[Graphic of flags omitted]
GABELLI GOLD FUND, INC.
FIRST QUARTER REPORT - MARCH 31, 2000
[Photo Omitted]
CAESAR BRYAN
TO OUR SHAREHOLDERS,
The first quarter of 2000 began with promise for the price of gold as a
number of leading gold companies announced plans to curtail their gold hedging
activities.
At the start of February the gold price rose to over $310 an ounce, a
level not reached since just after the Washington Accord in September 1999.
However, the upward move was short lived as accelerated sales of gold by the
Dutch Central Bank and the continued sales by the Bank of England hit sentiment.
Also, the market was disappointed by the announcement from Barrick Resources
reaffirming their hedging strategy. Initial optimism soon turned to
disappointment, and by the end of March, the price had fallen to $279 per ounce
- - representing a decline of about $10 for the quarter. And to make matters
worse, there were press reports from Paris suggesting the French government
might sell some gold. This proposal was soon squashed, but the damage had been
done.
INVESTMENT PERFORMANCE
For the first quarter ended March 31, 2000, The Gabelli Gold Fund's (the
"Fund") net asset value declined 16.69%. The Philadelphia Gold & Silver ("XAU")
Index of large North American gold companies and Lipper Gold Fund Average
declined 16.23% and 14.58%, 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 declined 4.77% over the trailing-twelve month
period. The XAU Index and Lipper Gold Fund Average declined 3.21% and 5.58%,
respectively, over the same twelve-month period.
For the five-year period ended March 31, 2000, the Fund's total return
averaged (13.78)% annually versus average annual total returns of (13.24)% and
(12.83)% for the XAU Index and Lipper Gold Fund Average, respectively. Since
inception on July 11, 1994 through March 31, 2000, the Fund had a cumulative
decline of 47.59%, which equates to an average annual return of (10.66)%.
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INVESTMENT RESULTS (a)
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Quarter
----------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
2000: Net Asset Value ... $5.19 -- -- -- --
Total Return ...... (16.7)% -- -- -- --
- -------------------------------------------------------------------------------
1999: Net Asset Value ... $5.45 $5.39 $6.74 $6.23 $6.23
Total Return ...... (3.7)% (1.1)% 25.1% (7.6)% 10.1%
- -------------------------------------------------------------------------------
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)
- -------------------------------------------------------------------------------
Average Annual Returns - March 31, 2000 (a)
-------------------------------------------
1 Year ................................ (4.77)%
5 Year ................................ (13.78)%
Life of Fund (b) ...................... (10.66)%
Dividend History
- --------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
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.
- --------------------------------------------------------------------------------
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
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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.
GLOBAL ALLOCATION
The accompanying chart presents the Fund's holdings by geographic region
as of March 31, 2000. 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.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HOLDINGS BY GEOGRAPHIC REGION - 4/30/2000
North America .............. 58.7%
South Africa ............... 34.7%
Asia/Pacific Rim ........... 5.9%
Europe ..................... 0.7%
COMMENTARY
The first quarter of 2000 was very disappointing for gold equity
investors. It appears that a fundamental change has occurred in the gold market
with the European central banks agreeing to limit their sales, yet gold equities
continue to be ignored.
During the summer of 1999, with the gold price trading near $255 per
ounce, the XAU Index of gold equities was around 70. Now, with the gold price
over $280 per ounce, the XAU Index is trading at levels well below 60. And in
the intervening months the European central banks have reaffirmed their
commitment to gold as a monetary asset and announced limits to future sales.
Also, in the meantime, oil prices have risen, interest rates have edged upwards
and global growth rates have probably accelerated. And on a micro level, most
gold companies have cut costs and increased reserves.
The result has been significant deflating of gold shares. By that we mean
gold shares are being valued by the market at very low levels relative to their
history, whether measured by price to cash flow or on a discounted cash flow
basis. This may be due to better performance available in other sectors of the
stock market and investor reaction to a couple of gold companies getting into
financial difficulties over aggressive hedging programs. From the extremely
depressed levels it seems that there is limited downside risk. However, this
could have been said at much higher levels.
What are the catalysts that could change sentiment? Clearly, equity
investors have no incentive to own gold stocks as other sectors of the market
perform so well. In a more adverse equity environment, gold equities could
become more attractive on a relative basis. However, for a sustained move a
higher gold price is necessary. There are a number of scenarios that might lead
to a higher gold price. Probably the most obvious, and therefore the least
likely to occur, is that faltering U.S. capital markets make the U.S. a less
attractive destination for the foreign capital which is required to finance the
current massive U.S. account deficit. This could lead to a lower dollar, which
in turn would likely trigger a higher gold price.
It is now widely acknowledged that there is a considerable amount of gold
loaned. Estimates vary, but it is probably more than twice the amount of gold
mined in a year. Somewhat surprisingly, gold lease rates have remained very low,
but if lease rates were to rise sharply, there would likely be a sharp short
covering rally.
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Only two portfolio holdings appreciated during the quarter. One was
Stillwater Mining, which benefited from considerably higher platinum and
palladium prices. During the quarter, the platinum price rose about $50 to $500
per ounce. Despite this, Impala Platinum fell by 15% reflecting lack of investor
interest in the sector. The only gold stock price to appreciate was Goldcorp, a
longtime portfolio holding which continues to add to gold reserves at its Red
Lake Mine in Canada.
