A fund holding the shares of gold mining companies and other related businesses, UK-registered MFM Junior Gold, hopes to continue its impressive gains through investments such as Focus Minerals, an Australian firm stepping up its production capacity. (“Junior gold” is also a term describing young mining and exploration companies in the sector).

The unit price of Junior Gold has surged by 76 per cent since early September 2009, strongly outperforming a 49 per cent rise in the value of the precious metal itself, said Angelos Damaskos, chief executive of Sector Investment Managers and advisor to the fund, in a statement.

The yellow metal has long been seen as a refuge for investors seeking to protect their money in uncertain financial times, and the economic waters have rarely been choppier than in recent years. Gold currently trades at around $1,491 per ounce, near a record high achieved yesterday after Standard & Poor issued a warning about US debt. The price has surged by 31 per cent in the past year. Damaskos predicts the price could reach more than $1,600 by the end of this year.

Currencies around the world are devalued, because fresh money is being printed to tackle burgeoning debt in the eurozone, the US and the UK. Oil prices are high as geopolitical unrest continues in the Middle-East and North Africa, and the recent Japanese earthquake has increased that country’s reliance on fossil fuels, meaning oil prices are likely to rise further.

The rise in the oil price has led to high inflation in developed economies, leading investors to sink their money into gold, driving the price ever higher.

Damaskos said Focus Minerals, currently the Junior Gold Fund’s largest holding, has announced that it raised additional capital to step up production from its latest mine and to fund exploration activities in a new deposit. The company expects production to grow from the current 73,000 ounces per annum to in excess of 130,000 ounces over the next two years.

The fund’s performance compares, for example, with a cumulative performance of 26.8 per cent over three years by the BlackRock Gold and General Fund, which has lagged the 32.7 per cent comparable rise in the FTSE Gold Mines (cap only) index (source: Trustnet, showing performance to 28 February, 2011).