The Federal Reserve raised its short term interest rate to 2.75%, causing a short term dollar rally, which causes most commodities to slide back from recent highs. However, since most commodities are following basic supply/demand situations, prices should not go much lower unless there is a serious change in the demand equation. In the U.S., gasoline prices are zooming partially due to refinery difficulties and real supply problems. Oil punched through $57 and natural gas prices have been soaring. If China, as rumored, decides to purchase large amounts of oil with spare US dollars, the price of oil will rise even more, and the dollar will eventually pay the price by sliding further.

Both General Motors and Freddie Mac (24% drop in net profits) posted disheartening earnings results as the climbing price of oil began to have a more lasting effect on the stock market. The Dow has had a very difficult time getting any rally to last longer than two days. The fact that Freddie Mac and Fannie Mae are not doing so well may be negatively influencing the home building industry even though home sales are still doing very well.

Bonds are still holding up well as the long bond yield settled at 4.76%, up only slightly from February.

Iraq seems to be settling down to fighting the insurgents in-house, but the elected parliament hasn't shown any indication that they can work together yet. That's not a good sign.

The ripple of democracy is spreading from Iraq's example. First the voters of the Ukraine demanded and got a new election last month. In Lebanon protesters made enough waves for Syria to consider leaving. Kirgizstan rid itself of a dictator, and Mongolia has seen demonstrations for a true democratic election. Zimbabwe is next.

A major factor not seen in U.S. news is the fact that French citizen voters are opinionated against the European Union Constitution. A worst case scenario could arise where the EU can't stay organized as is and the euro becomes a lost currency. Unbelievable.

The combination result of all this activity is that gold has fallen back from a high and is not showing any signs of recovering soon. Silver has joined in the slide and silver stocks have tumbled along with gold equities.The ultimate result is a month of gold funds giving up any previous gains for the year.

fn       Fund                     1 mo   3 mo  12 mo   2 yr   3 yr
22 VGPMX Vanguard Prec Metals .   -3.8   -0.5   10.2   85.9   80.6
 1 ASA   ASA Ltd              .   -4.0   -7.6  -12.8   10.8   35.9
 7 SGGDX First Eagle Gold A   .   -4.2   -5.6  -10.2   38.7   71.8
17 TGLDX Tocqueville Gold     .   -4.2   -2.4   -7.3   58.0   76.8
 6 FSAGX Fidelity Select Gold .   -4.2   -3.8  -10.6   33.8   38.4
11 MIDSX Midas Fund           .   -4.3   -5.6   -9.4   56.6   69.2
 4 INPMX AXP Precious Metals A.   -4.5   -4.4  -20.1   48.9   54.8
 8 FKRCX Franklin Gold & PrMt A   -4.5   -5.4   -8.7   54.2   47.0
20 USAGX USAA Precious Metals .   -4.5   -4.3  -12.2   63.5   80.4
19 UNWPX US Global World Pr Mns   -4.7   -0.3   -4.5  103.9  129.8
 5 EKWBX Evergreen Prec Mtls B.   -4.9   -4.3  -10.2   67.0   84.7
12 OCMGX OCM Gold             .   -5.0   -5.9  -16.7   33.3   67.8
 3 BGEIX Amer Cent Global Gold.   -5.0   -5.7  -11.6   46.8   56.8
 9 GOLDX Gabelli Gold         .   -5.2   -5.4  -12.7   42.8   62.1
13 OPGSX Oppenheimer Gold A   .   -5.2   -6.3   -6.0   65.7   56.7
 2 FGLDX AIM Gold & Pr Mtls Inv   -5.3   -2.2   -6.0   55.8   63.3
21 INIVX Van Eck Intl Inv GoldA   -5.4   -4.8  -10.6   50.4   66.4
10 LEXMX ING Precious Metals A.   -5.6   -5.4  -13.0   39.9   54.0
15 RYPMX Rydex Prec Metals    .   -6.3   -7.2  -20.1   32.2   26.9
18 USERX US Global Gold Shares.   -6.3   -4.5  -11.4   66.1   77.7
16 SGDAX Scudder Gold & Pr Mt A   -6.5   -8.2  -16.5   76.6  110.9
14 PMPIX Profund Prec Mtls Ultr   -7.6   -8.0  -18.4   51.5       

With all funds falling, Vanguard regained the top spot by falling the least. Vanguard Precious Metals (VGPMX) and US Global World Precious Minerals (UNWPX) are the only funds near a positive result for the last three months, and only a few are not double-digit disasters over the last twelve months.

