Investment approach

The theme-oriented and globally investing equity fund focuses on gold and precious metals equities, diversified commodity groups, base metal producers, chemical companies and oil & gas producers. The fund pursues an index-independent bottom-up approach with high-quality stock selection, focusing on the fundamental data of the companies. Debt-free gold producers with a competitive cost structure that can generate free cash flows even at lower gold prices are preferred. In general, negative or falling real interest rates are positive for tangible assets and for gold in particular. Investment demand for gold should continue to rise if US real interest rates remain low or fall again.

Monthly Commentary

In December the value of DJE - Gold & Resources increased 4.47%. Its benchmark index (60% Philadelphia Stock Exchange Gold and Silver Index, 20% Reuters/Jeffries CRB Index, 20% MSCI World Materials Sector Index (EUR)) gained 4.75%. Gold mining stocks performed positively in December. The XAU Gold Mining Index rose 9.35% in US dollar terms and 6.37% in euro terms - due to the US dollar depreciating against the euro in December. Gold mining stocks thus outperformed the gold price itself which rose 6.23% in U.S. dollar terms to settle at $1,894.4 per ounce. In euro terms the gain was lower at 3.34% and 1,549.6 EUR/ounce due to the depreciating US dollar. The recent downward trend in gold did not continue in December and the gold price was able to regain some ground. In the 4th quarter gold was mainly burdened by the positive news regarding the Corona vaccines. On the other hand gold received tailwind from the weakness of the U.S. dollar - the trade-weighted dollar index was at its lowest level since April 2018 at the end of the year. In addition the gold price also benefited from rising inflation expectations in the U.S. Furthermore the political situation could continue to have a positive impact on the gold price. The majority of Democrats in the House of Representatives and the Senate should facilitate the planned expansionary fiscal policy of the newly elected U.S. President Joe Biden. This should also have a positive impact on growth and inflation with a time lag. In this case real yields would probably fall further as the Fed has already announced that it will not raise interest rates for a long time yet even in the event of rising inflation. Gold should benefit from this. Overall a continuation of the phase of extremely low or negative real interest rates is to be expected - both in the USA and in Europe. In such a real interest rate environment, investments into gold appear safer than parking capital at a (possibly uncertain) bank without interest. The highest positive performance contributions in December came, among others, from the positions of the highly weighted diversified commodity groups Rio Tinto (UK/Australia) and Anglo American (UK/South Africa), from the gold and platinum group metals producer Sibanye Stilllwater (South Africa) and from the silver and gold producers First Majestic Silver and Yamana Gold (both from Canada). On the other hand positions in the gold streaming companies Royal Gold (USA) and Franco Nevada (Canada) and in the fertilizer company Nutrien (Canada), among others, had a negative impact. The weighting of gold mining stocks was between 55-60% during the reporting period. The focus remains on solidly financed producers that generate positive free cash flows even at lower gold prices and that offer also some growth prospects. Broader based commodity/chemical stocks underperformed gold mining stocks in December: MSCI World Materials +3.54% and CRB Commodity Index +2.51% - both figures in Euro terms. At the end of the month US dollar-denominated stocks were mainly fully currency hedged.

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