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Precious metals equity funds surge in April

INVESTMENT FUNDS REPORTER -- Precious metals equity funds were glittering in April, helped by a rising gold price as investors flocked to the yellow metal as a safe haven.

This group surged an average of 10.4 per cent amid growing concerns about Greece's debt crisis, and fears that its woes would spread to other countries in the euro zone.

Leaders in this group included Dynamic Precious Metals, which jumped 17.2 per cent; Middlefield Precious Metals Class, which rose 16.8 per cent and Sentry Select Precious Metals Growth, which gained 14.5 per cent.

"Gold technically broke through some important thresholds in April," said Dennis da Silva, manager with Middlefield Capital Corp. "You did see gold stay above that $1,100 (U.S.) an ounce barrier."

Gold futures for June delivery ended April at $1,180.10 per ounce on the Comex division of the New York Mercantile Exchange - up about 6 per cent on the month.

Gold stocks, however, are now outperforming the metal, he said yesterday.

"I think people are comfortable that it [gold] is not going back to $900 an ounce any time soon so they are starting to forecast what happens to these stocks in the context of a $1,100- or $1,200-gold price."

Mr. da Silva expects the metal to rise to $1,250 an ounce in the next 3 to 6 months.

His fund, which usually has 15 to 20 stocks, focuses on smaller growing companies as opposed to giants like Barrick Corp.

Names like Semafo, Red Back Mining, Iamgold, Exeter Resource and East Asia Minerals were among the big gainers last month, Mr. da Silva said.


Best and worst fund categories in April

Group Avg. 1mo. RtrnGroup Avg. YTD
Precious Metals Equity10.4%10.7%
U.S. Small or Mid Cap Equity3.7%8.5%
Natural Resources Equity3.3%7.3%
Global Small/Mid Cap Equity2.7%4.9%
Canadian Small or Mid Cap Equity2.4%7.7%
European Equity-2.2%-5.3%
Health Care Equity-2.0%0.1%
International Equity-1.4%-3.0%
Greater China Equity-1.1%-5.1%
Financial Services Equity-0.6%2.0%
Average for all funds 0.5% 2.0%
S&P 500 Composite ($ Cdn)1.1%2.9%
S&P/TSX Small Cap3.2%7.4%
S&P/TSX Total Return1.7%4.9%
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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