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 Stephen Gadsden
On January 15th 2002 the rules of the game changed for Canadian and American investors. With the World Gold Council’s attempts to launch a bullion investment product still on the ropes, Nick Barisheff of Toronto-based Bullion Management Services Inc. was cleared by regulators to offer Canada’s first and only retirement savings plan-eligible precious metals mutual fund that allows people to invest in real gold, platinum and silver bullion – The Millennium BullionFund. Ontarians began to invest in the fund in March 2002. It became available to all Canadians one year later in May 2003. Americans looking to get their cash outside of their borders into a safe haven were able to do so since the inception of the fund.
Barisheff’s fund was designed and implemented for a variety of reasons. Most importantly, the fund was created to give Canadian investors more investment choice and to provide investment portfolio insurance for their registered retirement savings plans (RRSPs). American investors could now take their capital to an “offshore” investment in a friendly, politically-stable country outside the reach of U.S. governmental authorities.
The Millennium BullionFund provides investors with protection from the various economic and stock market variables that have devastated many Canadian mutual fund portfolios over the past few years. This is partly because precious metals bullion is negatively correlated with stocks. History shows that, when stocks tank, precious metals rally for substantial periods of time (cf. U.S. markets circa 1972-1980).
How does this precious metals fund protect investors? After reading the fund’s 2004 Simplified Prospectus and Annual Information Form, it seems to me that there are two major reasons why investors would want to own The Millennium BullionFund. The first has to do with the operation of the fund. The second has to do with protecting your capital from external, negative economic developments.
The fund invests solely in gold, platinum and silver bullion at spot market prices. Whatever the daily prices are for gold, platinum and silver are the prices the fund pays. The investment mandate of the fund is to split each investment dollar equally among the three metals. So, regardless of market conditions, one-third of every dollar is invested in gold, one-third in platinum and one-third in silver bullion.
This simple investment method has a special benefit for investors. If you’ve been put off by the long string of debacles, lies, and profiteering by big brokerages, corporations and mutual fund manufacturers, then The Millennium BullionFund could be the fund for you.
The fund has a fixed investment policy to simply buy and sell gold, platinum and silver very near spot market prices. This means that, unlike most other mutual funds, it does not require any extensive management. It doesn’t need to rely on the expertise, or lack thereof, of an external portfolio manager.
Unlike all other mutual funds today, The Millennium BullionFund holds unencumbered, allocated physical bullion. While traditional financial assets, like currencies or securities are liabilities of the issuer, precious metals, in bullion form, are not anyone else’s liability. Furthermore, the value of bullion isn’t based on a promise of performance like traditional financial assets, either. Its value is subject only to market valuations, never to the many factors that often impact stocks, such as corporate management performance, expenses, fraud, insider trading, lawsuits, manipulation, profit and loss, and stock valuation.
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