Monthly report September 2019

After three positive months, September showed a sharp fall in precious metal-related investments. As a result, the NAV fell by -5.86% to 61.02. This performance was a reflection of the correction in gold (-2.5%), while the -7% correction in the silver price was even more pronounced. The index of HUI gold producers fell by -11%. September was the first month in a long time in which exploration shares outperformed the producers, albeit with a negative performance as well (TSX/V -5.2%). This stock market index of the smaller exploration companies closed the month with a year-to-date return of -3%. The recovery in the natural resources is therefore certainly not yet market-wide. Only the cash-flow generating gold and silver miners and some discoveries are now significantly up for the year. The base metals, with the exception of a nickel correction, showed a recovery (zinc +8%, copper +1%, lead +4%). This recovery can be explained by improved sentiment around a possible deal between China and the US. The inflow into the fund remains high.

Investments

With Osisko's bid for Barkerville, we have achieved the 56th acquisition since the start of our fund, in 2008. This is the fifth acquisition, unfortunately again against a low valuation, of this year. Our larger positions in base metals were unable to benefit from the positive performance of the metal prices (Solgold -19%, Tinka -16%). Our largest position Great Bear Resources, fortunately, performed well with a return of 13%. At the beginning of this month, the company announced that gold has now been found in the same mineralization over a length of more than 3 km. Another substantial position in our portfolio, North American Palladium (+27%), the only Western primary palladium producer, rose as a result of the continued strong palladium price. The correction in gold was a natural technical reaction after the first sharp rise over the summer. We expect a continuation of the recovery of precious metal prices as soon as the current correction is over, given the increasing turmoil in the financial system. Of note: advice for the purchase of precious metals is coming from more and more sides.

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