Monthly report August 2019

With a return of 5.09%, we saw a positive return for the third month in a row. From the low point in mid-June (NAV 55), we have bounced 20% at the time of writing. We are still lagging the real gold funds, which can be explained by the discrepancy between the performance of gold producers (HUI: +41%) and the exploration sector (TSX-V: -2%). Current monetary developments seem to be the driver for the rising gold price. For example, during the Fed meeting in Jackson Hole, Mark Carney, governor of the British central bank, said the US dollar era is almost over. According to him, the dollar is too dominant and the world needs a new reserve currency. His speech followed a report from JPMorgan, in which private clients were advised to halve their dollar exposure and to convert part of their portfolio into gold. Other major banks recently spoke out in a similar way. All very remarkable and a further indication for an upcoming 'reset' in some form. We recorded our largest inflow since 2011, from 32 participants.

The monetary dollar game now appears to have reached its final phase. After the huge rise in the dollar, there seems to be only one way out for the US: a devaluation against gold. With the strong movement of precious metals, it may have already begun. It is reminiscent of the 1930s, when President Roosevelt devalued the dollar to defuse the crisis. Substantially higher precious metal prices in the coming years are therefore very likely. The fall in the price of some base metals accelerated in August (zinc -9%, copper -4%), fearing a new economic crisis. Nickel was a big exception, with an increase of 24% last month, as Indonesia plans to ban the export of unprocessed nickel ore from 2020 onwards. In anticipation of greater unrest, (an imploding bond bubble?), we have adjusted our portfolio by doubling positions in precious metal producers. Physically covered ETFs have also been added. Our largest position, Great Bear Resources, rose 30% due to good news about new gold discoveries.

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