights.

We increased the fund's exposure to silver (Apex and Penoles) and added more junior/intermediate names. As we believe the gold bull market is in its infancy, we are maintaining a high exposure to smaller companies with high operational gearing to metals prices.

Argentina increased its gold holdings by about a quarter against a more bullish background for lower than expected Central Bank sales... Chinese gold demand is set to triple from 200t to 600t in coming years... a US exchange traded fund (StreetTRACKS) could soon trade on the NYSE, adding to demand for gold... UBS increased its forecast for gold... the USD traded lower in response to further bad news on the US current account deficit - gold benefits from a lower USD.

We need a push higher in the gold price above the old highs near $430 for our fund to re-enact last year's performance, and we may be a little "overbought" for now. But the fund is leveraged to this possibility. It's got holdings in pre-IPO stock (eg African Minerals), a much reduced bullion position (4% in palladium), the highest share weighting it's ever had (96%), an overwhelmingly small-cap emphasis and just under 5% in options and warrants.

Portfolio Changes
Net Buys - Sept 04	Net Sales - Sept 04
1. Bolivar Gold	1. Harmony Gold
2. Freeport-McMoran	2. Goldfields
3. Industrias Penoles	3. Mvelaphandra Resources
4. Gammon Lake	4. Placer Dome
5. Oceana Gold	5. Apollo Gold
6. Bendigo Mining	6. High River Gold
7. Berna Gold	7. Randgold
8. Apex Silver
9. Coeur d'Alene
10. Lihir Gold

Asset Allocation (as at 30/9/04)	Top 10 Holdings (38% of fund)
Gold and resource shares: 95.9%	1. Randgold 5.8%
	2. Placer Dome 4.5%
Palladium: 3.9%	3. Northern Orion 4.1%
	4. Palladium Bullion 3.9%
Cash: 0.2%	5. Freeport-McMoran 3.6%
	6. Apex Silver 3.5%
	7. European Gold Wts 3.4%
	8. Resolute Mining 3%
	9. Rio Narcea Gold 3%
	10. Mvelaphandra 2.9%
Asset Allocation (per month)