Gabelli Gold Fund, Inc.

Transcription

1 Gabelli Gold Fund, Inc. Shareholder Commentary March 31, 2005 Caesar Bryan To Our Shareholders, The Gabelli Gold Fund declined by 4.56% for the first three months of This compares with a fall of 4.17% for the average gold fund monitored by Lipper. The first quarter of the year saw the U.S. dollar stage a significant rally against both the euro and the yen. In the face of a stronger dollar, the gold price gave up some of its gains that it had made in the fourth quarter of For the three months under review the gold price declined by about ten dollars to $428 per ounce which is a fall of 2.3%. Despite a sharp rally in mid February that lasted a few weeks, gold equities had a poor quarter and declined by 5.25% as measured by the Philadelphia Gold and Silver Index. Our Investment Objective The Fund s objective is to obtain longterm capital appreciation by investing in equity securities of foreign and domestic issuers principally engaged in gold and goldrelated activities. Our Approach We look at a number of company specifics in order to determine which gold stocks are relatively undervalued. Our primary focus is on capitalization per ounce of production and, more importantly, on capitalization per ounce of recoverable reserves. This determines how much gold actually backs every dollar invested in a gold company. We appreciate that every mining company must replace the gold that it mines, and we place a heavy emphasis on the quality of management and their ability to create shareholder wealth. We invest globally with an emphasis on gold producing companies. We have separated the portfolio manager s commentary from the financial statements and investment portfolio due to new corporate governance regulations stipulated by the SarbanesOxley Act of We have done this to ensure that the content of the portfolio manager s commentary is unrestricted. The financial statements and investment portfolio are mailed separately. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at

2 INVESTMENT RESULTS (CLASS AAA SHARES) (a) Quarter 1st 2nd 3rd 4th Year 2005: Net Asset Value $15.27 Total Return (4.6)% 2004: Net Asset Value $17.55 $14.38 $16.53 $16.00 $16.00 Total Return (3.5)% (18.1)% 15.0% (2.0)% (10.9)% 2003: Net Asset Value $10.83 $12.26 $15.18 $18.18 $18.18 Total Return (11.8)% 13.2% 23.8% 20.9% 49.4% 2002: Net Asset Value $9.54 $10.54 $10.55 $12.28 $12.28 Total Return % 10.5% 0.1% 16.4% 87.2% 2001: Net Asset Value $4.88 $6.12 $6.33 $6.56 $6.56 Total Return (7.2)% 25.4% 3.4% 4.7% 26.0% 2000: Net Asset Value $5.19 $5.27 $5.04 $5.26 $5.26 Total Return (16.7)% 1.5% (4.4)% 4.4% (15.6)% 1999: Net Asset Value $5.45 $5.39 $6.74 $6.23 $6.23 Total Return (3.7)% (1.1)% 25.1% (7.6)% 10.1% 1998: Net Asset Value $6.63 $5.68 $6.17 $5.66 $5.66 Total Return % (14.3)% 8.6% (8.3)% (3.6)% 1997: Net Asset Value $11.83 $9.79 $9.17 $5.87 $5.87 Total Return (4.0)% (17.2)% (6.3)% (35.4)% (51.9)% 1996: Net Asset Value $14.00 $13.40 $13.46 $12.32 $12.32 Total Return % (4.3)% 0.4% (8.5)% 8.0% 1995: Net Asset Value $11.00 $11.96 $12.27 $11.41 $11.41 Total Return (0.6)% 8.7% 2.6% (7.0)% 3.1% 1994: Net Asset Value $12.37 $11.07 $11.07 Total Return %(b) (10.5)% 10.7%(b) Average Annual Returns through March 31, 2005 (a) Since Inception Quarter 1 Year 3 Year 5 Year 10 Year (7/11/94) Gabelli Gold Fund Class AAA (4.56)% (11.90)% 17.83% 24.88% 3.76% 4.43% Philadelphia Gold and Silver Index (5.25) (9.62) (1.25) (0.58) Lipper Gold Fund Average (4.17) (10.72) (a) Total returns and average annual returns reflect changes in share price and reinvestment of dividends and are net of expenses. Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Performance returns for periods less than one year are not annualized. Current performance may be lower or higher than the performance data presented. Visit for performance information as of the most recent month end. Investors should consider the investment objectives, risks and charges and expenses of the Fund carefully before investing. The prospectus contains more complete information about this and other matters and should be read carefully before investing. See page 6 for further details about additional classes of shares. Investing in foreign securities involves risks not ordinarily associated with investments in domestic issues, including currency fluctuation, economic and political risks. Investing in gold is considered speculative and is affected by a variety of worldwide economic, financial and political factors. The Philadelphia Gold & Silver Index is an unmanaged indicator of stock market performance of large North American gold and silver companies, while the Lipper Average reflects the average performance of mutual funds classified in this particular category. (b) From commencement of investment operations on July 11,