This is a list of reported distributions during 2004. This combines dividends and capital gains, and they're taken into consideration for comparison of annual results.

fn        Fund                  distribution
16 SGDAX Scudder Gold & Pr Mt A   1.66
13 OPGSX Oppenheimer Gold A   .   1.38
17 TGLDX Tocqueville Gold     .   1.36
 4 INPMX AXP Precious Metals A.   1.16
22 VGPMX Vanguard Prec Metals .   1.00
21 INIVX Van Eck Intl Inv GoldA   0.97
 1 ASA   ASA Ltd              .   0.55
19 UNWPX US Global World Pr Mns   0.46
12 OCMGX OCM Gold             .   0.36
10 LEXMX ING Precious Metals A.   0.23
 9 GOLDX Gabelli Gold         .   0.20
20 USAGX USAA Precious Metals .   0.15
 3 BGEIX Amer Cent Global Gold.   0.08
18 USERX US Global Gold Shares.   0.05
 2 FGLDX AIM Gold & Pr Mtls Inv   0.04
 8 FKRCX Franklin Gold & PrMt A   0.01
 5 EKWBX Evergreen Prec Mtls B.   0.00
11 MIDSX Midas Fund           .   0.00
15 RYPMX Rydex Prec Metals    .   0.00
 7 SGGDX First Eagle Gold A   .   0.00
 6 FSAGX Fidelity Select Gold .   0.00
14 PMPIX Profund Prec Mtls Ultr   0.00

The Position indicator gives the relative position of a fund between its 52 week high and low. A high is represented by +100 and a low by -100. As of March 31, 2005.

fn        Fund                     pos     nav
22 VGPMX Vanguard Prec Metals .   88.5    17.42
19 UNWPX US Global World Pr Mns   54.8    16.31
13 OPGSX Oppenheimer Gold A   .   42.2    18.28
17 TGLDX Tocqueville Gold     .   24.6    32.41
11 MIDSX Midas Fund           .   21.6     2.02
 8 FKRCX Franklin Gold & PrMt A   21.5    17.82
18 USERX US Global Gold Shares.   20.2     7.78
 2 FGLDX AIM Gold & Pr Mtls Inv   20.0     3.57
 6 FSAGX Fidelity Select Gold .   18.3    26.29
 5 EKWBX Evergreen Prec Mtls B.   11.7    30.63
20 USAGX USAA Precious Metals .    5.7    14.78
10 LEXMX ING Precious Metals A.    5.6     6.43
21 INIVX Van Eck Intl Inv GoldA    2.9     9.32
 3 BGEIX Amer Cent Global Gold.    0.5    11.32
 4 INPMX AXP Precious Metals A.   -1.7     8.98
 1 ASA   ASA Ltd              .   -1.7    38.97
 9 GOLDX Gabelli Gold         .   -2.7    15.27
 7 SGGDX First Eagle Gold A   .   -7.2    15.78
14 PMPIX Profund Prec Mtls Ultr   -8.8    27.58
16 SGDAX Scudder Gold & Pr Mt A   -9.2    16.07
12 OCMGX OCM Gold             .  -12.0    10.87
15 RYPMX Rydex Prec Metals    .  -25.4    35.64

From this list, you can see that some funds hold onto gains much better than other funds. Vanguard (VGPMX), World Precious Minerals (UNWPX), and Oppenheimer Gold (OPGSX) are head and shoulders above the rest in this category.

