GABELLI
GOLD
FUND,
INC.
FIRST QUARTER REPORT
MARCH 31, 1995
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GABELLI GOLD FUND, INC.
One Corporate Center
Rye, New York 10580-1434
FIRST QUARTER REPORT - 1995
TO OUR SHAREHOLDERS:
For the first three months of 1995 the Fund's net asset value declined by
0.6%. This compares with a fall of 1.3% in the average gold fund monitored by
Lipper Analytical Services. The Gold Fund's total return from inception on July
11, 1994 through March 31, 1995 is 10.0%. On March 31, 1995 our shareholder base
is 1,728 and net assets of the Fund are $16.6 million.
INVESTMENT RESULTS(a)
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Quarter
----------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
1995: Net Asset Value $11.00 --- --- --- ---
Total Return (0.6)% --- --- --- ---
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1994: Net Asset Value --- --- $12.37 $11.07 $11.07
Total Return --- --- 23.7%(b) (10.5)% 10.7%(b)
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(a)Total return reflects change in share price and is net of expenses. Of
course, returns represent past performance and do not guarantee future results.
Investment returns and the principal value of an investment will fluctuate. When
shares are redeemed they may be worth more or less than their original cost.
(b)From commencement of operations on July 11, 1994.
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The recovery in gold equities which took place in February and March was
narrowly based and limited to large capitalization North American gold shares.
It is often the case that there is a time lag before overseas gold equities
start to perform. The divergence in performance during the quarter is evidenced
by the return of 11.6% for the Philadelphia Gold and Silver Index compared with
a decline of over 10% for both the Australian and South African gold share
indices.
OUR INVESTMENT OBJECTIVE
The Fund's objective is to obtain long-term capital appreciation by
investing in the equity securities of foreign and domestic issues principally
engaged in gold and gold-related activities.
OUR APPROACH
We look at a number of company specifics in order to determine which gold
stocks are relatively undervalued. Our primary focus is on capitalization per
ounce of production, and, more important, on capitalization per ounce of
recoverable reserves. This determines how much gold actually backs every dollar
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invested in a gold company. We appreciate that every mining company must replace
the gold that it mines, and we place a heavy emphasis on the quality of
management and their ability to create shareholder wealth. We invest globally
with an emphasis on gold-producing companies.
COMMENTARY
The Mexican financial crisis, which began just before Christmas, has had a
significant effect on the world's financial system. Investors and other
participants in the currency markets have become more conservative and quality
conscious. This has had a negative impact on those currencies whose underlying
economies have severe imbalances, usually identified as high budget and current
account deficits.
The most notable victim of this flight to quality has been the U.S. dollar,
which has declined precipitously against both the deutsche mark and the Japanese
yen. During the first quarter the dollar fell by over 10% against the yen and
deutsche mark. However, during this period short-term interest rates rose by
about 25 basis points in the U.S. and declined by over 60 basis points in
Germany and Japan. Ordinarily, these moves would tend to make the dollar more
attractive. But investors are only prepared to finance the large U.S. current
account deficit by buying dollars at a price far below that which most
economists consider to be fair value. The role of the dollar as the world's
reserve currency is now being questioned as countries have witnessed a sharp
decline in the value of their reserves. This could result in a more prominent
role for gold in central bank reserves, especially among Far Eastern countries,
where gold as a proportion of total reserves is very low.
The price of gold did not benefit in any meaningful way from the weakness
in the dollar. During January and February, the gold price drifted lower to $375
per ounce and only began to move upward when the dollar came under heavy
pressure at the start of March. Indeed, by March 29th the gold price, at $382
per ounce, was actually lower than it was at year end and, of course, gold
denominated in yen and deutsche marks had declined to multi-year lows. On March
30th, the German Bundesbank cut the discount rate by 1/2 per cent, to 4.0%, and
the gold price rallied to finish the quarter at $391.10 per ounce. This almost
$10 per ounce move reflected market concerns that the Bundesbank was not acting
for purely domestic monetary reasons but rather to ease international financial
strains. It appears that both the yen and deutsche mark are very overvalued in
regard to most economic criteria and any loss of confidence in those currencies
should benefit the gold price. We believe the downside risk for gold is minimal.
This is based on strong physical demand continuing to appear below $380 per
ounce.
As is often the case, gold equities anticipated the upward move in the
price of bullion. After a very poor January, the leading North American gold
equities rallied strongly in February and March to end the quarter at
significantly higher levels. However, South African and Australian gold stocks
lagged and only began to move ahead in late March. Indeed, mid and small
capitalization stocks in North America also underperformed the larger producers.