3 Global Allocation The accompanying chart presents the Fund s holdings by geographic region as of March 31, The geographic allocation will change based on current global market conditions. Countries and/or regions represented in the chart and below may or may not be included in the Fund s future portfolio. HOLDINGS BY GEOGRAPHIC REGION 3/31/05 North America 62.6% South Africa 16.9% Europe 9.1% Asia/Pacific 8.4% Latin America 3.0% COMMENTARY We believe that the outlook for the gold price remains solid and that gold has a role to play in a diversified investment portfolio. Although the dollar has strengthened during the past few months, it is probably dangerous to assume that the dollar bear market is over. By the end of last year sentiment had become so bearish against the dollar that a rally in the dollar had to be expected. The reasons given for the dollar strength were, as usual, varied. Apart from being oversold, interest rate differentials continue to move in favor of the dollar. Short term interest rates have been raised on seven occasions and now stand at 2.75%. This compares with 1% a year ago. However, neither the European Central Bank or the Bank of Japan have as yet raised rates in this cycle. A further reason to buy dollars according to dollar bulls is that economic growth in both Europe and Japan lags that of the U.S. This is quite true. Growth forecasts for economic growth in Europe have been revised down to about 1.5% for the current year. The Japanese economy is barely registering any growth at all. As we have said in the past this is a highly unusual economic cycle. After the technology bubble burst, the response by the authorities was so forceful that the economy barely suffered a recession. However much of the recent growth in the economy is due to higher asset prices, particularly housing, combined with low rates affording consumers the opportunity to extract equity from their homes and raise their level of debt. With slow income growth this requires continued low rates and everrising house prices. Higher commodity prices, particularly oil, combined with higher rates appear to have slowed the economy. If economic weakness persists, with high levels of debt, we believe the Federal Reserve will show restraint in further raising interest rates. Markets have enjoyed a period of time when credit spreads have tightened to historic lows. But in the past few weeks spreads have widened in the wake of a number of credit downgrades. In the past, periods of Federal Reserve tightenings have often exposed fault lines in the financial system. Of course, inflation remains a key concern for the Federal Reserve. But if the market gets any sense that the authorities are wavering in their commitment to keep inflation low, we would expect the gold price to react favorably. We expect the next stage of the gold bull market not to be in terms of the dollar but expressed in terms of yen and euros. We have often written about the economic imbalances which burden the dollar. One of which is the unprecedented build up of foreign reserves by our creditors, the largest being Japan and China. Over the past few months a number of foreign central bankers have openly discussed the possibility of diversifying reserves away from the dollar. The main beneficiary of any move away from the dollar would be the euro. However the euro is an untested currency that only came into being in The euro s credibility has been dented by the recent political decision to rework and lessen the impact of the stability pact. This was an agreement to limit member countries from running a budget deficit of over 3% among other constraints. Over a period of time, it is probable that the attractions of gold will become apparent to the world s central bankers. 3

4 Investment Scorecard It was a difficult quarter for most gold equities. Although most of our holdings declined in value some performed well. Our winners were Erdene Gold and Nevsun Resources. Both rose by 33%. Erdene rallied on the back of a well received acquisition and Nevsun was allowed to resume drilling on its projects in Eritrea. Other stocks that appreciated by more than 10% included Jaguar Mining and Wheaton River. Among the Fund s larger holdings Randgold Resources, Agnico Eagle and FreeportMcMoRan did best. The latter two companies have significant base metal exposure which has helped earnings. Mining is a tough business and some of our investments disappointed. These included DRD Gold, Golden Star Resources, Wolfden Resources and Wesdome Gold Mines. Fortunately, these were small positions. Among our larger holdings that did poorly were Harmony Gold Mining, Kinross Gold and Placer Dome. Let s Talk Stocks The following are stock specifics on selected holdings of our Fund. Favorable earnings prospects do not necessarily translate into higher stock prices, but they do express a positive trend that we believe will develop over time. Individual securities mentioned are not necessarily representative of the entire portfolio. The share prices of the following holdings are stated in U.S. dollar equivalent terms as of March 31, AgnicoEagle Mines Ltd. (AEM $14.55 NYSE; AGE.TO $14.59 Toronto Stock Exchange) is a small Canadian gold company with an established operating history and reserves of 7.9 million ounces of gold at the end of The company operates the La Ronde mine in Quebec, Canada. AgnicoEagle has secured a dominant land position along the CadillacBousquet belt which will provide the company with future growth