BLACK ROCK MERRILL LYNCH GOLD & GENERAL

OUR VIEW:

This very popular fund was up nearly 41% in 2007, so no wonder it was popular. Most of the fund invests into gold-related businesses, such as gold miners like South African Gold Fields.  Obviously the key to this success is a rocketing gold price, encouraged by a weak US dollar, fears of inflation, and political and Stock Market uncertainty.  We are not totally convinced about the outlook, as the price chart for gold looks very over-extended, and a key argument in favour of gold appears to be demand at Indian weddings, which seems a tad flimsy.  If you were brave enough to get on board some time ago, we suggest you consider taking profits. 

Undoubtedly high risk, with gold mined in some of the most unstable world regions, though this risk can be diversified.  The recent stellar trend worries us.  Take profits and never have more than 5% in your portfolio. 

To achieve long-term capital growth by investing in gold, mining and precious metal related shares. It tends to be volatile and is particularly suitable for diversification in a larger portfolio.