Randgold Resources ( GOLD) is our largest holding in the First Eagle Gold Fund. This is a company that has demonstrated an ability to find, build and operate mines in West Africa. In most cases, gold-mining companies tend to be good at only one of these activities. Randgold is one of the rare few that is adept at all three stages, which has been a key differentiator for the company and the stock. What is your top "beneath the radar," or sleeper, stock pick? Benepe: South African gold miners aren't exactly under the radar in the gold space, but we think they are currently underappreciated. Investors may be worried about the political situation or the labor situation in South Africa, but these companies, particularly Gold Fields ( GFI) and AngloGold ( AU) have been increasing their exposure outside of South Africa. Additionally, South African mines, while deep and labor intensive, have long reserve lives, and in an industry where mine supply has been declining, we think 30- to 40-year mine lives is an attractive feature. What is your favorite sector? Benepe: In terms of a portfolio hedge, we think gold has a number of advantages over the alternatives. First Eagle, therefore, runs a pretty "pure" gold fund with minimal exposure to other metals such as silver and platinum. At the end of the day, First Eagle sees gold as the best inflation hedge versus oil, other metals and real property, and we also like that it is a hedge against other potential events. What sector or stock would you avoid? Benepe: First Eagle tends to avoid those gold companies that are really base-metals companies with some exposure to gold. We tend to underweight those companies that depend on zinc, lead or copper to boost their earnings. This is, again, core to our philosophy that gold is the ultimate insurance. We couldn't expect a base metal to perform outside the business cycle or credit cycle in the same way that gold does, so we have to be careful that we don't buy those base-metals companies that are masking themselves as a gold company.