opportunities. Agnico Eagle has the financial capability to finance its growth and is set to continue as a profitable, lowcost gold producer. AngloGold Ashanti Ltd., ADR (AU $34.45 NYSE), one of the world s leading gold producers, has spent the past decade diversifying its production away from South Africa. South Africa now accounts for less than half of the company s total production of about 6 million ounces of gold. A major part of this effort culminated with their acquisition of Ashanti Goldfields. At year end 2003, the company had reserves of over 80 million ounces of gold. AngloGold Ashanti has the financial and technical expertise to fully exploit the potential at Obuasi, in Ghana, which was Ashanti s major asset, and to complete its other projects. Buenaventura ADR (BVN $22.78 NYSE) is a Peruvian based gold mining company founded and managed by the Benavides family. The company s main asset is a 44% stake in South America s largest gold mine, Yanacocha. This mine is operated by Newmont Mining. During the past fifty years of the company s existence it has been able to acquire a very interesting land position in mineral rich Peru. This year the company should produce almost 1.5 million ounces of gold at a cost of about $150 per ounce. Eldorado Gold Corp. (ELD.TO $2.85 Toronto Stock Exchange; EGO $2.87 American Stock Exchange) is a well financed junior gold producer with an exciting growth profile. Currently, the company has one producing asset, the Sao Bento Mine in Brazil. The company is set to develop the Kisladag project in Turkey that should produce about 250,000 ounces in its third year of operation. The company also has other advanced exploration projects in Turkey and is exploring for gold in China and Brazil. FreeportMcMoRan Copper & Gold Inc. (FCX $39.61 NYSE) operates the world s largest and lowestcost copper and gold mine in the world. This deposit is located at the Grasberg mine in Indonesia. The deposit contains massive reserves of both gold and copper. The company also owns smaller interests in Spain and Indonesia. At year end 2003, aggregate proven and probable reserves were 2.7 billion tons of ore containing 40 billion pounds of copper and 47 million ounces of gold. 4

5 Meridian Gold Inc. (MDG $16.84 NYSE; MNG.TO $16.86 Toronto Stock Exchange) is a Reno, Nevada based gold producer whose main asset is located at El Penon, Chile. El Penon is one of the world s lowest cost gold mines and produces about 300,000 ounces per year. The company controls the Esquel project in Argentina, which has recently run into difficulties with the local authorities. Otherwise, the company has an interesting exploration opportunity at Rossi in Nevada. Good recent exploration results at Dorada have extended the life of El Penon, and Esquel remains an economic deposit which we believe is not included in the market s valuation of Meridian. In Conclusion Gold equities have underperformed gold bullion, which is a frustration to equity investors such as us. The gold mining industry faces a number of head winds including permitting issues and higher working costs. Due to the weakness of the dollar, those operating outside the dollar bloc have faced an added burden. We believe gold will increasingly become viewed as a currency in competition with the other leading global currencies and this will attract investment flows. In an environment of higher gold prices, we expect gold equities to perform well and reestablish their historic relationship to the gold price. Sincerely, Caesar Bryan Portfolio Manager May 1, 2005 NOTE: The views expressed in this report reflect those of the portfolio manager only through the end of the period stated in this report. The manager s views are subject to change at any time based on market and other conditions. Minimum Initial Investment $1,000 The Fund s minimum initial investment for regular accounts is $1,000. There are no subsequent investment minimums. No initial minimum is required for those establishing an Automatic Investment Plan. Additionally, the Fund and other Gabelli Funds are available through the notransaction fee programs at many major brokerage firms. The Fund imposes a 2% redemption fee on shares sold within 60 days of a purchase. See the prospectus for more details. Please visit us on the Internet. Our homepage at contains information about Gabelli Asset Management Inc., the Gabelli Mutual Funds, IRAs, 401(k)s, current and historical quarterly reports, closing prices and other current news. We welcome your comments and questions via at info@gabelli.com. You may sign up for our alerts at and receive early notice of quarterly report availability, news events, media sightings, mutual fund prices and performance, and access to the Gabelli & Company, Inc. research library. 5

