[GRAPHIC OMITTED]
GABELLI GOLD FUND, INC.
THIRD QUARTER REPORT - SEPTEMBER 30, 1999 [PHOTO OF CAESAR BRYAN]
CAESAR BRYAN
TO OUR SHAREHOLDERS,
A number of factors combined to help the gold price recover at the end of
September from its recent twenty-year lows. Gold demand reached an all-time high
in the second quarter of 1999, and the International Monetary Fund's proposal to
sell gold faced almost certain defeat. At the same time, the cost of borrowing
gold crept higher, suggesting that many market participants were continuing to
short gold and bet that the price would continue to decline. In contrast to the
first Bank of England auction, the second auction that took place on September
21 was a success. The gold was sold at a small premium to the prevailing price
and the sale was well over-subscribed. Then dramatically, on September 26, the
European central banks made a statement clarifying their intentions with respect
to their gold holdings. This was the catalyst that pushed the price of gold
sharply higher.
INVESTMENT PERFORMANCE
For the third quarter ended September 30, 1999, The Gabelli Gold Fund's
(the "Fund") total return was 25.05%. The Lipper Gold Fund Average and
Philadelphia Gold & Silver ("XAU") Index of large North American gold companies
had total returns of 19.21% and 21.20%, respectively, over the same period. The
XAU Index is an unmanaged indicator of stock market and investment performance,
while the Lipper Average reflects the average performance of mutual funds
classified in this particular category. The Fund was up 9.24% over the trailing
twelve-month period. The Lipper Gold Fund Average and XAU Index declined 8.38%
and 9.00%, respectively, over the same twelve-month period.
For the five-year period ended September 30, 1999, the Fund's total return
averaged (11.26)% annually versus average annual total returns of (11.75)% and
(35.94)% for the Lipper Gold Fund Average and XAU Index, respectively. Since
inception on July 11, 1994 through September 30, 1999, the Fund had a cumulative
decline of 31.93%, which equates to an average annual return of (7.09)%.
<PAGE>
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Quarter
--------------------------------------------------
1ST 2ND 3RD 4TH YEAR
--- --- --- --- ----
<C> <C> <C> <C> <C> <C> <C>
1999: Net Asset Value ............... $5.45 $5.39 $6.74 -- --
Total Return .................. (3.7)% (1.1)% 25.1% -- --
- --------------------------------------------------------------------------------------------------------------
1998: Net Asset Value ............... $6.63 $5.68 $6.17 $5.66 $5.66
Total Return .................. 12.9% (14.3)% 8.6% (8.3)% (3.6)%
- --------------------------------------------------------------------------------------------------------------
1997: Net Asset Value ............... $11.83 $9.79 $9.17 $5.87 $5.87
Total Return .................. (4.0)% (17.2)% (6.3)% (35.4)% (51.9)%
- --------------------------------------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Returns - September 30, 1999 (a) Dividend History
- ----------------------------------------------- ---------------------------------------------------------
<S> <C> <C> <C> <C>
1 Year ............................. 9.24% Payment (ex) Date Rate Per Share Reinvestment Price
5 Year ............................ (11.26)% ----------------- -------------- ------------------
Life of Fund (b) .................. (7.09)% December 29, 1997 $0.058 $5.86
(a) Total returns and average annual returns reflect changes in share price and reinvestment of dividends and
are net of expenses. The net asset value of the Fund is reduced on the ex-dividend (payment) date by the amount
of the dividend paid. 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 investment 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 worldwide economic, financial and political factors.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
OUR INVESTMENT OBJECTIVE
The Fund's objective is to obtain long term capital appreciation by
investing in 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.
2
<PAGE>
HOLDINGS BY GEOGRAPHIC REGION - 9/30/99
[PIE CHART OMITTED]
North America 52.7%
South Africa 29.6%
Cash 8.7%
Australia 6.7%
Europe 1.3%
Latin America 1.0%
GLOBAL ALLOCATION
The accompanying chart presents the Fund's holdings by geographic region as
of September 30, 1999. The geographic allocation will change based on current
global market conditions. Countries and/or regions represented in the chart and
below may or may not be included in the Fund's future portfolio.
COMMENTARY
The following is the text of a joint statement issued on September 26, by
fifteen European Central Banks: The European Central Banks of Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal,
Spain, Sweden, Switzerland, and England.
STATEMENT ON GOLD:
In the interest of clarifying their intentions with respect to their gold
holdings, the above institutions make the following statement:
1. Gold will remain an important element of global monetary reserves.
2. The above institutions will not enter the market as sellers, with the
exception of already decided sales.
3. The gold sales already decided will be achieved through a concerted
program of sales over the next five years. Annual sales will not exceed
approximately 400 tons and total sales over this period will not exceed 2,000
tons.