The following list shows the approximate size of funds as measured in total assets under management. (In $millions as of the end of March) 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
22 VGPMX Vanguard Prec Metals .   804
 6 FSAGX Fidelity Select Gold .   678
 3 BGEIX Amer Cent Global Gold.   652
17 TGLDX Tocqueville Gold     .   501
 7 SGGDX First Eagle Gold A   .   482
 8 FKRCX Franklin Gold & PrMt A   448
 1 ASA   ASA Ltd              .   373
20 USAGX USAA Precious Metals .   315
19 UNWPX US Global World Pr Mns   281
 9 GOLDX Gabelli Gold         .   269
21 INIVX Van Eck Intl Inv GoldA   227
13 OPGSX Oppenheimer Gold A   .   227
15 RYPMX Rydex Prec Metals    .   214
16 SGDAX Scudder Gold & Pr Mt A   118
 2 FGLDX AIM Gold & Pr Mtls Inv   106
10 LEXMX ING Precious Metals A.    82
18 USERX US Global Gold Shares.    73
12 OCMGX OCM Gold             .    67
14 PMPIX Profund Prec Mtls Ultr    62
 4 INPMX AXP Precious Metals A.    57
11 MIDSX Midas Fund           .    54
 5 EKWBX Evergreen Prec Mtls B.    42

Vanguard (VGPMX) still holds the top spot based on size of assets under management. This list is not high on my list of criteria for selecting a gold fund, but it does indicate which has the greatest following with investors. Again, it's more than just good marketing.

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 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
14 PMPIX Profund Prec Mtls Ultr   1.49
11 MIDSX Midas Fund           .   1.15
19 UNWPX US Global World Pr Mns   1.14
18 USERX US Global Gold Shares.   1.10
22 VGPMX Vanguard Prec Metals .   1.08
21 INIVX Van Eck Intl Inv GoldA   1.03
 3 BGEIX Amer Cent Global Gold.   1.02
 6 FSAGX Fidelity Select Gold .   1.02
 2 FGLDX AIM Gold & Pr Mtls Inv   0.99
13 OPGSX Oppenheimer Gold A   .   0.98
 5 EKWBX Evergreen Prec Mtls B.   0.96
15 RYPMX Rydex Prec Metals    .   0.96
16 SGDAX Scudder Gold & Pr Mt A   0.96
 8 FKRCX Franklin Gold & PrMt A   0.95
 1 ASA   ASA Ltd              .   0.95
 9 GOLDX Gabelli Gold         .   0.94
 4 INPMX AXP Precious Metals A.   0.88
12 OCMGX OCM Gold             .   0.85
10 LEXMX ING Precious Metals A.   0.85
20 USAGX USAA Precious Metals .   0.84
17 TGLDX Tocqueville Gold     .   0.84
 7 SGGDX First Eagle Gold A   .   0.75

The beta for each fund may change as the fund advances and declines, but the general position on the ladder doesn't change much, except as a reference to other funds. As you can see, there is a big difference between management policies of different funds. Perhaps the greatest difference is the policy of Profund (PMPIX) to leverage purchases or go 100% cash when they want. In a sustained up market, they should do very well, but a declining market might catch them too.

Once again Vanguard (VGPMX) demonstrated its ability to hold onto gains and to slide the least. This is obviously beneficial to investors not interested in losing assets.

The overall action of gold recently has been tied directly to the movement in the dollar, only inversely. The dollar has been struggling to retain its push toward the 85 or higher level expected by many analysts. Meanwhile gold has been sliding after attempting to sustain a rally taking it to the 446 area. Silver jumped to 7.60 in mid-March but couldn't hold either.

The initial level of gold price support seems to be around 420 - 424, but a lower support at 412 rescued a February decline so we could easily visit that area again.

World events have not produced anything which could be pro-gold or anti-gold recently, so the price has become primarily dollar driven. The recent and recurring U.S. trade deficits gave gold a boost, but the dollar recovered quickly, probably due to the Federal Reserve raising the short term rates.

If the commodity boom stalls, gold will have a much more difficult time climbing, and the dollar could rally above 85.

Some analysts have blamed the oil and gasoline increases on manipulation, but there are obvious shortages occurring and a higher oil price generally fits in with a higher gold price.

The economy is still cruising even in the face of negative reports on Freddie Mac and General Motors. The housing market on the surface continues to advance, but there are still signs that some areas of the country are definitely peaking. Of course, that has been the case for months, so I'll believe a peak when prices fall and yields go up in long term bonds. This might be difficult as long as investors flock to the long term bonds as a good, safe investment.