6 MultiClass Shares The Gabelli Gold Fund began offering additional classes of Fund shares in December Class AAA Shares are noload shares offered directly by selected broker/dealers. Class A, Class B and Class C Shares are targeted to the needs of investors who seek advice through financial consultants. The Board of Directors determined that expanding the types of Fund shares available through various distribution options would enhance the ability of the Fund to attract additional investors. Average Annual Returns March 31, 2005 (a) Class AAA Shares Class A Shares Class B Shares Class C Shares 1 Year (11.90)% (11.85)% (12.59)% (12.51)% (16.92)(c) (16.96)(d) (13.39)(d) 5 Year (c) 24.28(d) 24.47(d) 10 Year (c) 3.59(d) 3.60(d) Life of Fund (b) (c) 4.26(d) 4.27(d) (a) Total returns and average annual returns reflect changes in share price and reinvestment of dividends and are net of expenses. Current returns may be higher or lower than that shown. Of course, returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit for performance information as of the most recent month end. Investors should consider the investment objectives, risks and charges and expenses of the Fund carefully before investing. The prospectus contains more information about this and other matters and should be read carefully before investing. The Class AAA Shares net asset values are used to calculate performance for the periods prior to the issuance of Class A Shares, Class B Shares and Class C Shares on December 23, The actual performance for the Class B Shares and Class C Shares would have been lower due to the additional expenses associated with these classes of shares. Investing in foreign securities involves risks not ordinarily associated with investments in domestic issues, including currency fluctuation, economic and political risks. Investing in gold is considered speculative and is affected by a variety of worldwide economic, financial and political factors. (b) Performance is calculated from inception of Class AAA Shares on July 11, (c) Includes the effect of the maximum 5.75% sales charge at the beginning of the period. (d) Includes the effect of the applicable contingent deferred sales charge at the end of the period shown for Class B and Class C Shares, respectively. Top Ten Holdings March 31, 2005 Newmont Mining Corp. FreeportMcMoRan Copper & Gold Inc., Cl. B Gold Fields Ltd., ADR Placer Dome Inc. Randgold Resources Meridian Gold Inc. IAMGOLD Corp. AgnicoEagle Mines Ltd. Glamis Gold Ltd. AngloGold Ashanti Ltd., ADR 6

7 VALUE Gabelli Asset Fund Seeks to invest primarily in a diversified portfolio of common stocks selling at significant discounts to their private market value. The Fund s primary objective is growth of capital. (Multiclass) Portfolio Manager: Mario J. Gabelli, CFA Gabelli Blue Chip Value Fund Seeks long term growth of capital through investment primarily in the common stocks of established companies which are temporarily out of favor. The fund s objective is to identify a catalyst or sequence of events that will return the company to a higher value. (Multiclass) Portfolio Manager: Barbara Marcin, CFA Westwood Equity Fund Seeks to invest primarily in the common stock of wellseasoned companies that have recently reported positive earnings surprises and are trading below Westwood s proprietary growth rate estimates. The Fund s primary objective is capital appreciation. (Multiclass) Portfolio Manager: Susan M. Byrne FOCUSED VALUE Gabelli Value Fund Seeks to invest in securities of companies believed to be undervalued. The Fund s primary objective is longterm capital appreciation. (Multiclass) Portfolio Manager: Mario J. Gabelli, CFA SMALL CAP VALUE Gabelli Small Cap Fund Seeks to invest primarily in common stock of smaller companies (market capitalizations less than $1 billion) believed to have rapid revenue and earnings growth potential. The Fund s primary objective is capital appreciation. (Multiclass) Portfolio Manager: Mario J. Gabelli, CFA Westwood SmallCap Equity Fund Seeks to invest primarily in smaller capitalization equity securities market caps of $2.5 billion or less. The Fund s primary objective is longterm capital appreciation. (Multiclass) Team Managed Gabelli Woodland Small Cap Value Fund Seeks to invest primarily in the common stocks of smaller companies (market capitalizations less than $1.5 billion) believed to be undervalued with shareholder oriented management teams that are employing strategies to grow the company s value. The Fund s primary objective is capital appreciation. (Multiclass) Portfolio Manager: Elizabeth M. Lilly, CFA GROWTH Gabelli Growth Fund Seeks to invest primarily in large cap stocks believed to have favorable, yet undervalued, prospects for earnings growth. The Fund s primary objective is capital appreciation. (Multiclass) Portfolio Manager: Howard F. Ward, CFA Gabelli International Growth Fund Seeks to invest in the equity securities of foreign issuers with longterm capital appreciation potential. The Fund offers investors global diversification. (Multiclass) Portfolio Manager: Caesar Bryan GABELLI FAMILY OF FUNDS AGGRESSIVE GROWTH Gabelli Global Growth Fund Seeks capital appreciation through a disciplined investment program focusing on the globalization and interactivity of the world s marketplace. The Fund invests in companies at the forefront of accelerated growth. The Fund s primary objective is capital appreciation. (Multiclass) Team Managed MICROCAP Westwood Mighty Mites SM Fund Seeks to invest in microcap companies that have market capitalizations