The Charteris Gold & Precious Metals fund has been the UK top performing fund for the past 12 months. The fund’s stock-picker, Ian Williams, explains why the fund’s assets have risen by 117% over the last year.
Modestly, he notes that seven out of 10 of the best performing funds this year have been gold and precious metals-focused, so it has been the sector that has been the star.
“Our fund just happens to be at the top of the sector,” Williams said, before explaining why that is: “70% of our fund is in silver miners, as opposed to gold miners”.
“Silver’s gone up much more than gold’s gone up this year, and silver miners have gone up much more than gold miners,” Williams noted.
So, every fund should have a silver lining it seems, especially in a rampaging bull market.
“It happens in every bull market. Silver has twice the volatility of gold in an upswing, and twice the volatility in a downswing, so we say to investors: look, if you want exposure to precious metals, you should buy silver over gold all day long; if you don’t want exposure to precious metals, you don’t buy either silver or gold,” Williams opined.
“There’s no real argument for buying gold over silver if you are bullish about precious metals,” he added.
If you do not want the hassle of picking your own silver stocks, and you subscribe to Williams’s view that silver is the precious metal to back rather than gold, then his fund is the one to pick, as it has far more exposure to silver than other precious metals funds.
Williams thinks there is still plenty of juice left in the silver rally. Working on a ten-year cycle, silver is not only half-way through an up-cycle but it has also recovered about hallway from the low-point of the cycle to the previous high point.
In other words, silver is only halfway through its upward journey, in Williams’s view.
Most of the fund's silver investments are in Canadian companies, and most of those are mining in Mexico.
He lists a few of his favourite Canadian silver stocks and also a few Canadian gold companies that he likes the look of.
“We’ve sort of been drawn to the Canadian companies; 80% of the fund is in Canadian quoted companies, and the next highest is in UK companies, which only account for about 15,” the fund manager explained.
After Brexit and the Trump election win, Williams believes the deflation/inflation cycle is turning.
“This is going to be the big theme for 2017. The problem is, 70% of the average pension fund is in bonds and fixed interest, which are deflation proof assets, and about 1% is in gold and silver assets, which are inflation proof, and maybe 5-8% in property, so there’s a big mismatch as the cycle turns,” in Williams’s view.