Meanwhile, the economy showed signs of recession and the Federal Reserve kept trying to keep liquidity in the financial markets sufficient to keep it all working. Chairman Bernanke admitted that inflation was becoming something to worry about, but still promised to drop rates lower if necessary. His comments helped to push the dollar into its nosedive, and gold responded positively. In reality, almost all commodity prices jumped up. Crude oil passed over 102 before settling back.

The stock market was on a rollercoaster ride as it lost 500 points early in the month, recovered most it, and then gave it up at the end. This up and down action was created by the market's belief that lower rates were good for stocks and restrictions on liquidity were bad. At the same time, reports of job losses, possible bank bailouts, housing price declines, rising foreclosure rates, and sovereign fund investments pushed the Dow and NASDAQ in both directions.

The housing market showed no sign of recovery as new home sales dropped 34% from January 2007, and worse, the average sales price decreased.

The U.S. service sector is also losing ground, decreasing to a level not seen since 2001. Consumer confidence sank into February and consumer spending is down.

The economic stimulus package passed, a total of $168 billion distributed to consumers which a nice part will go to China.

Even with losses from Freddie Mac and Fannie Mae due to the mortgage disaster, the Feds are expected to raise the size of a mortgage they will be authorized to cover.

Visa is about to conduct a huge IPO to raise capital for its operations, which are losing money. Banks that own most of Visa are happy to get more investors involved. It indicates that the credit card industry may be the next domino to show serious weakness.

The U.S. Treasury is expanding the U.S. money supply somewhere between 7% and 15% per year, depending upon who you believe, and easily enough to create inflationary forces. Perhaps as a result, U.S. wholesale inflation caused by commodity prices is at a 27 year high.

South Africa had been the leading gold producer since the beginning of time, or about then. However, their production decreased in 2007 from 2006, and a recent electrical supply problem will produce less this year. As a result, China is now the lead producer.

The IMF was planning on selling 400 tonnes of gold, but it doesn't appear to be affecting gold prices.

Central banks are pouring money in home economies to keep liquidity high enough to keep the economies functioning. Therefore, this inflation is worldwide, not just local.

fn            Fund                1 mo   3 mo  12 mo   2 yr   3 yr
24 SLV   iShrs Silver Trust ETF   16.9   41.5   39.2              
21 VGPMX Vanguard Prec Metals .   12.2   13.7   44.2   77.2  161.9
14 INPMX Riversource Prec MtlsA   10.8   16.9   29.7   56.4  122.6
 9 GOLDX GAMCO Gold AAA       .    9.9   19.6   49.1   80.1  155.1
18 UNWPX US Global World Pr Mns    9.7   18.2   36.7   74.4  162.5
10 MIDSX Midas Fund           .    9.7   10.0   35.4   78.9  190.0
 4 SGDAX DWS Gold & Prec Mtls A    9.6   21.3   47.4   75.8  129.6
 1 ASA   ASA Ltd              .    9.2   19.5   43.4   50.2  133.6
 8 FKRCX Franklin Gold & PrMt A    9.2   19.0   47.8   81.2  171.5
12 OPGSX Oppenheimer Gold A   .    9.1   13.4   42.1   88.9  167.4
20 INIVX Van Eck Intl Inv GoldA    9.0   22.2   46.9   92.5  174.0
16 TGLDX Tocqueville Gold     .    8.9   15.9   25.8   55.6  126.5
19 USAGX USAA Precious Metals .    8.7   21.8   46.4   94.8  197.2
11 OCMGX OCM Gold             .    8.5   19.3   39.2   72.5  146.8
 5 EKWBX Evergreen Prec Mtls B.    8.4   21.2   46.1   81.2  163.5
13 PMPIX Profund Prec Mtls Ultr    8.0   16.5   56.5   48.6  113.6
 2 FGLDX AIM Gold & Pr Mtls Inv    7.8   15.7   39.6   68.4  133.7
15 RYPMX Rydex Prec Metals    .    7.8   16.1   37.5   55.6  103.9
17 USERX US Global Gold Shares.    7.7   21.2   38.6   75.4  169.8
 6 FSAGX Fidelity Select Gold .    7.2   16.5   45.5   68.3  151.8
 3 BGEIX Amer Cent Global Gold.    6.5   17.4   35.0   55.7  119.4
 7 SGGDX First Eagle Gold A   .    6.0   15.7   40.7   60.2  118.2
25 HUI   Amex Gold Bugs Index .    5.9   19.7   43.0   58.9  125.7
26 XAU   Phlx Gold/Silver Index    5.5   14.9   40.8   47.4   98.6
22 GDX   Mkt V Gold Miners ETF.    5.5   14.6   33.1              
23 GLD   StrtTrks Gold Shrs ETF    5.2   24.4   44.7   71.5  121.0