4. The signatories to this agreement have agreed not to expand their gold
leasings and their use of gold futures and options over this period.
5. This agreement will be reviewed after five years.
We believe this is a catalyst that will result in a fundamental change for
the gold market. The news of the amount of sales is probably less important than
the banks' statement confirming that they will not expand their gold lending
activities. This is likely to have a major impact on the gold lease rate. In the
future, the cost of borrowing gold is likely to be higher, making it less
profitable for both producers and financial market participants to borrow gold.
In response to this news, the gold price rallied from $265 per ounce to
$300 per ounce by the end of the quarter. We expect the price to move higher as
producers and funds seek to cover their short positions. On a fundamental basis
the supply/demand equation remains supportive of a higher price. Demand is about
4,000 tons and mine supply can only fill about 2,300 tons. The rest of the
demand is met from above ground supplies, much of which comes from central
banks.
3
<PAGE>
Gold stocks have responded to the move in bullion, but there has been a
differentiation in performance between those companies that have hedged a
significant portion of their reserves and production and those that have left
themselves exposed to changes in the gold price. The Gabelli Gold Fund has
tended to concentrate its holdings in stocks of companies that have hedged less
than the average, such as Newmont Mining, Homestake Mining, Gold Fields Ltd.,
Franco-Nevada Mining and Harmony Gold Mining. These companies should perform
best in a rising gold price environment with investors concentrating on unhedged
producers.
During the quarter, Kinross Gold, Meridian Gold, Lihir Gold and Anglogold
all appreciated by more than 45%. By comparison, Barrick Gold and Homestake
Mining rose by about 12%. Only two significant portfolio holdings declined
during the quarter. They were Stillwater Mining and IAM Gold. Both companies
should recover in the months ahead.
In this new gold environment, gold equities should perform well with
investors concentrating on unhedged producers. This should benefit the Fund's
portfolio of gold equities.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Fund.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time. The share prices of foreign holdings are stated in U.S. dollar equivalent
terms as of September 30, 1999.
ANGLOGOLD LTD. (ANGJ.J - $62.97 - JOHANNESBURG STOCK EXCHANGE) is the world's
largest gold producer at nearly seven million ounces per year. The company
generates strong cash flow, which allows it to undertake substantial investments
in exploration and development in addition to paying a significant dividend.
Anglogold operates thirteen mines in South Africa in addition to Mali and
Namibia. The company also gained exposure to the United States, Brazil and
Argentina through a transaction with Minorco. Anglogold continues to strive to
reduce costs and diversify mining risks to create wealth for its shareholders in
a competitive environment.
BARRICK GOLD CORP. (ABX - $21.75 - NYSE) is one of the world's leading gold
mining companies. Much of Barrick's growth has come from their very high quality
mines near Elko in Nevada, which the company purchased in the early 1980s.
Barrick has used cash flows from its Nevada Mines and the profits from the
industry's most successful hedging programs to acquire other gold assets in both
North America and overseas. Barrick has low operating costs, a strong balance
sheet and entrepreneurial management.
FRANCO-NEVADA MINING CORP. (FN.TO - $21.60 - TORONTO STOCK EXCHANGE) is one of
the world's largest public precious metals royalty companies since its merger
with its sister company, Euro-Nevada. The company has taken advantage of
depressed commodity prices to acquire assets at bargain levels, providing a
foundation for future growth. Euro-Nevada was focused on international gold
royalties while Franco-Nevada's focus had been North American royalties. The
company maintains a policy of not hedging its gold and has a strong balance
sheet with no debt.
GOLDCORP INC. (GA.TO - $6.60 - 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
4
<PAGE>
the Red Lake Mine, which is part of a major gold camp in Canada. Exploration
drilling has revealed previously unknown high-grade ore zones, which will add
significantly to the mine's reserves. These new discoveries will result in
increased production at significantly lower costs. GoldCorp is undervalued
relative to other mid-sized producers and we expect management to add
significantly to shareholder value.
GOLD FIELDS LTD. (GFLJ.J - $4.625 - JOHANNESBURG STOCK EXCHANGE) is South
Africa's second largest gold producer and was created by the amalgamation of a
number of South African mines. The company controls the vast gold mines of Kloof
and Driefontein as well as smaller mines in South Africa. Outside South Africa,
Gold Fields is bringing a mine to production in Ghana and is continually seeking
other opportunities. The company is largely unhedged and debt free.
HARMONY GOLD MINING LTD. (HARJ.J - $6.02 - JOHANNESBURG STOCK EXCHANGE) is a
medium sized gold company producing over one million ounces of gold per year.
