The big rally in Q2 continued into Q3 until early August

The big rally in Q2 continued into Q3 until early August. At that point, all of the technical and
sentiment indicators we monitor were registering levels which indicated that the speculative frenzy that
developed in July had reached the point of “boiling over.” We see the decline in the sector that began
in early August as a healthy “corrective” pullback that will set-up the next move higher.

The precious metals sector made a big run since mid-March, outperforming every asset class with the
exception of a handful of insanely overvalued tech stocks. When a market makes a big run like we
experienced in Q2, it’s not unusual to run into some interference while it consolidates and percolates
for the next move higher.

Our fund returned 4.23% for the quarter net of fees and expenses. Whereas last quarter the big gains
achieved in the junior mining stocks we own were diluted by the performance of physical gold and
silver, in Q3 the price correction in our stock portfolio was buffered considerably by the move higher in
physical gold and silver.