of $300 million or less. The Fund s primary objective is longterm capital appreciation. (Multiclass) Team Managed EQUITY INCOME Gabelli Equity Income Fund Seeks to invest primarily in equity securities with above market average yields. The Fund pays monthly dividends and seeks a high level of total return with an emphasis on income. (Multiclass) Portfolio Manager: Mario J. Gabelli, CFA Westwood Balanced Fund Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The Fund s primary objective is both capital appreciation and current income. (Multiclass) CoPortfolio Managers: Susan M. Byrne Mark Freeman, CFA Westwood Realty Fund Seeks to invest in securities that are primarily engaged in or related to the real estate industry. The Fund s primary objective is longterm capital appreciation. (Multiclass) Portfolio Manager: Susan M. Byrne SPECIALTY EQUITY Gabelli Global Convertible Securities Fund Seeks to invest principally in bonds and preferred stocks which are convertible into common stock of foreign and domestic companies. The Fund s primary objective is total return through a combination of current income and capital appreciation. (Multiclass) Team Managed Gabelli Global Opportunity Fund Seeks to invest in common stock of companies which have rapid growth in revenues and earnings and potential for above average capital appreciation or are undervalued. The Fund s primary objective is capital appreciation. (Multiclass) Team Managed SECTOR Gabelli Global Telecommunications Fund Seeks to invest in telecommunications companies throughout the world targeting undervalued companies with strong earnings and cash flow dynamics. The Fund s primary objective is capital appreciation. (Multiclass) Team Managed Gabelli Gold Fund Seeks to invest in a global portfolio of equity securities of gold mining and related companies. The Fund s objective is longterm capital appreciation. Investment in gold stocks is considered speculative and is affected by a variety of worldwide economic, financial and political factors. (Multiclass) Portfolio Manager: Caesar Bryan Gabelli Utilities Fund Seeks to provide a high level of total return through a combination of capital appreciation and current income. (Multiclass) Team Managed MERGER AND ARBITRAGE Gabelli ABC Fund Seeks to invest in securities with attractive opportunities for appreciation or investment income. The Fund s primary objective is total return in various market conditions without excessive risk of capital loss. (Noload) Portfolio Manager: Mario J. Gabelli, CFA CONTRARIAN Gabelli Mathers Fund Seeks longterm capital appreciation in various market conditions without excessive risk of capital loss. (Class AAANoload) Portfolio Manager: Henry Van der Eb, CFA Comstock Capital Value Fund Seeks capital appreciation and current income. The Fund may use either long or short positions to achieve its objective. (Multiclass) Portfolio Manager: Martin Weiner, CFA Comstock Strategy Fund The Fund emphasizes investments in debt securities, which maximize total return in light of credit risk, interest rate risk, and the risk associated with the length of maturity of the debt instrument. (Multiclass) Portfolio Manager: Martin Weiner, CFA QUANTITATIVE Ned Davis Research Asset Allocation Fund Seeks to achieve returns greater then the weighted composite benchmark consisting of 60% in the S&P 500 Index and 40% in the Lehman Long Term U.S. Government Bond Index through a flexible asset allocation strategy. The Fund s primary objective is capital appreciation. (Multiclass) Team Managed FIXED INCOME Westwood Intermediate Bond Fund Seeks to invest in a diversified portfolio of bonds with various maturities. The Fund s primary objective is total return. (Multiclass) Portfolio Manager: Mark Freeman, CFA CASH MANAGEMENTMONEY MARKET Gabelli U.S. Treasury Money Market Fund Seeks to invest exclusively in shortterm U.S. Treasury securities. The Fund s primary objective is to provide high current income consistent with the preservation of principal and liquidity. (Noload) Portfolio Manager: Judith A. Raneri The Treasurer s Fund Three money market portfolios designed to generate superior returns without compromising portfolio safety. U.S. Treasury Money Market seeks to invest in U.S. Treasury securities and repurchase agreements. Tax Exempt Money Market seeks to invest in municipal securities. Domestic Prime Money Market seeks to invest in prime quality, domestic money market instruments. (Noload) Portfolio Manager: Judith A. Raneri The Global Funds invest in foreign securities which involve risks not ordinarily associated with investments in domestic issues, including currency fluctuation, economic and political risks. An investment in the above Money Market Funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any government agency. Although the Funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Funds. To receive a prospectus, call 800GABELLI ( ). Investors should consider the investment objectives, risks and charges and expenses of the Fund carefully before investing. The prospectus contains more complete information about this and other matters and should be read carefully before investing.

