Yamana Gold (NYSE: AUY)
Every gold miner that EuroPac owns has helped the fund immensely, said Nelson, but this Toronto-based producer has been one of the best performers, climbing 144 percent year-to-date. One of the main reasons why this company, and others he owns, have done so well is that these businesses have finally cut expenses and have improved operations. Looking at the NYSE ARCA Gold Miners Index, capital expenditure levels for the group overall have been cut by 54 percent on a per-share basis since 2012, while net debt is down 28 percent per share from its high in 2013. Free cash flow has also turned positive for the index, he said.
As for Yamana, one reason why it's done so well is that it fell so much over the last few years — it plummeted about 90 percent between November 2012 and the end of 2015 — that it's just coming back from those low levels. It made a number of operational improvements, including cutting general and administrative expenses by $5.5 million in the first quarter of this year, which has helped, and it's focusing more on shareholder returns. "I knew these stocks were way oversold and were due for a bounce," said Schiff.
While Schiff is first to admit when his fund has a bad year, as it did in 2015, he's optimistic the gains he's made in 2016 will continue. Gold will stay strong, he said, and his other quality investment should keep paying off, too, especially if the United States struggles. For Nelson, it's about sticking to the plan through good times and bad. "We consistently employed our investment process, even though we expected headwinds in 2014 and 2015," he said. "We didn't expect the fed to be able to hike its interest rate as much as they were communicating, and it's turning out that we were correct. We stayed consistent, and we're now seeing an improvement."
— By Bryan Borzykowski, special to CNBC.com