Investing in gold stocks over the past few years has been tough. It’s
like crossing the start line intending to run a 10K race, but the course turns
out to be the distance of a marathon.
For those who have persevered and pushed through the pain, it’s been
nothing-but-elation lately as gold companies have seen incredible moves. Over
the past three months through March 3, the Philadelphia Gold & Silver Index
(XAU) rose an incredible 25 percent, significantly outperforming the S&P
500 Index by about 22 percent.
We’re pleased to say that the mutual funds within Morningstar’s equity
precious metals funds category grew even more in the same time frame, averaging
a three-month return of nearly 30 percent.
What’s more impressive is that these funds collectively were the best
performers among the entire fund universe.
Back in January, we said that gold stocks had reached
the historical limits of their multi-year decline.
Morningstar also anticipated this rebound. In its annual “Buy the Unloved”
strategy that looks at annual flows in and out of equity funds to figure
out what’s loved and hated by investors, precious metals funds were among the
most unloved fund categories.
The strategy suggests investors buy funds from “stock categories with
heavy redemptions and sell those with the greatest inflows.” Historically, the approach
worked well. Assuming a three-year holding period and category average returns,
“the unloved funds returned an annualized 10.4 percent versus 6.4 percent for
loved,” according to the article.
“Of course there’s no guarantee those results will repeat, but it does
illustrate the value in going against the grain,” says Morningstar.
Where will gold stocks go from here? I recently told Palisades Radio that
I look forward to gold stocks experiencing a nice, slow move up, so if you
haven’t been a long distance runner in gold companies, you might not want to
miss out on this exciting course.
Two ways to participate are U.S. Global’s Gold and Precious Metals Fund (USERX) and World Precious Minerals Fund (UNWPX). Each fund seeks
companies that have historically experienced growth on a per share basis and
offer potential capital appreciation. We believe this selective approach has
helped the funds outperform the indices over the one-year period through
February.
Download the USERX fact sheet or UNWPX fact sheet to
see long-term performance today and take time to listen to the Palisades Radio
conversation to learn more about what’s going on with gold miners.
Please consider carefully a fund’s investment
objectives, risks, charges and expenses. For this and other important
information, obtain a fund prospectus by visiting www.usfunds.com or by calling
1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing.
Distributed by U.S. Global Brokerage, Inc.
Past performance does
not guarantee future results.
Gold, precious
metals, and precious minerals funds may be susceptible to adverse economic,
political or regulatory developments due to concentrating in a single theme.
The prices of gold, precious metals, and precious minerals are subject to
substantial price fluctuations over short periods of time and may be affected
by unpredicted international monetary and political policies. We suggest
investing no more than 5 percent to 10 percent of your portfolio in these
sectors.
All opinions
expressed and data provided are subject to change without notice. Some of these
opinions may not be appropriate to every investor. By clicking the link above,
you will be directed to a third-party website. U.S. Global Investors does not
endorse all information supplied by this website and is not responsible for its
content. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a
capitalization-weighted index that includes the leading companies involved in
the mining of gold and silver. The S&P 500 Stock Index is a widely
recognized capitalization-weighted index of 500 common stock prices in U.S.
companies.
Disclaimer: This article was posted with the permission
of a third-party contributor and the opinions contained therein do not
necessarily reflect those of Smallcappower. Smallcappower does not endorse
any investment advice provided by these third-party contributors. Please
consult your investment advisor before making any investment
decisions.
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Communication and Ubika Research are not registered with any financial or
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