My investment strategy is producing excellent returns as demonstrated by the following information.


Merrill Lynch Gold & General Fund

This fund has increased by 81.02% in one year and by 112.88% in three years. Even over ten years during which time the gold price has fallen, this fund has increased by 318.25%. That' s even better than the FTSEI00 Index, which over the same period has risen by approximately 184%.


China has stated its desire to swap as much as 15% of its $700bn foreign exchange reserves from dollars into gold. The Japanese stock market has been falling for eleven years, their interest rates are close to zero, they had been making money by investing into the US but that is now falling, their banks are virtually insolvent, and the government are reducing bank deposit protection in April. It is no wonder that the Japanese are now exchanging their cash for gold coins and bars.


The gold price has recently broken its long-term downtrend (around $300 an ounce) and with the supportive background described above, should be looking to reach previous resistance levels at $328, $417, $500 and ultimately $725 an ounce. A commentator from investment managers Durlacher recently suggested on Bloomberg Television that the gold price could reach $600 an ounce within the next two years.


Merrill Lynch World Mining Trust

This fund has increased by 20.26% in one year and by 111.5% in three years. Despite having a 30% exposure to gold, the fund may perform poorly in the second half of this year, and I anticipate contacting clients over the next few months advising them to sell this fund. Nevertheless the valuation of mining stocks remains attractive and this fund should produce very good returns in the longer term.


Baring Korea

This fund has increased by 47.69% in one year, 114.10% in three years and by 80.23% in five years. I again anticipate contacting clients over the next few months, advising them to sell this fund. This fund should also offer very good long-term potential, as after the current economic turbulence I would expect developing economies to provide the best performing world stock markets.


Skandia/Gartmore CS Euro Money

This fund has increased by 10% in the last eighteen months. Sterling remains overvalued and talk of a referendum on the Euro persists. The Euro has been trading in a tight range over the last year. When trading ranges are broken, a violent reaction often occurs. I remain optimistic regarding the short-term potential for this fund.


United States

The current account deficit is $420 bn, requiring foreign investment of $1.5bn a day. Last year most of the deficit was funded by investment into US Corporate Bonds. That is likely to dry up after the Enron and other developing scandals. More likely, the dollar will depreciate rapidly bringing about an eventual surge in US exports.


This time last year the price/earnings ratio of the S&P 500 Index was 25.16. The level of the stock market is now approximately the same as it was a year ago, but the price/earnings ratio is now 31.29, making the US stock market 24% more expensive than a year ago.



The Government Budget deficit is 6% of GDP and 465% of general government revenue and it's credit rating may shortly be moved below that of Botswana' s. There is now a great risk of devaluation and/or hyper-inflation.


All investment performance statistics are on a bid to bid basis with income reinvested to 22nd

February 2002.Past performance is not necessarily a guide to the future.


The reviews reflected herein are those of Mitchell Neale Investment Services. Mitchell Neale Investment Services does not accept any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. Investors should be aware that the value and income from investments can rise and fall.


Mitchell Neale

Mitchell Neale Investment Services 28.02.2002