A Wall Street Transcript Interview with Rachel Benepe, Portfolio Manager at First Eagle Funds

Wall Street Transcript

67 WALL STREET, New York - April 4, 2013 - The Wall Street Transcript has just published its Investing in Gold and Value for Downside Protection Report offering a timely review for serious investors and industry executives. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Value Investing - Long-Term Investing - High Quality Companies - Global Investing - Longer-Term Investing - High Quality Companies - Investing in Gold

Companies include: Agnico-Eagle Mines Ltd. (AEM), Goldcorp Inc. (GG) and many others.

In the following excerpt from the Investing in Gold and Value for Downside Protection Report, Rachel Benepe, the widely respected portfolio manager, discusses the outlook for Gold and Gold miners and her investment rationale:

TWST: How would you describe your investment philosophy for the Gold Fund?

Ms. Benepe: From our standpoint, we believe in having a mix of both bullion and the gold miners. We use a proprietary model to analyze the stocks from a bottom-up standpoint. Our goal there is to buy the cheapest ounces possible. We view miners as a call option on future ounces, but we will not hesitate to buy gold bullion when we cannot find opportunities with the mining stocks. We think it's important to have a mix because gold bullion can only go up with capital appreciation, where gold miners can demonstrate leverage by finding more ounces, acquiring more ounces or taking ounces out of the ground more profitably.

So if you're in a volatile gold market like we're currently in, the gold miners can still potentially be successful even if gold is down year over year, where bullion obviously cannot overcome price changes to the downside.

I think because you've had a period of 12 years where the price of gold has increased, individual investors have become comfortable that gold going up is just a condition that will always be true. Gold miners can be difficult to analyze, and the performance of the stocks has diverged from the price of gold. This divergence between the gold miners and the gold bullion has made owning GLD or bullion a comfortable option. But if we're in an environment like the one we appear to be in right now, where the price of gold is down year over year, various gold miners can still potentially be quite profitable while the price of gold is above $1,300/oz.

TWST: Tell us about the asset mix in the Gold Fund. Why do you think that mix is the best way to get exposure to gold?

Ms. Benepe: We're 77% in equities, 20% in bullion, and then the rest is just a small amount in cash and cash equivalents We're happy with our bullion position. However, when we've had new capital to allocate, we've been finding more opportunities with the equities...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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