Sometimes the markets reward trading, rather than buying and holding. For example, in South America, if there is a situation with political risk, we try to be a bit contrarian, and have a long view. We might look for a company whose share prices have been pummeled because its main asset is in a country where there’s currently heightened political risk. We like to be contrarian and buy those shares at depressed prices, because the deposit must be put into production for anyone to reap any value for it, whether it’s from taxes for the government or from profit for the private enterprise that owns it.

Q:  Do you measure yourself against any benchmark?

A: Not really. We own gold mining companies, natural resources companies, zinc and aluminum companies and diversified mining companies, and we have had exposure in natural gas and oil. We can also own plain growth companies. One benchmark we have consistently outperformed in the last five years is the S&P 500, which is important because we are competing with everybody else that’s trying to make their investors money. We expect to beat inflation, we expect to beat Treasury bills, but our goal is to outperform all other equity funds for our investors, who are seeking capital appreciation.

Q:  What kind of risks do you perceive? How do you control them?

A: There are many risks in commodities investing, especially in mining, and we seek to manage these risks with a focused, but flexible, approach.

The Midas Fund takes a quality approach to investment in any sector. We can own up to 35% in regular growth companies. We can be defensive and we can go to cash or use futures and options, and go long and short in any index. The board of directors is determined to give us all the tools we need to help us manage risks.

Risks can include mines and mining companies that are often in foreign countries, thus presenting political, currency and geographic risk. There is also a risk that the price of the underlying resource will go down. And because mining is speculative and capital intensive, there is a financial risk in interest rate rises. These types of stocks will be negatively affected by macro factors like interest rates.

We factor these risks into our investment decisions.

Q:  What sets Midas Fund apart?

A: We are more tax efficient and we have some tax loss carry-forwards from the era of our prior management. We can sell a stock that has appreciated and not be overly concerned about incurring a taxable distribution to shareholders the way the other funds are. So, we have the flexibility to sell a stock if it has gone beyond our target and beyond a reasonable price. We can do that, whereas another fund might feel constrained and continue owning a stock that is perceived to have less upside than desired. We are free of that crucial constraint.