Calandra is off to Mongolia in search of gold and more

Precious metals funds are golden;
enjoy 15.5% advance in August
on gold's price rise;
most fund categories gain

ByCarolyn Leitch
Globe and Mail, Toronto
September 15, 2003
a href=http://www.globeandmail.ca/servlet/ArticleNews/TPStory/LAC/20030915/RFht...
UND15/?query=embry

The rising price of gold helped push equity funds that
invest in precious metals to a strong average advance
of 15.5 percent in August.

While precious metals funds posted the strongest
showing, mutual funds across most categories gained
ground last month as stock markets continued to climb.

August's run helped push precious metals funds to an
average gain of 31.2 percent for the 12 months to Aug. 31.

Among top performers last month, the $169.8-million
Sprott Gold and Precious Minerals fund surged 27
percent, the $328.8-million RBC Precious Metals fund
gained 22.5 percent, and the $8.6-million StrategicNova
World Precious Metals fund rose 21 percent.

The $187.8-million Dynamic Canadian Precious Metals
fund increased 20.4 percent, the $152.2-million AGF
Precious Metal fund advanced 18 percent, and the
$24.6-million Dynamic Global Precious Metals fund
rose 18 percent.

Much of gold's strength in the past year has been
fuelled by a weakening U.S. dollar. A decline in the
greenback makes gold, which is sold in U.S. dollars,
more affordable for foreign buyers.

John Embry, president of Sprott Asset Management
Inc. and manager of the Sprott gold fund, points out,
however, that the rise of gold is no longer just a U.S.
dollar story. The price of bullion has jumped against
other currencies as well.

He says a wave of quot;excessive global money creation,quot;
as countries allow their currencies to weaken in line
with the greenback, is very constructive for gold.

quot;What you've got is a global currency debasement.quot;
As the value of money goes down, the price of gold
rises, he explains.

Mr. Embry, who took the helm of the Sprott fund in
March, says it took a few months for him to get it
positioned to his liking. The manager favours companies
with large ore bodies and good leverage to a rising gold
price.

That strategy paid off in August, he said, with the help
of a good performance by many junior producers. quot;It
was a month in which a lot of those came to life.quot;

August was also a strong month for funds that invest
in equities in Japan. Japanese equity funds posted an
average advance of 9.4 percent to bring them just about
flat for the year to Aug. 31, with a 0.7-per-cent dip.

The $6-million Mackenzie Universal Select Managers
Japan Capital Class fund gained 13.4 percent, the
$2.1-million Fidelity Japan Class fund rose 12 percent,
and the $101-million Fidelity Japan-A fund added 12
percent.

Funds in the natural resources category received a
boost from the runup in the prices of gold and other
metals. Lumber prices rose also sharply and oil prices
gained modestly in August.

Funds in the group gained an average of 8.5 percent
last month. The one-year gain for natural resources
funds now stands at 20.2 percent.

The $8.6-million Dynamic Global Resource fund jumped
21 percent, the $4.1-million Mavrix Explorer fund gained
13.2 percent, and the $21.8-million TDK Resource Fund
Inc. fund advanced 12.8 percent.

Canadian equity funds rose an average of 2.8 percent in
August. The benchmark Samp;P/TSX composite index
gained 3.5 percent in the same period.

Among the leaders, the $15.3-million Acuity All Cap 30
Canadian Equity fund gained 15.6 percent, the
$37.6-million Acuity Canadian Equity fund rose 13.5
percent, and the $323,000 University Avenue Canadian
fund added 11.1 per cent.

Equity markets in Asia and the Pacific Rim posted
strong performances in August, and funds that invest
in the region gained 7.4 percent, on average, as a
result. Funds in the group have slipped an average of
0.07 percent for the one-year period ended Aug. 30.

Last month, the Investors Pan Asian Growth Class-B
fund rose 21.8 percent, the $62.6-million AIM
Indo-Pacific fund increased 8.8 percent, and the
$18.3-million CI Pacific Sector Shares fund gained
8.7 percent.

Canadian small-capitalization funds rose an average
4.8 percent in August, to bring their gain for one year
to 12.4 percent.

The $3.4-million Dynamic Quebec fund jumped 13.7
percent, the $10.7-million Front Street Small Cap
Canadian fund added 13.1 percent, and the
$123.1-million Dynamic Power Small Cap fund
increased 12.7 percent.

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----------------------------------------------------

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----------------------------------------------------

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