8 Gabelli Gold Fund, Inc. One Corporate Center Rye, New York GABELLI fax: website: Net Asset Value available daily by calling 800GABELLI after 6:00 P.M. Board of Directors Mario J. Gabelli, CFA Werner J. Roeder, MD Chairman and Chief Medical Director Investment Officer Lawrence Hospital Gabelli Asset Management Inc. E. Val Cerutti Anthonie C. van Ekris Chief Executive Officer Managing Director Cerutti Consultants, Inc. BALMAC International, Inc. Anthony J. Colavita Daniel E. Zucchi AttorneyatLaw President Anthony J. Colavita, P.C. Daniel E. Zucchi Associates Karl Otto Pöhl Salvatore J. Zizza Former President Chairman Deutsche Bundesbank Hallmark Electrical Supplies Corp. Officers and Portfolio Manager Caesar Bryan Bruce N. Alpert Portfolio Manager President and Treasurer James E. McKee Peter D. Goldstein Secretary Chief Compliance Officer Gabelli Gold Fund, Inc. Distributor Gabelli & Company, Inc. Custodian, Transfer Agent and Dividend Agent State Street Bank and Trust Company Legal Counsel Willkie Farr & Gallagher LLP This report is submitted for the general information of the shareholders of Gabelli Gold Fund, Inc. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. GAB008Q105SC SHAREHOLDER COMMENTARY MARCH 31, 2005

9 Gabelli Gold Fund, Inc. First Quarter Report March 31, 2005 To Our Shareholders, The Gabelli Gold Fund (Fund) declined 4.56% during the first quarter quarter of 2005 while the Philadelphia Gold and Silver Index declined 5.25% and the Lipper Gold Fund Average was down 4.17%. Enclosed is the portfolio of investments as of March 31, Comparative Results Average Annual Returns through March 31, 2005 (a) Since Inception Quarter 1 Year 3 Year 5 Year 10 Year (7/11/94) Gabelli Gold Fund Class AAA (4.56)% (11.90)% 17.83% 24.88% 3.76% 4.43% Philadelphia Gold and Silver Index (5.25) (9.62) (1.25) (0.58) Lipper Gold Fund Average (4.17) (10.72) Class A (4.57) (11.85) (10.04)(b) (16.92)(b) 15.54(b) 23.40(b) 3.16(b) 3.86(b) Class B (4.77) (12.59) (9.53)(c) (16.96)(c) 16.42(c) 24.28(c) 3.59(c) 4.26(c) Class C (4.77) (12.51) (5.73)(c) (13.39)(c) 17.19(c) 24.47(c) 3.60(c) 4.27(c) (a) Total returns and average annual returns reflect changes in share price and reinvestment of dividends and distributions and are net of expenses. Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are redeemed, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit for performance information as of the most recent month end. Performance returns for periods less than one year are not annualized. Investors should consider the investment objectives, risks and charges and expenses of the Fund carefully before investing.the prospectus contains more complete information about this and other matters and should be read carefully before investing. Investing in foreign securities involves risks not ordinarily associated with investments in domestic issues, including currency fluctuation, economic and political risks. Investing in gold is considered speculative and is affected by a variety of worldwide economic, financial and political factors. The Class AAA Shares net asset values are used to calculate performance for the periods prior to the issuance of Class A Shares, Class B Shares and Class C Shares on December 23, The actual performance for the Class B Shares and Class C Shares would have been lower due to the additional expenses associated with these classes of shares. The Philadelphia Gold & Silver Index is an unmanaged indicator of stock market performance of large North American gold and silver companies, while the Lipper Average reflects the average performance of mutual funds classified in this particular category. (b) Includes the effect of the maximum 5.75% sales charge at the beginning of the period. (c) Includes the effect of the applicable contingent deferred sales charge at the end of the period shown for Class B and Class C Shares, respectively. We have separated the portfolio manager s commentary from the financial statements and investment portfolio due to new corporate governance regulations stipulated by the SarbanesOxley Act of We have done this to ensure that the content of the portfolio manager s commentary is unrestricted. The financial statements and investment portfolio are mailed separately. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at

