KCI's Martchev Sticks with Gold
04/11/2003 12:00 am EST
“Gold bullion was in a bear market for 20 years and broke out of its life of oblivion just as the myths of the ‘new economy’ and the US dollar started unspooling. The downside in the US dollar hasn’t nearly been reached because of current account and budget deficits and a shaky equity market. Gold is inversely correlated with the US dollar and as long as the dollar remains weak, gold and gold shares are likely to do well. Since we don’t see any end in sight to the dollar’s problems, the long term story for gold remains intact.
“Among mutual funds our gold fund choice is American Century Global Gold (BGEIX), which tends to hold all of the bellwethers in the sector as well as plenty of smaller unhedged producers. The fund’s portfolio is diversified internationally and a return to trend in gold prices would produce plenty of leverage for the fund’s portfolio. Use the recent weakness to buy Global Gold if you haven’t already done so.”
Editor’s note: “Among silver plays, Apex Silver Mines (SIL NYSE) remains the top choice of Personal Finance. Says the service, “It has the most potential and is a pure play on Latin American exploration and development, and its San Cristobal property in Bolivia could prove to be a gold mine, so to speak. Buy up to 18. And for a more literal gold mine, Barrick Gold (ABX NYSE) remains our favored play. Revenues fell only 1% during a slow 2002 while net income surged $193 million from $97 million. Gold has a long way to go yet. Buy Barrick up to $20.”