Last month's leader, SLV, remained at the top again, but the GLD and GDX were weak enough to slide to the bottom. One would normally expect XAU and HUI to represent the gold fund market, but sometimes they don't. I would reason that this month gold funds leaders were invested significantly in exploratory mines and smaller stocks not included in XAU and HUI.

The Position indicator gives the relative position of a fund between its 52 week high and low. A high is represented by +100 and its low by -100. Positions and prices as of the end of February:

				           nav
fn          Fund                  pos   01/31/08  02/29/08
 1 ASA   ASA Ltd              .  100.0    80.20    87.59
23 GLD   StrtTrks Gold Shrs ETF  100.0    91.40    96.18
24 SLV   iShrs Silver Trust ETF  100.0   168.18   196.68
 8 FKRCX Franklin Gold & PrMt A   93.7    39.55    43.17
 7 SGGDX First Eagle Gold A   .   93.1    26.11    27.67
 9 GOLDX GAMCO Gold AAA       .   92.3    30.44    33.45
 5 EKWBX Evergreen Prec Mtls B.   91.4    68.80    74.60
19 USAGX USAA Precious Metals .   91.3    35.39    38.47
 4 SGDAX DWS Gold & Prec Mtls A   91.3    23.34    25.57
17 USERX US Global Gold Shares.   90.3    17.88    19.26
 2 FGLDX AIM Gold & Pr Mtls Inv   90.0     7.94     8.56
 3 BGEIX Amer Cent Global Gold.   89.5    24.43    26.03
20 INIVX Van Eck Intl Inv GoldA   88.9    19.30    21.04
25 HUI   Amex Gold Bugs Index .   88.8   459.00   486.07
 6 FSAGX Fidelity Select Gold .   88.6    43.27    46.37
11 OCMGX OCM Gold             .   88.4    22.13    24.01
22 GDX   Mkt V Gold Miners ETF.   88.3    50.35    53.12
10 MIDSX Midas Fund           .   87.9     5.57     6.11
16 TGLDX Tocqueville Gold     .   87.5    51.45    56.05
21 VGPMX Vanguard Prec Metals .   87.3    33.45    37.53
12 OPGSX Oppenheimer Gold A   .   86.2    36.66    40.01
15 RYPMX Rydex Prec Metals    .   85.3    71.95    77.54
26 XAU   Phlx Gold/Silver Index   84.8   186.30   196.58
18 UNWPX US Global World Pr Mns   81.8    27.53    30.20
13 PMPIX Profund Prec Mtls Ultr   78.1    52.02    56.20
14 INPMX Riversource Prec MtlsA   77.9    12.29    13.62

Many funds reached a new high this month but only ASA, GLD, and SLV closed friday with new records. Silver's rise has been expected by many silver experts and they expect it to go much higher due to the limited supply. SLV is siphoning off excess marketable silver and producing what might be considered a monopoly effect.

The following list shows the approximate size of funds as measured in total assets under management. (In $millions as of the end of February) This is only an approximation as the size changes daily with new purchases, redemptions, and nav changes. Relative positions of the funds usually don't change much. The largest remain the largest.

