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Russians will do better in rubles than dollars, finance minister promises
By Keith Damsell
The Globe and Mail, Toronto
Monday, January 10, 2005
http://www.theglobeandmail.com/servlet/story/RTGAM.20050110.wxrfundwa
tch10/BNStory/Business/
What the heck happened to your precious metals
mutual fund?
The volatile asset class had a miserable 2004,
down 17 percent on average, making it the
worst-performing sector of the year. That's a
dramatic tumble from three years of successive
double-digit gains, including a group average of
41 percent in 2003.
Investors would have done better buying the
precious metal itself. Gold ended the year at
$438.45 (U.S.) an ounce, up a modest 5.4
percent.
The comparative results torpedo the widely held
view that in a rising gold market, gold equities,
and, by extension, gold funds, outperform the
price of bullion.
A series of issues made 2004 a weird year for
gold, gold equities, and precious metal funds:
-- The U.S. Federal Reserve Board. Early in the
year, the market was convinced the Fed was on
track to raise interest rates, a sentiment that
prompted a selloff in gold equities. "People
started taking profits," said Kevin MacLean,
senior portfolio manager at Toronto's Sentry
Select Capital Corp.
-- No new money. From 2001 through 2003, gold
rose dramatically in price and resource-driven
investors, including mutual funds, snapped up
gold stocks; 2004 saw a shift in sentiment to
energy stocks and trusts. "There was no real
rush of new players into gold," said John Ing,
president of Maison Placement Canada Inc.
-- Dilution. Gold's return to favour saw many
producers tap the markets and the flood of
paper helped drive down prices. According to
data from Bloomberg LP, about $1.1-billion
(Canadian) in equity was raised by Canadian
gold firms in 2003 and again in 2004. That's a
remarkable figure when you consider the
pitiful $2.3-million raised in the dark days of
1999 when gold plunged to $252.55 (U.S.) an
ounce.
-- StreetTracks Gold Trust. The U.S. bullion fund
created in November has attracted a whopping
$1.5-billion from investors, making it the most
successful exchange-traded fund in history. To
the detriment of equities, StreetTracks has
become the most popular way to buy gold as
a hedge against a decline in the U.S. dollar.
-- Margins under pressure. Gold is reported in U.S.
dollars and 2004's weak greenback hurt the gold
sector. Why? The bulk of the world's gold is mined
overseas where local currencies were on the rise.
As a result, producers with operations in South
Africa, Australia, and Canada felt an income
statement "squeeze," said Gavin Graham, director
of investments at Guardian Group of Funds Ltd.
of Toronto.
But don't sell your precious metals fund yet. Bulls
and bears agree that this year looks favourable for
the volatile metal and its equity cousins. A weak
U.S. dollar, inflation fears, strong demand, an
absence of new discoveries, and political uncertainty
all lend themselves to strong gold prices.
Fund managers interviewed are on the watch for
promising juniors that, in the event of a discovery
or potential takeover, may see tremendous upside.
Large gold producers "would rather buy production
than explore for it," said Craig Porter, portfolio
manager of the Altamira Precious & Strategic
Metal Fund. "Why not spend your high cash flow
now? You buy production today; you can take
advantage of high commodity prices."
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RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
Free sites:
http://www.cbs.marketwatch.com
http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
(In Spanish)
http://www.plata.com.mx/plata/plata/english.htm
(In English)
http://www.resourceinvestor.com
Subscription sites:
http://www.lemetropolecafe.com/
http://www.interventionalanalysis.com
http://www.investmentindicators.com/
Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
COIN AND PRECIOUS METALS DEALERS
WHO HAVE SUPPORTED GATA
AND BEEN RECOMMENDED
BY OUR MEMBERS
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com
Centennial Precious Metals
3033 East First Ave., Suite 807
Denver, Colorado 80206
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
cpm@usagold.com
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
Gold@gwe.net
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
harvey@eldoradogold.net
Gold & Silver Investments Ltd.
Mespil House
37 Adelaide Rd
Dublin 2
Ireland
+353 1 2315260/6
Fax: +353 1 2315202
http://www.goldinvestments.org
info@gold.ie
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
gwestgaard@investmentrarities.com
Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
leecoins@aol.com
Miles Franklin Ltd.
3015 Ottawa Ave. South
St. Louis Park, Minn. 55416
1-800-822-8080 / 952-929-1129
fax: 952-925-0143
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
info@mocoin.com
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
Metalguys@aol.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066
----------------------------------------------------
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