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November 2014

For the month of November, spot gold closed at $1,167.41 down $6.07 per ounce, or -0.52 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, rose 5.78 percent. The U.S. Trade-Weighted Dollar Index rose 1.66 percent for the month. Also for November, the Philadelphia Gold & Silver Index (XAU) rose 5.43 percent. The S&P/TSX Global Gold Index gained 6.49 percent, while the FTSE/JSE African Gold Mining Index was up 11.37 percent.

For the month of November, the Gold and Precious Metals Fund gained 1.76 percent, while the World Precious Minerals Fund gained 0.42 percent. See complete fund performance here.


  • Central banks in Europe have been under pressure to account for gold held abroad. The latest news comes from France, where Governor of the Bank of France M. Christian Noyer has been asked to comprehensively audit the nation's gold reserves. Likewise, the Netherlands repatriated some of its gold in order to restore confidence in the central bank. The increase in proprietary holding of gold by central banks is positive for global gold transparency.
  • Standard Chartered raised its average gold price forecast for 2015 to $1,245 per ounce, up from $1,160 saying that many of the factors pressuring gold will be neutralized. Standard expects dollar bullishness to fade and worries about deflation to subside.
  • The Indian government removed its current 80/20 import rule, which said that 20 percent of all imported gold had to be exported before any new shipments could be brought in. Analysts have pointed out that the news comes as a surprise because of recent speculation that the government would tighten import rules.


  • Four companies, including Goldman Sachs Group Inc. and HSBC Holdings PLC, are being sued over claims that they conspired for eight years to manipulate precious metals prices. The lawsuits join numerous other attacks on financial companies.
  • The World Gold Council announced that gold demand fell to the lowest level in almost five years in the third quarter as bar, coin and jewelry purchases slowed.
  • Holdings in the SPDR Gold Trust are hovering close to the lowest amount since September 2008. A confluence of factors has influenced the flight from the metal held by some investors as a haven. First, there is a mistakenly held notion in the markets that gold is one of the most volatile asset classes. In actuality, the return on equities as measured by the S&P 500 is typically twice as volatile as the return on gold bullion. Second, low gold prices have prompted some investment advisors to recommend a zero allocation to gold. Third, new highs in the equity market continue to increase investor appetite for risky assets.



  • The chart above shows the profit margin of Klondex Mines versus a peer group of other gold miners. On the vertical scale plotted against the valuation is enterprise value, assigned by the market for a given revenue base. In the case of Klondex Mines, its revenue of $33 million for the third quarter was slightly less than Argonaut Gold and Alamos Gold with $37 million and $39 million, respectively. However, the value of Klondex is $175 million while Argonaut and Alamos sport enterprise values of $505 million and $638 million, respectively. Strikingly Klondex is the only company to post significant profit margins in a tough gold environment and is set to end the year with roughly C$50 million in cash, up from C$7.6 million from the first quarter 2014. With more results like this Klondex could be a considerable outperformer relative to its peers in 2015.
  • Virginia Mines and Osisko Gold Royalties announced they would merge in an all-share deal to make the company the fourth-largest royalty company in the world after Royal Gold, Franco-Nevada and Silver Wheaton. The all-stock offer represented a deal premium of 41 percent.
  • Lucapa Diamond Company jumped this month after signing a 35-year diamond mining license agreement in Angola. The term of the license is the longest offered by the government's new mining code. The agreement also allows Lucapa to recover all of its alluvial exploration and development expenditure from free cash flow and repatriate dividends and capital gains.



  • Credit spreads between corporate and government bonds have been on the rise, indicating investors are demanding a higher premium for parting with their money. The rise in spreads comes as a warning sign that liquidity, one of the largest drivers of the stock market rally in recent years, could be deteriorating. Jack Ablin with BMO Private Bank noted that further deterioration would move the big market liquidity indicator into bearish territory, leaving only two of the bank's five indicators (the economy and momentum) in bull mode.
  • The labor movement in South Africa was thrown into turmoil after the decision on November 8; the Congress of South African Trade Unions will expel the National Union of Metalworkers of South Africa. The decision was opposed by seven of the 20 other affiliates and sets the stage for a fight over loyalty and membership dues of the remaining 1.85 million members. South Africa's labor relations are the most hostile of 144 countries, according to the World Economic Forum, and the country had 114 strikes last year that resulted in 6.7 billion rand ($597 million) in lost wages.
  • Looming gold reserve cuts threatens write-downs for gold miners. If gold prices stay low, gold miners will be forced to lower their reserve price assumptions, leading to write-downs. B2Gold is especially vulnerable as its 2013 reserve assumption stands at $1,350 an ounce.

Past performance does not guarantee future results.

The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The index benchmark value was 500.0 at the close of trading on December 20, 2002. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. 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/TSX Global Gold Index is an international benchmark tracking the world's leading gold companies with the intent to provide an investable representative index of publicly-traded international gold companies. The FTSE/JSE African Gold Mining Index is a market capitalization weighted index. (Returns are quoted as price return in the home currencies of each index. For example, the S&P/TSX Canadian Global Gold Index is calculated using Canadian Dollars.) The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Gold and Precious Metals Fund and the World Precious Minerals Fund as a percentage of net assets as of 09/30/2014: Alamos Gold Inc. (World Precious Minerals Fund 0.04%), Argonaut Gold 0.00%, AuRico Gold Inc. (Gold and Precious Metals Fund 1.85%, World Precious Minerals Fund 0.41%), B2Gold Corp 0.00%, Detour Gold Corp 0.00%, Franco-Nevada Corp (Gold and Precious Metals Fund 6.44%, World Precious Minerals Fund 1.16%), Klondex Mines Ltd. (Gold and Precious Metals Fund 7.76%, World Precious Minerals Fund 7.51%), Lucapa Diamond Co Ltd. (World Precious Minerals Fund 0.31%), Osisko Mining Corp 0.00%, Primero Mining Corp Gold and Precious Metals Fund 0.05%, World Precious Minerals Fund 0.02%), Royal Gold Inc. (Gold and Precious Metals Fund 3.44%, World Precious Minerals Fund 1.01%), Silver Wheaton Corp. (Gold and Precious Metals Fund 1.10%, World Precious Minerals Fund 0.35%), SPDR Gold Shares (Gold and Precious Metals Fund 0.32%), Virginia Mines Inc. (World Precious Minerals Fund 7.13%).

Net Asset Value
as of 01/26/2015

Global Resources Fund PSPFX $6.45 0.07 Gold and Precious Metals Fund USERX $5.99 0.04 World Precious Minerals Fund UNWPX $5.13 No Change China Region Fund USCOX $8.48 0.03 Emerging Europe Fund EUROX $6.53 -0.07 All American Equity Fund GBTFX $27.81 0.07 Holmes Macro Trends Fund MEGAX $20.42 0.12 Near-Term Tax Free Fund NEARX $2.26 No Change China Region Fund USCOX $8.48 0.03