GABELLI GOLD FUND, INC.
FIRST QUARTER REPORT - MARCH 31, 1997
[PHOTO]
CAESAR BRYAN
TO OUR SHAREHOLDERS:
The continued strength of the dollar and rumors of further central bank
or official sector sales caused further weakness in the price of gold during the
first quarter of 1997. By the end of March, the price of gold had fallen by
$17.50 to $351.00 per ounce, which is a decline of 4.8%.
In this lackluster gold price environment, gold equities performed
poorly and the Gabelli Gold Fund declined by 4.0% during the quarter under
review. This compares with a fall of 7.9% and 10.8% for the average gold fund
monitored by Lipper Analytical Services Inc. and the Philadelphia Index of gold
and silver stocks (XAU index), respectively.
<TABLE>
<CAPTION>
INVESTMENT RESULTS (a)
==========================================================================================
Quarter
------------------------------------------------------
1st 2nd 3rd 4th Year
--- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
1997: Net Asset Value ...... $11.83 -- -- -- --
Total Return ......... (4.0)% -- -- -- --
- ------------------------------------------------------------------------------------------
1996: Net Asset Value ...... $14.00 $13.40 $13.46 $12.32 $12.32
Total Return ......... 22.7% (4.3)% 0.4% (8.5)% 8.0%
- ------------------------------------------------------------------------------------------
1995: Net Asset Value ...... $11.00 $11.96 $12.27 $11.41 $11.41
Total Return ......... (0.6)% 8.7% 2.6% (7.0)% 3.1%
- ------------------------------------------------------------------------------------------
1994: Net Asset Value ...... -- -- $12.37 $11.07 $11.07
Total Return ......... -- -- 23.7%(b) (10.5)% 10.7%(b)
</TABLE>
================================================================================
Average Annual Returns - March 31, 1997 (a)
- -------------------------------------------------------------------------------
1 Year...........................................(15.5)%
Life of Fund(b)...................................18.3%
- -------------------------------------------------------------------------------
(a) Total returns reflect changes in share price and are 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.
NOTE: Investing in foreign securities involves risks not ordinarily associated
with investments in domestic issues, including currency fluctuation, economic
and political risks. Investing in gold is considered speculative and is affected
by a variety of world-wide economic, financial and political factors.
================================================================================
<PAGE>
OUR INVESTMENT OBJECTIVE
The Fund's objective is to obtain long-term capital appreciation by
investing in the equity securities of foreign and domestic issuers 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 importantly, on capitalization per ounce of
recoverable reserves. This determines how much gold actually backs every dollar
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.
[THE FOLLOWING TABLE REPRESENTS A CHART IN THE PRINTED PIECE.]
HOLDINGS BY GEOGRAPHIC REGION - 3/31/97
NORTH AMERICA .................. 59.3%
SOUTH AFRICA ................... 29.3%
AUSTRALIA ...................... 8.8%
OTHER .......................... 2.6%
THE PORTFOLIO
GLOBAL ALLOCATION
The chart at the right presents the Fund's holdings by geographic region
as of March 31, 1997. 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.
COMMENTARY
The most significant event of the quarter was the sharp fall in the
share price of many of the exploration companies that occurred during the last
week of March. This was caused by the announcement by Freeport-McMoRan Copper &
Gold Inc. (FTX - $29.25 - NYSE) that the gold discovery made by Bre-X Minerals
Ltd. (BXM - $1.75 - Toronto) at Busang in Indonesia possibly contains an
insignificant amount of gold. The share price of Bre-X Minerals promptly
collapsed and most other exploration stocks were hard hit. The discrepancy
between Bre-X's previous claims that the property contained at least 71 million
ounces of gold and Freeport's recent announcement remains a mystery. The market
awaits further test results.
The Gabelli Gold Fund did not own any Bre-X shares and has a limited
exposure to gold exploration stocks that have no gold production. However, the
whole sector was adversely affected by the Bre-X news. We believe that the
current environment presents an opportunity for further consolidation in the
industry. Larger gold companies now have the chance to acquire gold reserves and
resources at more attractive prices. The Fund has positions in a number of small
and medium sized producers which we continue to believe are attractive
acquisition targets.