fn         Fund                  $assets
21 VGPMX Vanguard Prec Metals .   4656
 6 FSAGX Fidelity Select Gold .   1835
12 OPGSX Oppenheimer Gold A   .   1529
 8 FKRCX Franklin Gold & PrMt A   1305
 3 BGEIX Amer Cent Global Gold.   1271
19 USAGX USAA Precious Metals .   1080
16 TGLDX Tocqueville Gold     .   1068
18 UNWPX US Global World Pr Mns    929
 7 SGGDX First Eagle Gold A   .    910
 1 ASA   ASA Ltd              .    718
20 INIVX Van Eck Intl Inv GoldA    639
 9 GOLDX GAMCO Gold AAA       .    524
22 GDX   Mkt V Gold Miners ETF.    457
17 USERX US Global Gold Shares.    285
10 MIDSX Midas Fund           .    271
 4 SGDAX DWS Gold & Prec Mtls A    228
 2 FGLDX AIM Gold & Pr Mtls Inv    189
15 RYPMX Rydex Prec Metals    .    157
11 OCMGX OCM Gold             .    151
 5 EKWBX Evergreen Prec Mtls B.    101
13 PMPIX Profund Prec Mtls Ultr     96
14 INPMX Riversource Prec MtlsA     91

The beta indicator measures the relative volatility of a fund's net asset value (nav) movement over the last 52 weeks as compared to the gold fund group average, 1.0. This number indicates volatility by measuring the difference between a fund's high and low navs, but does not specify the direction of movement, so it is only a measurement of relative activity of the price of the fund.

fn       fund                       beta
24 SLV   iShrs Silver Trust ETF    1.41
13 PMPIX Profund Prec Mtls Ultr    1.36
25 HUI   Amex Gold Bugs Index .    1.35
26 XAU   Phlx Gold/Silver Index    1.24
22 GDX   Mkt V Gold Miners ETF.    1.20
 3 BGEIX Amer Cent Global Gold.    1.19
 1 ASA   ASA Ltd              .    1.16
 5 EKWBX Evergreen Prec Mtls B.    1.09
10 MIDSX Midas Fund           .    1.08
19 USAGX USAA Precious Metals .    1.08
15 RYPMX Rydex Prec Metals    .    1.07
 2 FGLDX AIM Gold & Pr Mtls Inv    1.06
 4 SGDAX DWS Gold & Prec Mtls A    1.02
 8 FKRCX Franklin Gold & PrMt A    1.01
 9 GOLDX GAMCO Gold AAA       .    1.01
12 OPGSX Oppenheimer Gold A   .    1.01
11 OCMGX OCM Gold             .    1.01
23 GLD   StrtTrks Gold Shrs ETF    0.99
20 INIVX Van Eck Intl Inv GoldA    0.97
 6 FSAGX Fidelity Select Gold .    0.96
21 VGPMX Vanguard Prec Metals .    0.87
17 USERX US Global Gold Shares.    0.87
 7 SGGDX First Eagle Gold A   .    0.86
14 INPMX Riversource Prec MtlsA    0.57
16 TGLDX Tocqueville Gold     .    0.57
18 UNWPX US Global World Pr Mns    0.55

The beta for each fund may change as the fund advances and declines, but the general position on the list doesn't change much, except as a reference to other funds. As you can see, there is a big difference between portfolio management policies of different funds.

SLV has been the hottest for the last two months with Vanguard(VGPMX) and Riversource(INPMX) next in line. There are many funds in close pursuit as February turned out to be another great month. 2008 so far is almost too good to be true for a gold investor.

I watch the Dow and NASDAQ because they directly influence gold stocks, XAU, and gold funds, sometimes in opposition to the movement in gold. Naturally, over a period of time, maybe just a day or two, gold equities will respond to gold's magnificent move upward, but sometimes it takes a while, enough time to question an investment in a gold stock that just lost 7% as gold advanced.

The graph of gold's advance and silver's rocket do not convince me that they can continue to do this much longer without a correction unless there is absolutely no support for the dollar anywhere. Only if the dollar plummets, which it might since many pundits are worried, can gold and silver continue their wild ride. Therefore, unless the dollar picks up some support soon, gold and gold funds will probably reap the benefits.

This is not limited to gold and silver as almost all commodities are surging. However, crude oil backed down from 102 and I suggest political forces will soon enter the arena to cool off rising asset prices. We are due for a correction, so be ready. The long term trend is still up.

The ratio of XAU to gold is 196.58/972.1 = .202. Last month it was .201. Below .19 has historically been a great time to buy. If gold held at 972, a dip by XAU to 184.6 would give us .19, an excellent buy signal. However, if gold doesn't hold, this ratio won't either, and won't mean anything.