Iran openly rejected U.N. requests to limit its nuclear program. China restated its intent to increase its gold reserves, and made it much easier for its citizens to buy and trade gold. The European Central bank stated that they were finished with selling gold for at least the near term, and raised their interest rate again to 2.5%, the second raise in three months. India and China continued their search for raw materials and energy sources, particularly in Australia. Oil bounced up from support at $59 and resumed its advance toward 70, closing at 66.63, up 7.5%.

In the U.S., the Republican leadership in Congress systematically removed fiscal conservatives from its inner circle, something that appears to be a continued disregard for the budget deficits and a weaker dollar. With the many immigration protests, Congress appears likely to roll over for votes, regardless of the economic cost. The miscommunication in Washington with the Dubai Ports decision showed that too many things are not under control and management of the dollar is just one.

Money supply growth worldwide continued at around 10% in most currencies, much higher than GDP growth in the same countries. The dollar index closed at 89.73, remaining in a three month trading range, and was held up by other currencies printing more money than we do.

The Federal Reserve increased its short term rate to 4.75% with a warning comment on inflation, but official inflation is well below what real prices are doing. The long bond yield surged to 4.89%, the highest in 12 months, which is the main determinate of mortgage rates. Sales of existing homes declined for the fifth straight month. The existing inventory of homes for sale hit another record.

The trade deficit posted a new record in January, 68.5 billion. Even with exports increasing to a new record, oil imports increased more.

The new ETF for silver is well on its way to hitting the market and the price of silver is indicating that much silver will be removed from market inventories, resulting in a climbing price. Silver stocks surged.

fn            Fund                1 mo   3 mo  12 mo   2 yr   3 yr
18 USERX US Global Gold Shares.   14.3   35.0   87.7   66.2  211.7
19 UNWPX US Global World Pr Mns   14.3   37.8   80.5   72.4  268.0
21 INIVX Van Eck Intl Inv GoldA   12.1   27.2   68.7   51.2  153.7
13 OPGSX Oppenheimer Gold A   .   11.9   24.8   67.0   64.8  177.3
20 USAGX USAA Precious Metals .   11.3   23.2   77.9   57.4  190.9
 9 GOLDX Gabelli Gold         .   11.0   20.6   65.7   46.0  136.6
11 MIDSX Midas Fund           .   10.2   26.1   86.6   69.1  192.2
 5 EKWBX Evergreen Prec Mtls B.   10.1   21.0   68.4   52.8  181.1
 4 INPMX Riversource Prec MtlsA   10.1   24.9   64.0   31.0  144.3
10 LEXMX ING Precious Metals A.    9.9   22.9   70.5   49.3  138.6
16 SGDAX Scudder Gold & Pr Mt A    9.7   18.2   53.1   29.4  170.3
12 OCMGX OCM Gold             .    9.5   23.3   64.9   37.5  120.0
 3 BGEIX Amer Cent Global Gold.    9.5   18.6   62.5   43.6  138.4
15 RYPMX Rydex Prec Metals    .    9.4   17.5   52.9   23.0  102.2
 8 FKRCX Franklin Gold & PrMt A    9.2   18.3   71.3   60.5  164.2
 2 FGLDX AIM Gold & Pr Mtls Inv    9.0   17.8   59.7   50.1  148.8
 6 FSAGX Fidelity Select Gold .    8.6   17.3   69.6   54.0  126.8
22 VGPMX Vanguard Prec Metals .    7.8   20.3   65.7   91.7  208.2
17 TGLDX Tocqueville Gold     .    7.6   23.6   63.5   52.3  158.4
14 PMPIX Profund Prec Mtls Ultr    7.4   11.0   66.9   36.3  152.8
 7 SGGDX First Eagle Gold A   .    6.4   14.6   51.3   37.5  109.8
 1 ASA   ASA Ltd              .    5.9   18.2   71.0   55.8   89.8

All funds had a good month, and a good year so far. U.S. Global had two top funds, UNWPX and USERX, leading the way through March, including the three and twelve month periods. Gains this month would be accepted by many other funds as a good year.

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 March 31, 2006.

					      nav
fn          Fund                  pos   02/28/06  03/31/06
21 INIVX Van Eck Intl Inv GoldA   99.7    14.02    15.72
 9 GOLDX Gabelli Gold         .   99.7    22.61    25.09
 6 FSAGX Fidelity Select Gold .   99.2    35.91    38.99
19 UNWPX US Global World Pr Mns   98.9    24.50    28.00
20 USAGX USAA Precious Metals .   98.4    23.44    26.10
 5 EKWBX Evergreen Prec Mtls B.   98.4    46.76    51.49
12 OCMGX OCM Gold             .   98.2    16.31    17.86
11 MIDSX Midas Fund           .   98.1     3.42     3.77
17 TGLDX Tocqueville Gold     .   97.9    46.85    50.42
 8 FKRCX Franklin Gold & PrMt A   97.9    27.78    30.34
10 LEXMX ING Precious Metals A.   97.9     9.95    10.94
22 VGPMX Vanguard Prec Metals .   97.6    25.88    27.91
13 OPGSX Oppenheimer Gold A   .   97.5    25.98    29.06
 2 FGLDX AIM Gold & Pr Mtls Inv   97.0     5.23     5.70
18 USERX US Global Gold Shares.   96.9    12.63    14.44
 3 BGEIX Amer Cent Global Gold.   96.3    16.80    18.39
16 SGDAX Scudder Gold & Pr Mt A   96.1    20.93    22.95
 4 INPMX Riversource Prec MtlsA   95.9    13.38    14.73
 7 SGGDX First Eagle Gold A   .   92.2    21.91    23.32
15 RYPMX Rydex Prec Metals    .   91.7    49.81    54.50
 1 ASA   ASA Ltd              .   79.9    61.39    65.00
14 PMPIX Profund Prec Mtls Ultr   52.9    42.88    46.04

Many funds peaked in late March and retreated slightly on the last day of the month. All are in an overbought area, but they are only following the surge in gold and all basic metals, which is following the surge in all commodities, which is representative of the worldwide increases in money supplies and resulting demand. Technical trends may slow this market, but the long term trend is definitely up.