2
<PAGE>
Investor sentiment towards gold bullion remains poor. This is largely
due to the fear of further European central bank sales and producer forward
sales. The recent announcement by the Swiss authorities that they intend to seek
popular approval for the sale of gold reserves further hurt sentiment even
though sales from this source would only occur in 1999, if at all. The market
now assumes that European central banks will continue to fill the shortfall in
gold supply that is required despite continued statements from the Deutsche
Bundesbank that such sales are likely to be limited and that Germany does not
intend to sell any gold.
Anecdotal evidence suggests that the recent fall in the gold price has
caused physical demand, particularly from the Far East, to rise sharply. Also,
some market observers believe that a Far Eastern central bank may be increasing
its gold holdings. This sharp rise in physical demand should prevent the gold
price from declining below its current level.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Fund.
Favorable EBITDA (earnings before interest, taxes, depreciation and
amortization) prospects do not necessarily translate into higher stock prices,
but they do express a positive trend which we believe will develop over time.
RANDGOLD AND EXPLORATION COMPANY LTD. (RNGJN.J - $7.86 - JOHANNESBURG STOCK
EXCHANGE) Randgold owns stocks in a number of mines in South Africa including
Harmony Gold Mines and Durban Roodepoort Mines, as well as exploration assets
and gold mines in the rest of Africa through a subsidiary called Randgold
Resources. New management joined the company in 1994 and has undertaken a
comprehensive review of the company's activities and structure. This has
resulted in a change in the relationship between Randgold and its operating
mines, reducing head office staff and instituting productivity enhancing reforms
such as buying neighboring mines. Randgold Resources recently purchased an
operating gold mine from B.H.P., the large Australian metals company, and we
expect Randgold Resources will attempt to list its shares during 1997. Randgold
offers investors sensitivity to higher gold prices through its producing mines
and also to reserve growth through Randgold Resources. Randgold Resources has a
number of promising exploration properties outside South Africa, the value of
which we believe has not been fully recognized by the market.
STILLWATER MINING LTD. (PGMS - $19.625 - NASDAQ) is the only U.S. producer of
platinum and palladium, 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 price of platinum has
traded at a premium to the gold price. The company's reserves of platinum and
palladium at year end 1996 totaled 21.6 million ounces, which is roughly
equivalent to 12 million ounces of gold. In addition to this, Stillwater
announced a total mineral inventory of 25.4 million ounces, equivalent to 14
million ounces of gold. Based on a market capitalization to reserves, this makes
Stillwater very cheap relative to North American gold companies. New management
is concentrating on improving profitability and expanding the operation.
Stillwater went public at the end of 1994 and raised the necessary funds to
finance the mine expansion.
3
<PAGE>
GOLDCORP INC. (GA.TO - $8.31 - TORONTO STOCK EXCHANGE) is a mid-sized Canadian
gold producer with two producing gold mines and two industrial mineral
operations. The company's most significant asset is the Red Lake Mine, which is
part of a major production camp in Canada. Recent exploration drilling has
revealed high grade ore zones, previously unknown, which will add significantly
to the mine's reserves. These new discoveries will necessitate some capital
expenditures, which the company will easily be able to finance from its current
cash position of $50 million. GoldCorp is undervalued relative to other
mid-sized producers and we expect management to add significantly to shareholder
value.
BEMA GOLD CORPORATION (7.50% SUB. DEB. CV. 2/28/00) is a junior Canadian-based
growth gold mining company active in South America. In 1996 the company entered
the ranks of a producing company when its 50%-owned Refugo Mine in Chile started
operations. This mine is expected to produce over 230,000 ounces per year. Cash
flow from this mine and a small operation in Venezuela will be used to carry out
an aggressive drilling program on a number of properties, of which the most
exciting is the Cerro Casale gold-copper porphyry deposit.
