Fidelity's Gold Sector Plays

10/03/2003 12:00 am EST

Focus:

Jim Lowell

Senior Partner & Chief Investment Strategist, Adviser Investments

When it comes to Fidelity funds, Jim Lowell is the authority. He is the editor of Fidelity Investor, whose portfolios have never had a losing year. He is also the editor of the technical trading service, Fidelity Sector Investor. In his latest review of Fidelity sector funds, he issues buy ratings to two metals funds.

"Fideilty Select Gold (FSAGX ) is a 'buy'. The fund invests in miners and refiners of gold, silver, and other precious metals such as platinum and palladium. Gold has been seen as the ultimate defensive play, the reasoning being that in some global catastrophe, gold and silver will again be the only reliable media of exchange. If events really did put us into a medieval economy, I doubt that owning shares in a mutual fund would do much good, but a certain level of geopolitical fear occasionally does bring big profits to shorter-term speculators.

"We also rate Fidelity Select Industrial Materials (FSDPX ) a 'buy'. The fund invests in the producers and transporters of a variety of basic materials and semifinished goods with industrial uses. These include: petroleum products, chemicals and plastics, building materials, aluminum, steel, and other metals and their ores. The fund currently has a heavier than market concentration in precious metals. Also, producers of industrial metals such as copper generally produce at least some precious metals. This fund should benefit as the world business cycle continues to improve."

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