Argentina is still struggling as a country because the currency has collapsed beyond anything we have experienced since bank panics of the early 1800's. If the paper in your pocket is suddenly worth 70% less and won't pay the bills, it tends to upset people. It is not improving.

Two months ago, we were talking about how Japan wanted a weaker yen to help get out of their delationary conditions, and citizens ran out and bought more gold. Since the Japanese have not historically been buyers of precious metals, this required a true cultural adjustment. Now with the yen near 128 yen/dollar, it is gaining, not losing against the dollar, and gold may not look so good to them as before.

The results of the semi-coup in Venezuela may become more complex but for now President Chavez is back in charge and not necessarily a friend of the U.S. That means he will more than likely side with OPEC in limiting production.

Last report we were talking about home sales up and manufacturing productivity recovering. With the last two quarters estimated at a 5% annual rate of increase in GDP, it looked like the national economy was off the ropes. With long term interest rates back down, the Federal Reserve decided not to raise rates. It sounded good, but too many lower earnings reports and layoffs have persisted. By the end of April, the Dow Industrials dropped to 9946, disregarding the good news about GDP growth.

Debt creation in the U.S., and indirectly money creation, continues at a high pace, including federal debt. With Congress taking no action to raise the debt ceiling as requested by the Bush Administration in December, we could see a pinch in the next few months if the government threatens to shut down from lack of funding.

For April, the price of gold started at 302.6, dipped twice below 300 and suddenly shot above 312 during the last few days to close at 308.9. Silver started at 4.64, jumped to a new yearly high at 4.73, and closed down at 4.53. XAU started at 70.8, spent most of the month down, jumped to 77.5 on the 26th, and closed at 73.9.

The weakness of the dollar permitted the weak yen to gain, closing at 128.6 yen/dollar, and the euro advanced to another three month high from .871 to .900. Oil edged up further, passing $27. The long bond rate dipped further to 5.59% with 30 year mortgage rates at 6.36%, well under the recent 7%.

fn         Fund                   1 mo   3 mo  12 mo   2 yr   3 yr
 1 ASA   ASA Ltd              .   10.9   46.5   73.1  124.4   89.7
19 UNWPX US Global World PrecM.   10.5   40.8   76.1   38.9   -6.5
18 USERX US Global Gold Shrs  .   10.0   43.8   78.7   73.6   23.0
16 SCGDX Scudder Gold         .    8.0   29.5   46.8   75.2   38.4
21 INIVX Van Eck Intl Inv GoldA    8.0   37.5   78.1   80.8   24.1
11 MNTGX Monterey OCM Gold    .    7.9   31.6   71.4   80.6   41.5
 8 GOLDX Gabelli Gold         .    7.8   37.4   78.8  118.3   65.0
 6 SGGDX First Eagle SGen Gold.    7.7   37.9   91.0  105.3   68.8
 3 INPMX AXP Precious Metals A.    7.7   32.1   44.4   72.8   30.4
14 LEXMX Pilgrim Prec Metals A.    7.2   29.7   62.8   82.9   39.9
 4 EKWBX Evergreen Prec Mtls B.    6.8   29.2   62.1   91.4   48.8
 9 FGLDX INVESCO Strat Gold   .    6.6   27.7   52.5   54.4   17.9
 2 BGEIX Amer Cent Global Gold.    6.1   30.5   77.1   91.3   34.7
20 USAGX USAA Gold            .    6.0   30.1   74.3  101.5   57.6
10 MIDSX Midas Fund           .    5.6   27.9   44.6   43.0  -15.3
17 TGLDX Tocqueville Gold     .    5.5   32.8   76.9  102.5   70.9
 7 FKRCX Franklin Gold A      .    5.4   24.4   34.0   62.9   38.9
22 VGPMX Vanguard Gold/Pr Mtls.    4.1   19.5   42.0   83.7   50.2
12 OPGSX Oppenheimer Gold A   .    3.9   23.3   38.3   59.0   23.7
 5 FSAGX Fidelity Select Gold .    3.5   24.8   60.8   79.1   41.4
15 RYPMX Rydex Prec Metals    .    3.3   20.6   42.4   56.3      
13 PRPFX Permanent Portfolio  .    1.1    4.6    6.7    8.4    2.2

The trend remains up for now with one caveat. After reaching over 312 on April 26, gold ended the month falling back for two days. Following this run we are due for a correction, so it was not unexpected. Several of the top 30 gold equities lost for the month, indicating that some traders have already started to remove some of their profits from the past four months. This is perfectly normal. As you can see from the table above, five funds have doubled in the past 24 months.