CIA DE MINAS BUENAVENTURA S.A. (BLE.LM - $9.42 - LIMA STOCK EXCHANGE) is one of
Peru's leading mining companies. Its major asset is a 43% stake in Yanacocha,
which is one of the most profitable gold operations in the world and South
America's largest gold mine. The operator is Newmont Mining and in 1996 the mine
produced over 800,000 ounces at a cash cost of $107 per ounce. After mine
depletion, 1.2 million ounces of gold were added to reserves during 1996.
Newmont Mining, in its 1996 annual report, describes Yanacocha as "a gold
producer's dream." Buenaventura has interests in a number of other gold and
silver mines in Peru as well as promising exploration properties. Buenaventura's
exploration joint venture partners include Barrick Resources, Echo Bay and
Cyprus Amex.
TVX GOLD, INC. (TVX - $7.01 - NYSE) is a mid-sized gold producer with four
operating mines. Its largest mine is La Coipa in Chile, a joint venture with
Placer Dome Inc., one of the world's largest gold producers. The other mines are
located in Brazil and Canada. The company has been very actively pursuing a
growth strategy, which includes acquisitions and exploration. The single most
exciting project within the company is in Greece at Kassandra. This property was
sold to TVX by the Government of Greece and mining has been conducted there for
centuries. However, TVX has discovered further resources and Kassandra will
become a significant producer of gold for the company. This spring another of
TVX's development properties, Mussellwhite, will begin operations. We believe
TVX is one of the cheapest mid-capitalization gold stocks on a reserve basis in
North America.
NEWMONT MINING CORPORATION (NEM - $38.75 - NYSE) is one of the premier growth
gold mining companies in North America. Until recently, the company's operations
were limited to the Carlin Trend in Nevada, which produced 1.7 million ounces of
gold in 1996. However, the company is now beginning to benefit from exploration
expenditures outside the United States. In 1996, Newmont began gold production
at Minahasa in Indonesia, adding to its existing overseas operations at
Yanacocha in Peru and Zarafsham in Uzbekistan. In March 1997, Santa Fe Gold
accepted Newmont's merger offer. The combined company will have 55 million
ounces of reserves and gold production of 4 million ounces by 1998. The merged
company will have an excellent land position in Nevada for further exploration
and the potential to cut costs at existing operations.
4
<PAGE>
IAM GOLD (IMG.TO - $4.34 - TORONTO STOCK EXCHANGE) International African Mining
Gold Corporation is involved in the exploration and development of gold
properties primarily in West Africa. The company sought out interesting
properties before West Africa became popular among junior exploration companies.
The company's main asset is their 38% ownership of the Sadiola gold mine in
Mali. The mine has recently begun production at an annual rate of about 400,000
ounces at a very low cash cost of less than $150 per ounce. IAM Gold's partner
in this mine is Anglo American. The company also has a joint venture with
Ashanti Goldfields to explore for gold in Ghana, Guinea, Niger and Senegal. More
recently, IAM Gold has turned its attention to South America and has obtained
exploration concessions in Ecuador.
EURO-NEVADA MINING CORPORATION (EN.TO - $28.90 - TORONTO STOCK EXCHANGE) is a
sister company of Franco-Nevada and shares the same management. However,
Euro-Nevada only invests in gold royalty properties. The company's flagship
royalty properties are its 4% net smelter return and 5% net profits interest
royalty on Barrick Gold's Meikle Mine in the Carlin Trend of Nevada. The company
has assembled impressive royalty properties, many of which are in production.
Among a number of recent exciting developments is the continuing flow of news
from the company's Midas joint venture in Nevada with Franco-Nevada. Euro-Nevada
owns 50% of this project which will be one of the lowest cost gold mines in the
world when it comes into production.
THE PIONEER GROUP INC. (PIOG - $25.875 - NASDAQ), based in Boston, engages in
two main businesses: asset management and gold mining. The company owns 90% of
the Teberebie gold mine, which is Ghana's second largest mine. In 1996, the mine
produced a little more than 200,000 ounces. Teberebie experienced some operating
difficulties in 1996 and management has made changes in the mining method, which
should improve efficiencies. Reserves at the mine total over 9 million ounces
which would support further mine expansions. Pioneer also operates a successful
mutual fund business in the United States and some foreign countries with $17.0
billion under management at the end of 1996. The company has also invested in
other natural resource businesses and financial services outside the United
States which we expect to be successful.