10 Gabelli Gold Fund, Inc. Schedule of Investments March 31, 2005 (Unaudited) Market Shares Value* COMMON STOCKS 99.2% METALS AND MINING 99.2% Australia 8.4% 2,000,000 Central Asia Gold Ltd $ 1,141,022 4,500,000 Croesus Mining NL ,633, ,000 Kingsgate Consolidated Ltd ,414, ,762 Leviathan Resources Ltd ,737 7,045,000 Lihir Gold Ltd ,844, ,000 Newcrest Mining Ltd ,037,083 9,593,750 Oxiana Ltd ,491, ,000 Sino Gold Ltd ,884 5,175,000 Tanami Gold NL ,979 23,123,471 Latin America 3.0% 357,400 Compania de Minas Buenaventura SA, ADR.. 8,141,572 North America 61.9% 709,000 AgnicoEagle Mines Ltd., New York ,315,950 55,000 AgnicoEagle Mines Ltd., Toronto , ,400 Arizona Star Resource Corp ,718, ,000 Axmin Inc ,663 1,300,000 Axmin Inc. (b)(c) , ,000 Banro Corp , ,000 Banro Corp. (b)(c) , ,000 Barrick Gold Corp ,542, ,000 Bema Gold Corp , ,000 Bema Gold Corp. (b)(c) , ,700 Crystallex International Corp ,077, ,000 Eldorado Gold Corp., New York ,000 1,232,500 Eldorado Gold Corp., Toronto ,515, ,500 Eldorado Gold Corp., Toronto (b)(c) ,333,285 1,300,000 Erdene Gold Inc ,128, ,500 FreeportMcMoRan Copper & Gold Inc., Cl. B 20,696, ,000 Gammon Lake Resources Inc ,160, ,000 Glamis Gold Ltd., New York ,492, ,200 Glamis Gold Ltd., Toronto ,232, ,600 Goldcorp Inc., New York ,807, ,200 Goldcorp Inc., Toronto ,325, ,000 Golden Queen Mining Co. Ltd ,835 1,000,000 Golden Queen Mining Co. Ltd. (b)(c) , ,000 Golden Star Resources Ltd., New York ,348, ,000 Golden Star Resources Ltd., Toronto ,425,973 5,499,188 Guinor Gold Corp ,000, ,000 IAMGOLD Corp., New York ,456,000 1,555,060 IAMGOLD Corp., Toronto ,576,917 30,000 Ivanhoe Mines Ltd., New York , ,000 Ivanhoe Mines Ltd., Toronto ,031, ,000 Jaguar Mining Inc ,200, ,000 Kinross Gold Corp., New York ,510, ,999 Kinross Gold Corp., Toronto ,737, ,295 Meridian Gold Inc., New York ,866,768 70,000 Meridian Gold Inc., Toronto ,180,458 Market Shares Value* 300,000 Miramar Mining Corp., New York $ 321, ,000 Miramar Mining Corp., Toronto , ,000 Miramar Mining Corp., Toronto (b)(c) ,583 60,000 Nevsun Resources Ltd., New York , ,000 Nevsun Resources Ltd., Toronto ,896, ,000 Nevsun Resources Ltd., Toronto (b)(c) , ,071 Newmont Mining Corp ,550, ,000 Orezone Resources Inc., New York ,500 1,051,000 Orezone Resources Inc., Toronto ,424, ,147 Placer Dome Inc., Australia ,824, ,000 Placer Dome Inc., New York ,213,660 65,000 Placer Dome Inc., Toronto ,051,004 1,099,988 Radius Gold Inc ,327,587 1,291,100 River Gold Mines Ltd ,323,439 1,300,000 Wesdome Gold Mines Inc. (b)(c) ,504,505 1,270,000 Wheaton River Minerals Ltd ,535, ,000 Wheaton River Minerals Ltd. (b)(c) ,499, ,400 Wolfden Resources Inc , ,511,147 South Africa 16.8% 66,700 Anglo American Platinum Corp. Ltd ,497, ,058 AngloGold Ashanti Ltd., ADR ,578,148 1,105,000 DRDGOLD Ltd ,005, ,000 Gold Fields Ltd ,435,927 1,283,249 Gold Fields Ltd., ADR ,744, ,000 Harmony Gold Mining Co. Ltd ,581,390 1,011,326 Harmony Gold Mining Co. Ltd., ADR ,888,343 20,000 Impala Platinum Holdings Ltd ,683, ,000 Impala Platinum Holdings Ltd., ADR ,808,201 46,223,263 Sweden 0.9% 2,153,846 Riddarhyttan Resources AB ,497,591 United Kingdom 8.2% 500,000 Highland Gold Mining Ltd ,936, ,000 Lonmin plc ,740, ,333 Monterrico Metals plc ,392,647 1,067,200 Randgold Resources Ltd., ADR ,190, ,000 TransSiberian Gold Ltd ,762 22,722,805 TOTAL COMMON STOCKS ,219,849 PREFERRED STOCKS 0.1% Metals and Mining 0.1% South Africa 0.1% 10,447 Anglo American Platinum Corp. Ltd., 6.380% Cv. Pfd ,691 WARRANTS 0.7% Australia 0.0% 2,375,000 Crescent Gold Ltd. expire 11/30/ ,016 2