The company has developed a core competency in mining low-grade ore from
underground very efficiently. Harmony Gold Mining has taken these skills and
applied their techniques to other poorly managed mines with success. Any small
increase in the gold price will likely have a very positive impact on profits,
as the company is unhedged.
HOMESTAKE MINING CO. (HM - $9.1875 - NYSE) is an international gold company with
exposure in the United States, Australia, Canada, and South America that
produces roughly 2.3 million ounces of gold per year. The company continues to
diversify its operations through acquisitions such as Plutonic Resources in
Australia, Prime Resources in Canada and Argentina Gold Corp. in Argentina.
Management has been successful in implementing its policy of improving the
quality of its operations and increasing reserves.
IMPALA PLATINUM HOLDINGS LTD. (IMPAY - $33.75 - NASDAQ) mines and markets
platinum and other platinum group metals such as palladium, rhodium and nickel.
Impala is the second largest producer of palladium and platinum in the world, as
well as one of the lowest cost producers. The company is realizing the benefits
of a production drive coupled with a cost reduction plan. Impala also continues
to improve its balance sheet and build its cash balance in order to fund new
projects.
NEWMONT MINING CORP. (NEM - $25.875 - NYSE) is North America's largest gold
producer, yielding upwards of four million ounces annually. The company has
utilized the cash flow generated by its very successful Nevada operations to
expand overseas. Newmont also has a 51% interest in Minera Yanacocha (Latin
America's largest gold producing mine), a 50% interest in a joint venture in
Uzbekistan, and an interest in Indonesia's first heap-leaching operation. The
company is only modestly hedged and is highly leveraged to a rising gold price.
PLACER DOME INC. (PDG - $14.875 - NYSE) is one of the worlds's lowest cost gold
producers. Placer Dome has fifteen operational mines in Australia, Chile, Papua
New Guinea, South Africa and the United States. The company's focus on large,
low-cost mines continues to drive efficient production. Placer Dome has
developed a joint venture with Western Areas Limited to develop the largest
undeveloped ore-body in the Witwatersrand region of South Africa and has agreed
to merge with Getchell Gold to develop and operate two mines in Nevada.
5
<PAGE>
MINIMUM INITIAL INVESTMENT - $1,000
The Fund's minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent investment minimums. No initial
minimum is required for those establishing an Automatic Investment Plan.
Additionally, The Gabelli Gold Fund and other Gabelli Funds are available
through the no-transaction fee programs at many major discount brokerage firms.
INTERNET
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Asset Management Inc.,
the Gabelli Mutual Funds, IRAs, 401(k)s, quarterly reports, closing prices and
other current news. You can 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
business day for further information.
Sincerely,
/s/ Caesar Bryan
CAESAR BRYAN
President and Portfolio Manager
October 25, 1999
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TOP TEN HOLDINGS
SEPTEMBER 30, 1999
------------------
Placer Dome Inc. Gold Fields Ltd.
Newmont Mining Corp. Anglogold Ltd.
Franco-Nevada Mining Corp. Impala Platinum Holdings Ltd.
Harmony Gold Mining Ltd. GoldCorp Inc.
Barrick Gold Corp. Homestake Mining Co.
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NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period stated in this report. 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 -- SEPTEMBER 30, 1999 (UNAUDITED)
================================================================================
Market
Shares Value
------ -----
COMMON STOCKS -- 93.2%
Metals and Mining -- 93.2%
Australia -- 6.8%
370,000 Lihir Gold Ltd. ..................................... $ 405,749
470,000 Normandy Mining Ltd. ................................ 417,238
15,000 Normandy Mining Ltd., ADR ........................... 132,662
103,000 Ranger Minerals NL .................................. 192,287
300,000 Resolute Samantha Ltd. .............................. 127,286
140,000 Ross Mining NL ...................................... 46,606
-----------
1,321,828
-----------
Ireland -- 0.6%
214,771 Glencar Explorations plc ............................ 109,714
-----------
North America -- 53.9%
76,000 Agnico-Eagle Mines Ltd. ............................. 587,440
5,000 Apex Silver Mines Ltd. .............................. 73,750
45,000 Barrick Gold Corp. .................................. 978,750
32,600 Bema Gold Corp. ..................................... 32,600