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. Furthermore,
Gabelli Gold Fund and other Gabelli Funds are available through the
no-transaction fee programs at many major discount brokerage firms.
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
5
<PAGE>
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. An investment in The Gabelli U.S. Treasury Money Market Fund is
neither insured nor guaranteed by the U.S. Government and there can be no
assurance that the Fund will maintain a stable $1 per share net asset value.
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.
INTERNET
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Funds, Inc., the
Gabelli Mutual Funds, quarterly reports, closing prices, IRAs, 401(k)s and other
current news. You can also send us e-mail at [email protected].
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 1997.
Sincerely,
/s/Caesar Bryan
---------------
CAESAR BRYAN
President and Portfolio Manager
May 1, 1997
- -------------------------------------------------------------------------------
TOP TEN HOLDINGS
MARCH 31, 1997
--------------
Randgold and Exploration Company Ltd.
Stillwater Mining Ltd.
GoldCorp Inc.
Bema Gold Corp.
TVX Gold, Inc.
Newmont Mining Corporation
IAM Gold
Cia de Minas Buenaventura S.A
Randgold Resources
Euro-Nevada Mining Corporation
- -------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period of this report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
6
<PAGE>
GABELLI GOLD FUND, INC.
PORTFOLIO OF INVESTMENTS -- MARCH 31, 1997 (UNAUDITED)
===============================================================================
Market
Shares Value
------- ------
COMMON STOCKS - 96.39%
METALS AND MINING -
AUSTRALIA - 8.50%
21,658 AGSM............................................ $ 2,166
230,000 Emperor Mines Ltd.+............................. 350,713
300,000 Kimberley Diamond Co. NL........................ 63,666
250,000 Menzies Gold NL................................. 102,180
60,000 Plutonic Resources Ltd.......................... 233,442
80,000 Ranger Minerals N.L.+........................... 266,611
140,000 Resolute Samantha Ltd........................... 302,610
----------
1,321,388
----------
IRELAND - 1.83%
347,271 Glencar Explorations plc+....................... 284,762
----------
NORTH AMERICA - 53.29%
44,257 Avgold Ltd...................................... 90,606
17,000 Casmyn Corp..................................... 140,250
50,000 Dayton Mining Corporation....................... 205,925
17,600 Euro-Nevada Mining Corporation.................. 508,671
9,500 Franco-Nevada Mining Corporation................ 439,306
10,000 Getchell Gold Corp.+............................ 406,250
89,600 GoldCorp Inc. Cl. A............................. 744,509
30,000 Golden Star Resources Ltd.+..................... 313,223
5,000 Golden Star Resources Ltd. ADR+................. 52,500
25,000 Greenstone Resources Ltd........................ 252,890
94,200 Guyanor Resources SA+........................... 374,350
130,000 IAM Gold+....................................... 563,584
13,000 Lazare Kaplan International, Inc.+.............. 198,250
70,000 Meridian Gold Inc.+............................. 177,023
90,000 Minorca Resources Inc........................... 92,666
45,000 Miramar Mining Corporation+..................... 188,584
15,000 Newmont Mining Corporation...................... 581,250
31,000 North American Palladium Ltd.+.................. 123,031
19,200 Pioneer Group, Inc.............................. 496,800
21,300 Placer Dome Inc................................. 386,062
50,000 Prime Resources Group........................... 391,980
44,250 Stillwater Mining Ltd. (b) (c)+................. 868,406
90,000 TVX Gold, Inc.+................................. 630,780
8,000 Valerie Gold Resources Ltd...................... 15,607