Towards the end of last year and in January, the Fund added to its position
in a number of the bigger and better known gold companies as their valuations
became increasingly attractive. These included Barrick Gold Corporation (ABX -
$25.00 - NYSE), Placer Dome, Inc. (PDG - $24.375 - NYSE) and Newmont Mining
Corporation (NEM - $42.75 - NYSE). However, the portfolio remains concentrated
in the mid-sized gold companies which trade at a discount to the larger
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companies and have a better growth profile. We continue to believe that the
North American gold mining industry will consolidate, because of the discrepancy
in valuations according to size and the need for the larger companies to grow
reserves. Recent examples include Pegasus Gold, Inc. (PGU - $12.339 - ASE)
bidding for the minority of its Australian subsidiary and Placer Dome offering
to buy International Musto.
In Australia, a number of mid-sized gold producers are selling at
attractive valuations which have exciting growth potential; consequently, the
Fund has added to its exposure in Australia. South African gold equities have
been very hard hit over the past few months largely as a consequence of labor
unrest. This will undoubtedly result in lower short-term earnings. A significant
portion of the Fund's investments in South Africa are in platinum producers
which have been less affected by strikes and stoppages. In early March, the
South African government abolished the Financial Rand, and since then the
currency has remained stable. This reflected a rise in South Africa's foreign
exchange reserves and improved confidence in the new political system.
Over seventy percent of the Fund is invested in North American and
Australian companies with a high growth profile that will allow them to prosper
even in a flat gold price environment. Only a portion of the Fund's South
African holdings requires a higher gold price to improve earnings, and these
should perform very well when the price of gold rises, as we expect.
GLOBAL ALLOCATION
The chart at the right presents the Fund's holdings by geographic region as
of March 31, 1995. The geographic allocation will change based on future global
market conditions.
Countries and/or regions or companies represented in the chart and below
may or may not be included in the Fund's portfolio in the future.
[Pie chart represented by the following table]
HOLDINGS BY GEOGRAPHIC REGION - 3/31/95
North America South Africa Australia Other
58.4% 27.3% 9.9% 4.4%
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Fund's
investments. Favorable EBITDA prospects do not necessarily translate into higher
stock prices, but they do express a positive trend which we believe will develop
over time.
PLACER DOME, INC. (PDG - $24.375 - NYSE) is the second-largest North
American-based gold producer, with mining operations in the United States,
Canada, Chile, and through its Australian subsidiary, Placer Pacific, in
Australia and Papua New Guinea. The company's two largest mines, Missima and
3
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Campbell, had cash costs under $140.00 per ounce in 1994, and are strong cash
generators for the company. Management is experienced in developing new mines
overseas, and during the next few years we expect a number of development
projects to be converted to operating mines. Indeed, the company recently
announced a mineral resource of 18.7 million ounces of gold at its exploration
properties. This amount is nearly equal to its proven and probable reserve of
19.8 million ounces.
STILLWATER MINING LTD. (PGMS - $17.75 - NASDAQ) is the only U.S. producer of
platinum and palladium, which are rare precious metals used in many industrial
applications and in the jewelry industry. The largest use for platinum is in
catalytic converters for the auto industry, while about half of the supply of
palladium is consumed in the production of electric components for personal
computers and cellular telephones. Historically, the platinum price has traded
at a premium to the gold price. The Stillwater mine has proven and probable
reserves of 18.0 million ounces of platinum and palladium. This is equivalent to
our 10 million ounces of gold. At the current rate of mining, the mine life is
over 60 years. The company is currently undertaking an expansion program which
will double production within two years. This program will lower costs and
improve profitability. Stillwater went public at the end of 1994 and raised the
necessary funds to finance the mine expansion.
SAINT HELENA GOLD MINES LTD. (SGOLY- $9.875 - NASDAQ) has been mining gold from
its lease area in the Orange Free State, South Africa for almost fifty years.
The company experienced low productivity a few years ago because of declining
grades and low productivity. However, management has turned the company around
largely as a consequence of introducing a new mining technique involving large
vacuum pumps. These pumps, which can move rocks larger than a baseball, have
been very effective in lowering the loss of gold that had been experienced due
to the very friable nature of the ore. The company expects 40% of production to
be sourced by this new method, and further productivity gains are expected. At
the current gold price, St. Helena's divided yield is estimated to be over 10%,
and the mine has a life of over twelve years.
