Question: With reference to Charlie Aitken’s article Bullish on Gold on 7 July, I read another article that stated the probability of the US increasing interest rates in July, Sept and Nov has increased due to the non-farm payroll report in the United States. If this is the case and rates do increase, what impact do you think this will have on the present gold bull market?

Answer (by Paul Rickard): You will note that on Friday, the gold price stabilized and last night (Monday), it pulled back about US $10.

If the market starts to think that the US will increase interest rates, then the price of gold will fall. However, I don’t think there is any expectation of an increase in July or Sept, with most of the market also thinking that a December increase is unlikely.

Question: When I set up my SMSF in mid 2013, I placed some funds in several listed investment firms, and one was CAM. It is by far the worse performer, down some 30%, and at the same time my daughter was also interested in the stock market and wanted to invest some of her savings. We (well, I) decided that CAM, run by Clime and John Abernethy, who was regularly featured in business news for his expertise, would be a good conservative choice and I did spend time telling her markets as well as going up could often go down.

She told me when the market goes up, CAM goes nowhere but when it goes down, so does CAM. I could not disagree and although I have decided to hang in there with my SMSF holding, as I bought in with a long term view, I am thinking of selling her CAM and reimbursing her the money she lost, as I feel so bad about having selected what I thought was a well run, well respected LIC and giving her a bad introduction to investing in the share market.

So the question is: what is the Switzer Super Report view on this LIC?

Answer (by Paul Rickard): Like many LICs (Listed Investment Companies), it is trading at a discount to its NTA. At 30 June, this was approximately 12%. This is one of the big problems with Listed Investment Companies.

While it is doing a buyback, liquidity remains very low. If you can be patient and take a long-term view, then hang on – it is very cheap. Otherwise, other investments will generate a more immediate performance.

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