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 .   2761
 6 FSAGX Fidelity Select Gold .   1116
 3 BGEIX Amer Cent Global Gold.    947
17 TGLDX Tocqueville Gold     .    771
 7 SGGDX First Eagle Gold A   .    763
 8 FKRCX Franklin Gold & PrMt A    744
 1 ASA   ASA Ltd              .    628
20 USAGX USAA Precious Metals .    491
19 UNWPX US Global World Pr Mns    479
13 OPGSX Oppenheimer Gold A   .    419
 9 GOLDX Gabelli Gold         .    395
21 INIVX Van Eck Intl Inv GoldA    381
15 RYPMX Rydex Prec Metals    .    194
16 SGDAX Scudder Gold & Pr Mt A    181
 2 FGLDX AIM Gold & Pr Mtls Inv    148
14 PMPIX Profund Prec Mtls Ultr    147
18 USERX US Global Gold Shares.    135
10 LEXMX ING Precious Metals A.    129
12 OCMGX OCM Gold             .    109
 4 INPMX Riversource Prec MtlsA     94
11 MIDSX Midas Fund           .     86
 5 EKWBX Evergreen Prec Mtls B.     65

Vanguard (VGPMX) continues to be the leader here with Fidelity (FSAGX) chasing. These totals sum up to over $11 billion, and not too long ago it was less than $5 billion. With the addition of the Exchange Traded Fund (ETF), GLD, gold is actively being purchased and used as an investment vehicle on the road to wealth. Silver is also benefiting from the projected ETF purchases which will be required to back shares once the silver ETF hits the market.

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
14 PMPIX Profund Prec Mtls Ultr   1.56
18 USERX US Global Gold Shares.   1.32
11 MIDSX Midas Fund           .   1.27
19 UNWPX US Global World Pr Mns   1.14
20 USAGX USAA Precious Metals .   1.08
 1 ASA   ASA Ltd              .   1.06
10 LEXMX ING Precious Metals A.   1.06
22 VGPMX Vanguard Prec Metals .   1.05
 5 EKWBX Evergreen Prec Mtls B.   1.01
21 INIVX Van Eck Intl Inv GoldA   1.00
 3 BGEIX Amer Cent Global Gold.   0.99
 8 FKRCX Franklin Gold & PrMt A   0.98
 4 INPMX Riversource Prec MtlsA   0.98
12 OCMGX OCM Gold             .   0.94
 9 GOLDX Gabelli Gold         .   0.94
15 RYPMX Rydex Prec Metals    .   0.93
 6 FSAGX Fidelity Select Gold .   0.91
13 OPGSX Oppenheimer Gold A   .   0.90
 2 FGLDX AIM Gold & Pr Mtls Inv   0.89
17 TGLDX Tocqueville Gold     .   0.82
16 SGDAX Scudder Gold & Pr Mt A   0.74
 7 SGGDX First Eagle Gold A   .   0.71

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. The greatest difference is the policy of Profund (PMPIX) to leverage purchases or go 100% cash when they want. This policy produces a higher volatility rating and more amplified returns in an up market.

Gold and gold stocks paused in February and early March, but have been climbing since mid-March. While it appears that gold and silver are reaching into overbought areas, the world demand for commodities and gold does not seem to be slowing down. An overbought condition is technical in nature, and sustained demand is a fundamental reason for higher prices. So far, gold is up over 12% and silver up over 30% in the first quarter, well ahead of the Dow.

Even with higher oil prices, the economy continues to look good with the Dow up slightly. After the Fed raised the short term rate, long bond and 10 year yields both took off. Relative to movement over the last two years, these recent increases were not slight. Mortgage rates can be expected to increase and put more pressure on the housing market.

With China's adjustment in policy to promote their citizens investing in gold, it could be the beginning of China purchasing more gold for its reserves, which they said they intend to do soon. That would include fewer dollars kept and fewer invested in US Treasuries, resulting in a higher yield for existing bonds.

One report stated that the increase in commodity prices has been caused by large institutional investors and hedge funds with large resources getting into this sector with both feet. That would allow for excessive behavior and a resulting technical correction soon.

Conversely, historic moves in economics sometimes run right through technical indicators, such as the rise in the stock market in the fall of 1982. Once it started in August of 1982, the market was overbought for six months and kept on climbing anyway. Getting out to be safe turned out to be expensive as the market kept on going up. That was a major turn in national economics, and the latest worldwide commodity explosion due to demand and weakening currencies looks a lot like an historic turn that started in 2005. The size of the US trade deficit and increasing debt levels are both extreme conditions that don't appear to be anywhere near reversing.

In the long term, the deficits appear to doom the dollar to lower values, and it is just a matter of time. The price of gold and silver is already reflecting that. If gold and commodities continue to remain in demand, gold equities and gold funds will continue to be great investments. Attempts to control inflation with higher interest rates will continue as long as the currencies continue to expand, but will result only in higher interest rates which will put a collar on the housing market and the Dow.