MOUNT EDON GOLD MINES LTD. (MEG.AX- $1.985 - AUSTRALIAN STOCK EXCHANGE) is a
small Australian-based gold company that should enjoy substantial growth over
the next few years. The company's main asset is the Tarmoola mine located in
Western Australia. This mine is currently being expanded, and next year gold
production is expected to double to about 130,000 oz. per annum. At the end of
1994, reserves at Tarmoola were sufficient for about six more years of mining,
but the company is confident that significant reserve additions will be made.
Recently, Mt. Edon made a small acquisition which gives the company a second
mine and some interesting exploration prospects. We expect the company to
continue its exploration success in finding gold in the ground at a low cost.
MINIMUM INITIAL INVESTMENT - $1,000
The Fund's minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent minimums. No initial minimum is
required for those establishing an Automatic Investment Plan.
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GABELLI U.S. TREASURY MONEY MARKET FUND
Shareholders of any of the Gabelli Funds may invest in The Gabelli U.S.
Treasury Money Market Fund with an initial investment of $3,000 or more. The
Fund provides checkwriting and exchange privileges. The Fund's expenses are
capped at .30% of average net assets, making it one of the most attractive U.S.
Treasury-only money market funds. With dividends that are exempt from state and
local income taxes in all states, the Fund is an excellent vehicle in which to
store idle cash. Call us at 1-800-GABELLI (1-800-422-3554) for a prospectus
which gives a more complete description of the Fund, including management fees
and expenses. Read it carefully before you invest or send money.
IN CONCLUSION
The Fund's daily net asset value is available in the financial press and
each evening after 6:00 PM (Eastern Time) by calling 1-800-GABELLI
(1-800-422-3554). The Fund's NASDAQ symbol is GOLDX. Please call us during the
day for further information.
We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1995.
Sincerely,
/s/Caesar Bryan
Caesar Bryan
President and Portfolio Manager
May 1, 1995
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Top Ten Holdings
March 31, 1995
--------------
- -
Stillwater Mining Ltd. Santa Fe Pacific Gold Corporation
Barrick Gold Corporation Kloof Gold Mining Company, Ltd.
Placer Dome, Inc. Randgold and Exploration Company Ltd.
Newmont Mining Corporation Saint Helena Gold Mines Ltd.
TVX Gold, Inc. Pegasus Gold, Inc.
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5
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GABELLI GOLD FUND, INC.
PORTFOLIO OF INVESTMENTS -- MARCH 31, 1995 (UNAUDITED)
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Market
Shares Cost Value
- -------- ------ --------
COMMON STOCKS -- 99.10%
METALS AND MINING -- 99.10%
AUSTRALIA -- 9.90%
230,000 Climax Mining Ltd.+...... $199,675 $ 155,525
75,000 Delta Gold+.............. 169,895 148,838
210,000 Golden Shamrock Mines
Limited+............... 201,669 137,372
30,000 Great Central Mines N.L.+ 72,236 48,510
190,700 Homestake Gold of Australia
Limited+............... 215,577 193,427
100,000 Mount Edon Gold Mines Ltd. 233,853 198,450
56,700 Newcrest Mining Limited.. 270,573 215,874
80,000 Ranger Minerals NL+...... 235,400 194,040
100,000 Rhodes Mining NL+........ 15,897 8,085
213,500 Saint Barbara Mines Ltd.+ 266,385 182,030
150,000 Zapopan N.L.+ ........... 199,351 159,863
---------- ----------
2,080,511 1,642,014
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EUROPE -- 3.28%
15,000 Ashanti Goldfields GDR(a)+ 325,250 372,750
352,100 Glencar Explorations plc+ 221,040 171,754
---------- ----------
546,290 544,504
---------- ----------
NORTH AMERICA -- 57.52%
7,000 Agnico-Eagle Mines, Ltd.. 85,050 84,000
29,922 Barrick Gold Corporation. 622,328 748,050
20,000 Bema Gold Corporation+... 34,216 37,768
35,400 Cambior, Inc............. 446,793 408,315
87,000 Dayton Mining Corporation+ 273,319 255,150
12,800 Euro-Nevada Mining
Corporation............ 328,855 338,770
6,750 Franco-Nevada Mining
Corporation............ 371,603 335,567
59,800 Goldcorp Inc. Cl. A.+ ... 319,932 433,101