This is an extremely difficult time for gold investors. We believe that
the fundamentals for better gold prices are good. The central banks have issued
an assurance that gold will maintain its role as a monetary asset, the dollar
could weaken in response to large U.S. current account deficits and better
global growth is reflected by good physical demand for gold. Added to this is
the large short position evidenced by the amount of gold that the central banks
have loaned. Indeed, the gold price has moved upward over the past few months,
yet gold shares have responded by falling in price.
The Fund continues to invest in the best quality gold companies. These
include the best-managed large gold producers in North America and South Africa
and a handful of smaller companies that have good growth prospects.
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 March 31, 2000.
ANGLOGOLD LTD. (ANGJ.J - $47.8922 - 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 - $15.6875 - 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 - $10.53 - TORONTO STOCK EXCHANGE) is one of
the world's largest public precious metals royalty companies after 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.
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GOLDCORP INC. (GA.TO - $6.0836 - 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 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 - $3.875 - 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 CO. LTD. (HARJ.J - $5.8144 - 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 - $6.00 - 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 - $34.60 - 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 - $22.4375 - NYSE) is North America's largest gold
producer at 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 - $8.125 - NYSE) is one of the world'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
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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 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
April 14, 2000
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TOP TEN HOLDINGS
MARCH 31, 2000
--------------
Harmony Gold Mining Co. Ltd. Impala Platinum Holdings Ltd.
Newmont Mining Corp. Anglogold Ltd.
Stillwater Mining Co. Barrick Gold Corp.
Goldcorp Inc. Freeport-McMoRan Copper and Gold Inc.
Gold Fields Ltd. Anglo American Platinum Corp. Ltd.
- --------------------------------------------------------------------------------
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.
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GABELLI GOLD FUND, INC.
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------- ------
COMMON STOCKS -- 100.6%
METALS AND MINING -- 100.6%
AUSTRALIA -- 5.9%
570,000 Lihir Gold Ltd.+ .............. $ 224,727
570,000 Normandy Mining Ltd. .......... 300,788
103,000 Ranger Minerals NL+ ........... 136,195
3,636 Ross Mining NL ................ 816
-----------
662,526
-----------
IRELAND -- 0.7%
214,771 Glencar Explorations plc+ ..... 75,245
-----------
NORTH AMERICA -- 59.0%
86,000 Agnico-Eagle Mines Ltd. ....... 478,435
35,000 Barrick Gold Corp. ............ 549,062
47,189 Franco-Nevada Mining Corp. .... 496,897
45,000 Freeport-McMoRan Copper & Gold
Inc., Cl. B+ ................ 542,812
122,900 Goldcorp Inc., Cl. A+ ......... 747,657
94,200 Guyanor Resources SA, Cl. B+ .. 48,624
25,000 Homestake Mining Co. .......... 150,000
244,700 IAM Gold+ ..................... 446,287
150,000 Kinross Gold Corp.+ ........... 231,246
80,000 Meridian Gold Inc.+ ........... 465,000
168,800 Moydow Mines International Inc.+ 162,643
22,437 New Venoro Gold Corp. ......... 2,780
41,700 Newmont Mining Corp. .......... 935,644
65,000 Placer Dome Inc. .............. 528,125
20,025 Stillwater Mining Co.+ ........ 801,000
-----------
6,586,212
-----------
SOUTH AFRICA -- 35.0%
20,000 Anglo American Platinum Corp. Ltd. 532,476
8,529 Anglogold Ltd. ................ 408,473
8,400 Anglogold Ltd., ADR ........... 201,600
21,658 Ashanti Goldfields Ltd. ....... 2,166
46,000 Gold Fields Ltd. .............. 178,250
147,249 Gold Fields Ltd., ADR ......... 513,699
116,326 Harmony Gold Mining Co. Ltd. .. 676,366
60,000 Harmony Gold Mining Co. Ltd., ADR 367,500
18,000 Impala Platinum Holdings Ltd., ADR 622,800
367,750 Northam Platinum Ltd.+ ........ 396,701
-----------
3,900,031
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TOTAL COMMON STOCKS ........... 11,224,014
-----------
MARKET
SHARES VALUE
------- ------
WARRANTS -- 0.4%
NORTH AMERICA -- 0.3%
50,000 Golden Star Resources Ltd.+ ... $ 27,529
-----------
SOUTH AFRICA -- 0.1%
23,630 Durban Roodepoort Deep Ltd.,
Ser. B+ ..................... 11,208
-----------
TOTAL WARRANTS ................ 38,737
-----------
TOTAL INVESTMENTS -- 101.0%
(Cost $12,846,766) .......... 11,262,751
OTHER ASSETS AND
LIABILITIES (NET) -- (1.0)% (108,112)
-----------
NET ASSETS -- 100.0%
(2,149,970 shares outstanding) $11,154,639
===========
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+ Non-income producing security.
ADR - American Depositary Receipt.
% OF
MARKET MARKET
GEOGRAPHIC DIVERSIFICATION VALUE VALUE
-------------------------- ------ ------
North America ................ 58.7% $ 6,613,741
South Africa ................. 34.7% 3,911,239
Asia/Pacific Rim ............. 5.9% 662,526
Europe ....................... 0.7% 75,245
----- -----------
100.0% $11,262,751
===== ===========
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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.
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GAB008Q100SR
[Photo of Mario J. Gabelli omitted]
GABELLI
GOLD
FUND,
INC.
FIRST QUARTER REPORT
MARCH 31, 2000