400,000 Venoro Gold Corp. Cl. A+........................ 46,243
----------
8,288,746
----------
PERU - 4.29%
13,825 Cia De Minas Buenaventura SA - Class B.......... 145,573
55,301 Cia De Minas Buenaventura SA - Class C.......... 520,997
----------
666,570
----------
SOUTH AFRICA - 28.48%
17,664 Ashanti Goldfields Co. Ltd. GDR................. 242,887
167,900 Blyvooruitzicht Gold Mining Ltd................. 205,127
30,000 Blyvooruitzicht Gold Mining Ltd. Unsponsored ADR 105,000
130,000 Deelkraal Gold+................................. 111,748
100,000 Deelkraal Gold ADR+............................. 85,973
27,500 Durban Roodepoort Deep, Ltd..................... 225,537
34,000 Harmony Gold Mining Ltd. ADR.................... 276,889
25,000 Impala Platinum Holdings Ltd.................... 298,323
128,355 Kalahari Goldridge Mining Co., Ltd.............. 91,475
367,750 Northam Platinum Limited+....................... 199,683
31,195 Randfontein Estates Gold Mining Company Ltd. ADR 141,135
203,547 Randgold and Exploration Company Ltd.+.......... 1,600,285
20,161 Rangold Resources Ltd.+......................... 514,106
36,700 Saint Helena Gold Mines Ltd..................... 204,144
50,000 West Rand Consolidated Mines Ltd................ 127,814
----------
4,430,126
----------
TOTAL COMMON STOCKS ............................ 14,991,592
----------
Principal
Amount
or Shares
- ----------
PREFERRED STOCKS - 0.56%
SOUTH AFRICA - 0.56%
11,000 Durban Roodepoort Deep, Ltd. Pfd................ 87,104
----------
TOTAL PREFERRED STOCKS ......................... 87,104
----------
OPTIONS - 0.69%
SOUTH AFRICA - 0.69%
36,000 Durban Roodepoort Deep, Ltd.+................... 107,499
----------
TOTAL OPTIONS - ................................ 107,499
----------
WARRANTS - 0.34%
AUSTRALIA - 0.26%
180,500 Lone Star Exploration Exp. 7/31/97+............. 40,434
----------
CANADA - 0.00%
4,000 Valerie Gold Resources Ltd. Special Warrants+... 0
----------
SOUTH AFRICA - 0.08%
21,900 Blyvooruitzicht Gold Mining Ltd. Exp. 1/1/2001+. 12,635
19,750 Northam Platinum Limited Exp. 12/31/97+......... 357
----------
12,992
----------
TOTAL WARRANTS ................................. 53,426
----------
CONVERTIBLE CORPORATE BONDS- 6.00%
NORTH AMERICA - 6.00%
200,000 Atlas Corporation Sub. Deb. Cv.
7.00%, 10/25/00 (a)........................... 180,000
200,000 Bema Gold Corporation Sub. Deb. Cv.
7.50%, 02/28/00............................... 677,360
100,000 William Resources Ltd. Sub. Deb. Cv.
1.00%, 01/23/02............................... 76,553
----------
TOTAL CONVERTIBLE CORPORATE BONDS .............. 933,913
----------
TOTAL INVESTMENTS - 103.98% .................... 16,173,534
Liabilities, in excess of Other Assets--(3.98)%.. (619,103)
----------
NET ASSETS - 100.00% ........................... $15,554,431
==========
(1,314,475 shares outstanding)
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE . $11.83
======
- -----------------------------------------------------------
(a) Security exempt from registration under Rule 144A of the Securities Act of
1993. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At March 31, 1997, Rule 144A
security amounted to $180,000 or 1.2% 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 5.6% of net assets at March 31, 1997.
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
+ Non-income producing security
7
<PAGE>
GABELLI GOLD FUND, INC.
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
http://www.gabelli.com
e-mail: [email protected]
(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
PRESIDENT
DANIEL E. ZUCCHI ASSOCIATES
OFFICERS
Caesar Bryan
PRESIDENT AND
PORTFOLIO MANAGER
James E. McKee
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
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
[PHOTO]
GABELLI
GOLD
FUND,
INC.
FIRST QUARTER REPORT
MARCH 31, 1997