54,189 Franco-Nevada Mining Corp. .......................... 1,170,488
35,000 Freeport-McMoRan Copper & Gold Inc. ................. 544,687
122,900 GoldCorp Inc., Cl. A ................................ 811,028
35,000 Golden Star Resources Ltd. .......................... 24,287
100,000 Golden Star Resources Ltd., ADR ..................... 75,000
94,200 Guyanor Resources SA, Cl. B ......................... 44,860
83,640 Homestake Mining Co. ................................ 768,443
169,700 IAM Gold ............................................ 409,848
225,000 Kinross Gold Corp. .................................. 640,027
80,000 Meridian Gold Inc. .................................. 545,000
168,800 Moydow Mines International Inc. (a) ................. 166,515
46,700 Newmont Mining Corp. ................................ 1,208,362
22,437 New Venoro Gold Corp. ............................... 3,206
93,120 Placer Dome Inc. .................................... 1,385,160
20,025 Stillwater Mining Co. ............................... 538,172
351,000 TVX Gold Inc. ....................................... 444,156
-----------
10,451,779
-----------
Peru -- 1.0%
23,801 Cia De Minas Buenaventura SA, Cl. B ................. 204,794
-----------
South Africa -- 30.2%
8,529 Anglogold Ltd.(a) ................................... 537,103
13,400 Anglogold Ltd., ADR ................................. 421,263
21,658 Ashanti Goldfields Ltd.(a) .......................... 2,166
60,000 Ashanti Goldfields Ltd., ADR ........................ 472,500
205,000 Avgold Ltd. (a) ..................................... 133,195
100,700 Durban Roodepoort Deep Ltd. (a) ..................... 199,638
250,000 Durban Roodepoort Deep Ltd., ADR .................... 500,000
61,000 Gold Fields Ltd.(a) ................................. 282,125
147,249 Gold Fields Ltd., ADR ............................... 680,743
70,000 Harmony Gold Mining Ltd.(a) ......................... 421,574
103,000 Harmony Gold Mining Ltd., ADR ....................... 618,000
26,000 Impala Platinum Holdings Ltd., ADR .................. 877,500
128,355 Kalahari Goldridge Mining Co. Ltd. .................. 58,591
367,750 Northam Platinum Ltd. ............................... 419,673
102,200 West Rand Consolidated Mines Ltd. ................... 219,638
-----------
5,843,709
-----------
United Kingdom -- 0.8%
34,273 Randgold Resources Ltd., ADR ........................ $ 154,229
-----------
TOTAL COMMON STOCKS ................................. 18,086,053
-----------
OPTIONS
South Africa -- 0.1%
47,000 Durban Roodepoort Deep Ltd. ......................... 6,656
23,630 Durban Roodepoort Deep Ltd., Ser. B ................. 6,692
-----------
TOTAL OPTIONS ....................................... 13,348
-----------
Principal
Amount
------
U.S. GOVERNMENT OBLIGATIONS -- 8.9%
$1,730,000 U.S. Treasury Bills,
3.68% to 5.59% ++,
due 10/14/99 to 12/02/99 ......................... 1,721,054
-----------
TOTAL INVESTMENTS -- 102.2%
(Cost $19,361,681) ............................... 19,820,455
OTHER ASSETS AND
LIABILITIES (NET) -- (2.2)% ...................... (433,964)
-----------
NET ASSETS -- 100.0%
(2,875,806 shares outstanding) ................... $19,386,491
===========
NET ASSET VALUE,
OFFERING AND REDEMPTION
PRICE PER SHARE .................................. $6.74
=====
- ----------
(a) Security fair valued as determined by the Board of Directors.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR -- American Depositary Receipt.
% OF MARKET
GEOGRAPHIC DIVERSIFICATION MARKET VALUE VALUE
- -------------------------- ------------ -----
North America 61.4% $12,172,833
South Africa 29.6% 5,857,057
Australia 6.7% 1,321,829
Europe 1.3% 263,942
Latin America 1.0% 204,794
----- -----------
100.0% $19,820,455
===== ===========
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 Werner J. Roeder, MD
CHAIRMAN AND CHIEF MEDICAL DIRECTOR
INVESTMENT OFFICER LAWRENCE HOSPITAL
GABELLI ASSET MANAGEMENT INC.
E. Val Cerutti Anthonie C. van Ekris
CHIEF EXECUTIVE OFFICER MANAGING DIRECTOR
CERUTTI CONSULTANTS, INC. BALMAC INTERNATIONAL, INC.
Anthony J. Colavita Daniel E. Zucchi
ATTORNEY-AT-LAW PRESIDENT
ANTHONY J. COLAVITA, P.C. DANIEL E. ZUCCHI ASSOCIATES
Karl Otto Pohl
FORMER PRESIDENT
DEUTSCHE BUNDESBANK
OFFICERS AND PORTFOLIO MANAGERS
Caesar Bryan Bruce N. Alpert
PRESIDENT AND VICE PRESIDENT
PORTFOLIO MANAGER AND TREASURER
James E. McKee
SECRETARY
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.
- --------------------------------------------------------------------------------
GAB008Q399SR
[PHOTO OF MARIO J. GABELLI]
GABELLI
GOLD
FUND,
INC.
THIRD QUARTER REPORT
SEPTEMBER 30, 1999
