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Understanding the Gold Investment Model of TGLDX

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Feb. 8 2016, Updated 8:19 p.m. ET

TGLDX’s investment methodology

The Tocqueville Gold Fund (TGLDX) is an alternative strategy fund that provides exposure to gold and other precious metals as well as to the securities of companies related to gold mining and processing. Since mining stocks are derivatives of gold’s price, any increase in gold’s price can have an even greater impact on the price of mining stocks, and vice versa.

TGLDX seeks to replicate the price performance of the gold market. The following graph compares the return performance of TGLDX with similar strategy precious metal funds such as the Vanguard Precious Metals and Mining Fund Investor Shares (VGPMX) and the First Eagle Gold Fund Class A (SGGDX) since January 2012.

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Falling precious metal markets

The market for gold and other precious metals has fallen considerably amid the current metal and energy market crash. Hence, all the three of the above gold funds gave negative returns to their investors in the aforementioned period. Among them, VGPMX was the worst performer, while the SGGDX was the least decliner. However, gold and other precious metal funds are starting to see better times in 2016. Since January 1, 2016, TGLDX and SGGDX have risen by 4.2% and 4.5%, respectively.

Global assets

The fund’s top holdings include gold and gold-related securities like Agnico-Eagle Mines (AEM), Eldorado Gold (EGO), Goldcorp (GG), and Randgold Resources (GOLD), among others. Because gold is an asset with universal appeal, it’s heavily impacted by the international monetary and political developments that directly affect the supply of gold. Also, the fund’s holdings of physical gold significantly increase expenses related to the fund, as this requires additional carrying and warehouse charges.

Now let’s look at moving average trends and analyst estimates of TGLDX’s top holdings.

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