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Strategies & Market Trends : Precious Metals mutual funds (gold, silver, PGMs) -- Ignore unavailable to you. Want to Upgrade?

To: W.F. Schwertley who wrote (431)	12/16/1999 7:10:00 PM
From: Richard Mazzarella	Respond to of 972

WF, other than a few speculative juniors, I limit my precious metal trading to the XAU. The XAU is represented by the RYPMX mutual fund.

To: W.F. Schwertley who wrote (431)	12/19/1999 9:18:00 AM
From: Dan P	Respond to of 972

As far as the different gold funds are concerned, I am certain that the major ones are undoubtedly aware of all that we are aware of, as far as hedging, etc. I don't see any gold fund losing much value because of gold rising and because they have gold stocks that are hedged. On the contrary, I would expect the rest of their portfolio to move up, and the Barricks of the world just stagnating. Of course, you could do as Richard does, and buy the Rydex gold fund, which follows the XAU: keeping in mind that the XAU has a significant representation in Barrick. Check out post 423 by Larry, where he compares the XAU holdings and Barron's GMI. Barrick is 26 % of the XAU, and of the remaining stocks, PDG has some hedging. I would still expect the XAU to perform well in a good gold market. Furthermore companies that are hedged, like Barrick, have mostly given up some potential upside, rather than facing losses as gold goes up(hopefully). I would bet that many funds have lightened their holdings of Barrick,and others like it. What you saw in Ashanti and Cambior is not likely to be repeated, unless we have a huge move up in gold like happened a couple of months ago. A gradual move up, as I would hope for, will not cause the distortions that we have seen. In my own account, I have funds in two large mutual fund families, and recently have switched into their gold funds. I expect them to perform reasonably, but if gold continues to rise, I would also expect them to decrease their holdings in stocks that have big hedge positions. Also, I trade gold stocks in another account, and own some juniors. If I were buying stocks in major producers I would concentrate on several that were either not hedged or only lightly hedged. That type of information is available. Regards Dan