20,000 Golden Star Resources, Ltd.+ 186,373 159,156
124,000 Guyanor Resources S.A.... 187,338 239,485
15,900 Hycroft Resources &
Development Corporation+ 38,494 27,296
76,000 International Gold Resources
Corporation+........... 236,653 217,454
70,000 Kinross Gold Corporation+ 394,291 394,313
80,000 Miramar Mining Corporation+ 378,552 371,960
17,000 Newmont Mining Corporation 674,388 726,750
51,000 North American
Palladium Ltd.+ 298,995 369,750
40,000 Pegasus Gold, Inc.+...... 523,140 493,562
19,200 Pioneer Group, Inc....... 418,779 398,400
30,300 Placer Dome, Inc......... 623,482 738,563
40,000 Primer Resource Group, Inc.+ 245,462 271,817
49,000 Santa Fe Pacific Gold
Corporation+ 608,575 618,625
41,250 Stillwater Mining Ltd.(b)(c)+ 242,000 649,688
30,000 Stillwater Mining Ltd.+.. 390,000 532,500
104,000 TVX Gold, Inc.+.......... 687,723 678,827
30,000 Zamora Gold Corporation+. 43,481 13,949
---------- ----------
8,659,822 9,542,816
---------- ----------
SOUTH AFRICA -- 27.27%
180,000 Deelkraal Gold ADR....... 332,548 178,650
155,000 Doornfontein Gold Mining
Company Limited ADR+... 187,250 125,674
90,000 Grootvlei Proprietary
Mines Ltd. 258,252 225,000
Principal
Amount Market
or Shares Cost Value
- --------- ------- --------
35,000 Harmony Gold Mining Ltd. ADR+ $ 245,175 $ 288,687
20,000 Impala Platinum Holdings, Ltd. 444,375 452,956
48,000 Kloof Gold Mining
Company, Ltd........... 629,132 558,000
305,000 Lebowa Platinum Mines Limited+ 354,700 362,283
20,000 Leslie Gold Mines Ltd. ADR 180,475 145,392
40,100 Loraine Gold Mines Ltd. ADR+ 192,363 120,300
177,750 Northam Platinum Limited+ 219,820 213,618
1,100,000 Rand Leases Gold Mining+ 298,500 261,319
20,000 Randfontein Estates Gold
Mining Company Ltd. ADR 215,000 132,500
188,000 Randgold and Exploration
Company Ltd............ 537,200 514,925
20,000 Rustenburg Platinum Holdings,
Ltd.................... 496,215 451,558
50,000 Saint Helena Gold Mines Ltd. 455,888 493,750
---------- ----------
5,046,893 4,524,612
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SOUTH AMERICA -- 1.13%
45,000 Cia De Minas Buenaventura SA 172,946 187,168
---------- ----------
TOTAL COMMON STOCKS ..... 16,506,462 16,441,114
---------- ----------
WARRANTS -- 0.02%
19,750 Northam Platinum Limited. 2,497 3,864
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TOTAL WARRANTS .......... 2,497 3,864
---------- ----------
CONVERTIBLE CORPORATE BONDS -- 1.22%
NORTH AMERICA
$200,000 Bema Gold Corporation Sub.
Deb. Cv. 7.50%, 9/15/99(b) 200,000 202,000
---------- ----------
TOTAL CONVERTIBLE
CORPORATE BONDS ........ 200,000 202,000
---------- ----------
TOTAL
INVESTMENTS--100.34% .... $16,708,959 16,646,978
==========
LIABILITIES, IN EXCESS OF OTHER
ASSETS - (0.34)% ...... (56,239)
----------
NET ASSETS - 100.00%
(1,508,302 shares
outstanding) ........ $16,590,739
==========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE ......... $11.00
======
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(a)Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At March 31, 1995, Rule 144A
security amounted to $372,750 or 2.2% of net assets.
(b)Security is fair valued pursuant to procedures established by the Board of
Directors.
(c)Security restricted as to resale. This investment was acquired on September
14, 1994 and represents 3.9% of net assets at March 31, 1995.
ADR--American Depository Receipt
GDR--Global Depository Receipt
+Non-income producing security.
6
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GABELLI FAMILY OF FUNDS
DISTRIBUTED BY GABELLI & COMPANY, INC.
ONE CORPORATE CENTER, RYE, NY 10580-1435
GABELLI ASSET FUND--------------------------------------------------------------
Invests in a diversified portfolio of companies selling below their private
market value. The Fund's primary objective is to seek growth of capital.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI GROWTH FUND-------------------------------------------------------------
Invests in a diversified portfolio of common stocks that have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is to
seek capital appreciation by employing an earnings-driven investment approach.
PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GABELLI GLOBAL SERIES
---------------------
GABELLI GLOBAL TELECOMMUNICATIONS FUND
Invests in telecommunications companies throughout the world. Targets
undervalued companies with strong earnings per share and cash flow dynamics.
The Fund's primary objective is to seek capital appreciation.
TEAM MANAGER: MARIO J. GABELLI, CFA
GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
Invests primarily in bonds and preferred stocks which are convertible into
common stock of foreign and domestic companies. The Fund's primary objective
is to seek a high level of total return through a combination of current
income and capital appreciation.
PORTFOLIO MANAGER: HART WOODSON
GABELLI GLOBAL INTERACTIVE COUCH POTATO(TM)(C) FUND
Invests in companies involved in communications, creativity and copyright
throughout the world. The Fund will also invest in companies participating in
emerging technological advances in interactive services and products. The
Fund's primary objective is to seek capital appreciation.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI GOLD FUND---------------------------------------------------------------
Invests in a global portfolio of equity securities of gold mining and related
companies. The Fund's primary objective is to seek capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of worldwide economic, financial and political factors.
PORTFOLIO MANAGER: CAESAR BRYAN
Investment in foreign securities involves risks not ordinarily associated with
investments in domestic issuers, including currency fluctuation, economic and
political risks.
GABELLI SMALL CAP GROWTH FUND
Invests primarily in equity securities of smaller companies (companies with a
total market capitalization of less than $500 million) which are believed likely
to have rapid growth in revenues and earnings. The Fund's primary objective is
to seek capital appreciation.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
MAX. SALES CHARGE: 4 1/2%
GABELLI VALUE FUND--------------------------------------------------------------
Invests in a concentrated portfolio of securities of companies which are selling
below their private market value. The Fund's primary objective is long-term
capital appreciation. $250 initial minimum for IRAs.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
MAX. SALES CHARGE: 5 1/2%
GABELLI EQUITY INCOME FUND------------------------------------------------------
Invests primarily in a portion of income-producing equity securities. Pays
quarterly dividends. The Fund's primary objective is to seek a high level of
total return.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
MAX. SALES CHARGE: 4 1/2%
GABELLI U.S. TREASURY MONEY MARKET FUND-----------------------------------------
Invests exclusively in short-term U.S. Treasury securities. The Fund's primary
objective is to provide high current income consistent with the preservation of
principal and liquidity. Features low expenses, free checkwriting, telephone
exchange and redemption privileges. $10,000 minimum initial investment. $3,000
minimum for Gabelli Fund shareholders. $1,000 for IRAs and Custodial Accounts.
PORTFOLIO MANAGER: RONALD EAKER
GABELLI'S WESTWOOD FUNDS--------------------------------------------------------
The Westwood Funds consist of three investment portfolios, designed to pursue a
variety of investment objectives: Westwood Equity Fund seeks growth, Westwood
Balanced Fund seeks income and growth, and Westwood Intermediate Bond Fund seeks
current income.
PORTFOLIO MANAGERS: SUSAN BYRNE & PAT FRAZE
To request a prospectus, call
1-800-GABELLI (1-800-422-3554)
Or, visit our Internet homepage at:
HTTP:/ /NETWORTH.GALT.COM/GABELLI
The prospectus(es) contain more complete information, including fees and
expenses, and should be read carefully prior to investing.
<PAGE>
GABELLI GOLD FUND, INC.
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
(Net Asset Value may be obtained
daily by calling
1-800-GABELLI after 6:00 P.M.)
BOARD OF DIRECTORS
Mario J. Gabelli, CFA
Chairman and Chief
Investment Officer
Gabelli Funds, Inc.
E. Val Cerutti
Chief Executive Officer
Cerutti Consultants, Inc.
Anthony J. Colavita
Attorney-at-Law
Anthony J. Colavita, P.C.
Karl Otto Pohl
Former President
Deutsche Bundesbank
Werner J. Roeder, MD
Director of Surgery
Lawrence Hospital
Anthonie C. van Ekris
Managing Director
BALMAC International, Inc.
Daniel E. Zucchi
Senior Vice President
Hearst Magazines
OFFICERS
Caesar Bryan
President and
Portfolio Manager
J. Hamilton Crawford, Jr.
Secretary
Bruce N. Alpert
Vice President
and Treasurer
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Willkie Farr & Gallagher
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This report is submitted for the general information of the shareholders of
Gabelli Gold Fund, Inc. It is not authorized for distribution to prospective
investors unless preceded or accompanied by an effective prospectus.
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