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Peter Schiff says his EuroPac Gold Fund is being launched to coincide with “the greatest buying opportunity that I’ve seen during the entire bull market in gold stocks.”
This article was originally published on Gold Investing News on July 24, 2013.
In a move bound to confound the bears and comfort even the most shell-shocked gold bugs, renowned economist and precious metals investor Peter Schiff has launched a new gold mutual fund with exposure to the sector.
Schiff, the author of three books, including The Real Crash: America’s Coming Bankruptcy — How to Save Yourself and Your Country, announced last Friday the launch of the EuroPac Gold Fund (MUTF:EPGFX) through his company, Euro Pacific Asset Management.
The fund will invest in both precious metals producers/explorers and precious metals, with at least 80 percent targeting gold-related investments. It will be sub-advised by Adrian Day of Adrian Day Asset Management, also a high-profile investor and author whose titles include Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.
Ever the gold optimist, Schiff’s fund launch comes at a time when both exchange-traded gold products and gold equities have been roundly hammered by the markets.
Gold bullion holdings in the world’s 140+ gold-backed exchange-traded funds (ETFs) have declined 24 percent this year, to below 2,000 tonnes, compared to a record 2,623 tonnes reached in December 2012, according to Bloomberg data.
The world’s largest gold ETF, the SPDR Gold Trust (ARCA:GLD), is down 19 percent year-to-date, although it has risen about 4 percent in the last week with the uptick in the gold price.
Gold equities, which largely depend on the gold price for their valuations, have been hurt. The HUI Gold Bugs Index (INDEXNYSEGIS:HUI), a weighted index of gold mining companies considered to be a barometer for gold miners, has more than halved in value from a September 2012 price of $525.47 per share to a June 26 bottom of $208.42. HUI has since climbed back up, closing yesterday at $262.43.
Gold investors have been fleeing the metal since it took a precipitous drop in mid-April and continued sliding on remarks from US Federal Reserve Chair Ben Bernanke that indicate a likely end to the central bank’s quantitative easing, which has been bullish for gold.
Schiff, however, does not buy the Fed’s musings about an improved United States economy prefacing an end to monetary stimulus, and believes QE will continue in perpetuity.
“So right now they talk about tapering … [but] if the economy is strong enough for tapering, why wait four months? Why wait six months? Why not just do it?” he told Bull Market Thinking’s Tekoa de Silva in a recent interview.
“It’s kind of like the guy who is overweight and he constantly tells you he’s going to go on a diet but he’s going to start next month. Why not just start right now? It’s easy to talk about something you’re going to do in the future, but what’s hard, is actually doing something in the present.”
Regarding his gold fund, Schiff thinks now is the opportune time to invest in gold as it, and gold stocks, are undervalued and out of favor.
“With precious metals stocks currently at their lowest levels in years, and with many investment firms declaring the end of the bull market in gold, some may consider the launch of our fund to be poorly timed,” said Schiff. “But for those who believe, as Adrian and I do, that gold still has a long way to rise, then the timing may be attractive. In our view, the fundamentals behind the metal become stronger every day.”
Added Day, “[t]he underperformance of the miners versus the metal appears stretched. We believe the severely depressed levels of many mining stocks provide a good opportunity to seek and exploit value in the mining space.”
Shares of the EuroPac Gold Fund can be purchased through a brokerage account at Euro Pacific Capital, directly at Euro Pacific Funds or through Schwab, E-Trade, TD Ameritrade and Fidelity. Log onto europacificfunds.com for more details.
Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Investing News Network has no relationship with Euro Pacific Capital or Euro Pacific Funds. This article was neither solicited nor paid-for.
Related reading:
Japan Cashes Up on Gold ETF
3 Experts, 3 Opinions on Gold and QE