11 Gabelli Gold Fund, Inc. Schedule of Investments (Continued) March 31, 2005 (Unaudited) Market Shares Value* WARRANTS (Continued) North America 0.7% 145,500 Apollo Gold Corp. expire 12/23/06 (a)(b)(c).. $ 536 1,000,000 Golden Queen Mining Co. Ltd. expire 01/27/06 (a)(b)(c) , ,000 Golden Star Resources Ltd. expire 02/14/ , ,000 Mexgold Resources Inc. expire 02/26/06 (a)(b)(c) , ,500 Northern Orion Resources Inc. expire 05/29/08 (b)(c) , ,000 Wesdome Gold Mines Inc. expire 04/23/05 (a)(b)(c) ,000 Wheaton River Minerals Ltd. expire 05/30/07 620, ,000 Wheaton River Minerals Ltd. expire 05/30/07 (b)(c) ,239 2,047,314 TOTAL WARRANTS ,080,330 TOTAL INVESTMENTS 100.0% (Cost $216,669,834) $275,500,870 (a) (b) For Federal tax purposes: Aggregate cost $216,669,834 Gross unrealized appreciation $ 74,339,430 Gross unrealized depreciation (15,508,394) Net unrealized appreciation (depreciation).. $ 58,831,036 Security fair valued under procedures established by the Board of Directors. The procedures may include reviewing available financial information about the company and reviewing the valuation of comparable securities and other factors on a regular basis. At March 31, 2005, the market value of fair valued securities amounted to $163,727 or 0.06% of total investments. Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended, or otherwise restricted. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At March 31, 2005, the Rule 144A securities are considered liquid and the market value amounted to $8,154,427 or 2.96% of total investments. (c) At March 31, 2005, the Fund held investments in restricted securities that were valued under methods approved by the Board as follows: 03/31/05 Carrying Acquisition Acquisition Acquisition Value Shares Issuer Date Cost Per Unit 145,500 Apollo Gold Corp. Warrants expire 12/23/ /17/02 $ ,300,000 Axmin Inc /20/02 $ 397, ,000 Banro Corp /25/04 373, ,000 Bema Gold Corp /26/04 476, ,500 Eldorado Gold Corp., Toronto.. 12/6/02 568, ,000,000 Golden Queen Mining Co. Ltd... 1/13/04 393, ,000,000 Golden Queen Mining Co. Ltd. Warrants expire 01/27/ /13/ ,000 Mexgold Resources Inc. Warrants expire 02/26/ /13/ ,000 Miramar Mining Corp., Toronto 7/24/03 300, ,000 Nevsun Resources Ltd., Toronto 2/12/03 354, ,500 Northern Orion Resources Inc. Warrants expire 05/29/ /30/ ,300,000 Wesdome Gold Mines Inc /22/03 1,360, ,000 Wesdome Gold Mines Inc. Warrants expire 04/23/ /29/04 420,000 Wheaton River Minerals Ltd.... 5/14/02 310, ,000 Wheaton River Minerals Ltd. Warrants expire 05/30/ /14/ Nonincome producing security. ADR American Depository Receipt. * Portfolio securities are valued at the last quoted sale price or closing values. If these are unavailable, then the average of the closing bid and asked prices is used. If there is no asked price, the security is valued at the closing bid price on that day. Debt instruments are valued at the average of the closing bid and asked prices. If the security matures in 60 days or less and is not creditimpaired, it is valued at amortized cost. All securities and assets for which market quotations are not readily available or any security that the Board determines does not reflect its fair market value are valued in good faith under procedures established by the Board. % of Market Market Geographic Diversification Value Value North America % $172,558,461 South Africa ,423,955 Europe ,220,396 Asia/Pacific ,156,486 Latin America ,141, % $275,500,870 3

12 Gabelli Gold Fund, Inc. One Corporate Center Rye, New York GABELLI fax: website: Net Asset Value available daily by calling 800GABELLI after 6:00 P.M. Board of Directors Mario J. Gabelli, CFA Werner J. Roeder, MD Chairman and Chief Medical Director Executive Officer Lawrence Hospital Gabelli Asset Management Inc. E. Val Cerutti Anthonie C. van Ekris Chief Executive Officer Managing Director Cerutti Consultants, Inc. BALMAC International, Inc. Anthony J. Colavita Daniel E. Zucchi AttorneyatLaw President Anthony J. Colavita, P.C. Daniel E. Zucchi Associates Karl Otto Pöhl Salvatore J. Zizza Former President Chairman Deutsche Bundesbank Hallmark Electrical Supplies Corp. Officers and Portfolio Manager Caesar Bryan Bruce N. Alpert Portfolio Manager President and Treasurer James E. McKee Peter D. Goldstein Secretary Chief Compliance Officer Gabelli Gold Fund, Inc. Distributor Gabelli & Company, Inc. Custodian, Transfer Agent and Dividend Agent State Street Bank and Trust Company Legal Counsel Willkie Farr & Gallagher LLP This report is submitted for the general information of the shareholders of Gabelli Gold Fund, Inc. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. GAB008Q105SR FIRST QUARTER REPORT MARCH 31, 2005