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March 14, 2016 at 08:02 PM
After several years of hibernating, gold is back.
Since the start of the year, gold bullion has gained 18% while global gold mining stocks, as measured by the iShares MSCI Global Gold Miners ETF (RING), have soared almost 60%. In comparison, many global stock market indexes along with the S&P 500 have yet to show positive year-to-date performance.
All of this is good news for gold-focused mutual funds, which over the past few years, have struggled to attract investors’ attention due to abysmal returns.
The Tocqueville Gold Fund (TGLDX) has rebounded with an impressive 33% year-to-date gain.
“Our strategy is to de-emphasize bloated, large-cap companies and to focus on smaller mining companies with entrepreneurial managements that could provide more upside with an increase in gold’s price,” said John Hathaway, co-manager of Tocqueville’s gold fund, in a recent interview.
About 85% of TGLDX’s holdings are committed to mid- and small-cap stocks, according to Morningstar. Also, the fund has just 6% exposure to U.S. stocks while the remaining balance is invested in international gold equities. TGLDX has $1.15 billion in assets and charges 1.43% annually.
Gold has a storied history of booms and busts that at times have lasted for decades.
After the convertibility of the U.S. dollar to gold was abolished in 1971, gold prices soared more than 2,000% and hit a peak of $850 per ounce in 1980. But instead of adding to its gains, gold prices entered a two-decade decline, crashing more than 70%. And in 2008, after 28 years of pain, gold bullion finally got back to its 1980 price peak of $850 per ounce.