fn    Fund                  pos  nav(4-30)
13 Permanent Portfolio  .  100.0   19.45
22 Vanguard Gold/Pr Mtls.   94.9   11.13
19 US Global World PrecM.   91.6    8.98
 6 First Eagle SGen Gold.   91.0   10.16
20 USAA Gold            .   89.7    9.69
 7 Franklin Gold A      .   89.4   12.64
 4 Evergreen Prec Mtls B.   89.4   17.95
17 Tocqueville Gold     .   89.3   21.28
 2 Amer Cent Global Gold.   89.1    7.88
 5 Fidelity Select Gold .   88.7   20.81
14 Pilgrim Prec Metals A.   87.6    4.59
12 Oppenheimer Gold A   .   87.3   13.26
 3 AXP Precious Metals A.   86.4    7.81
 8 Gabelli Gold         .   86.1   10.28
16 Scudder Gold         .   84.1    9.69
18 US Global Gold Shrs  .   83.9    4.86
11 Monterey OCM Gold    .   83.0    7.37
 9 INVESCO Strat Gold   .   81.7    2.44
21 Van Eck Intl Inv GoldA   81.5    8.39
10 Midas Fund           .   79.7    1.33
15 Rydex Prec Metals    .   78.5   28.83
 1 ASA Ltd              .   71.9   32.15

Most of these set new 52-week highs last week and backed off.

fn    fund                  assets
22 Vanguard Gold/Pr Mtls.   416
 5 Fidelity Select Gold .   381
 1 ASA Ltd              .   279
 2 Amer Cent Global Gold.   261
 7 Franklin Gold A      .   207
21 Van Eck Intl Inv GoldA   157
16 Scudder Gold         .   128
12 Oppenheimer Gold A   .   113
20 USAA Gold            .   113
 9 INVESCO Strat Gold   .    86
14 Pilgrim Prec Metals A.    69
19 US Global World Gold .    68
15 Rydex Prec Metals    .    59
13 Permanent Portfolio  .    56
10 Midas Fund           .    47
 3 AXP Precious Metals A.    39
18 US Global Gold Shrs  .    34
17 Tocqueville Gold     .    32
 8 Gabelli Gold         .    19
11 Monterey OCM Gold    .    17
 6 First Eagle SGen Gold.    16
 4 Evergreen Prec Mtls B.     9

fn      fund                beta
 6 First Eagle SGen Gold.   1.60
 8 Gabelli Gold         .   1.47
11 Monterey OCM Gold    .   1.45
 2 Amer Cent Global Gold.   1.41
 1 ASA Ltd              .   1.40
21 Van Eck Intl Inv GoldA   1.39
18 US Global Gold Shrs  .   1.38
17 Tocqueville Gold     .   1.33
20 USAA Gold            .   1.32
19 US Global World PrecM.   1.17
 4 Evergreen Prec Mtls B.   1.14
 5 Fidelity Select Gold .   1.10
14 Pilgrim Prec Metals A.   1.08
 9 INVESCO Strat Gold   .   1.06
15 Rydex Prec Metals    .   0.93
 3 AXP Precious Metals A.   0.93
16 Scudder Gold         .   0.89
10 Midas Fund           .   0.88
22 Vanguard Gold/Pr Mtls.   0.86
12 Oppenheimer Gold A   .   0.77
 7 Franklin Gold A      .   0.73
13 Permanent Portfolio  .   0.13

The beta for each fund changes monthly as the fund advances and declines, but the relative 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 nav price movement is a direct reflection of the types of equities selected by the fund manager.

*** Funds that diversify with government treasuries, bullion or natural resource stocks generally have a lower beta and are less volatile compared to a portfolio concentrating on small capitalization mining companies.

The standard, accepted, sensible method of investing, which almost entirely disregards gold, remains in its closet and refuses to notice that the dollar may have problems. Historically, large trade deficits and the resulting current account imbalances, now over 4.2% of GDP, cannot be sustained without depreciating a currency.

The IMF pointed out that the U.S. trade deficit is a major international problem, and apparently someone is taking notice besides the U.S. Government. Since the last two administrations have not seen this as a problem, I expect it to continue. Treasury Secretary O'Neill ridicules those who point out the historical viewpoint, so it's obvious what his position is. When it does turn, the overhanging amount of dollars overseas will all try to get out the door together, similar to an avalanche, not a managed adjustment. The result will be much higher prices for imports, a much higher interest rate, and a soaring gold price.

The Federal Reserve likes to think that it is the controller of the U.S. dollar money supply, but I think it has lost out to the billions created each month by Fannie Mae in terms of new mortgages backed by paper sold to investors. This has kept the residential mortgage market booming, which looks great for now.

From a U.S. business standpoint, there is a major conversion going on from short term commercial paper to long term bond creation by many large U.S. corporations. This tells me that they think interest rates are near bottom. It also has an economic effect of reducing the money supply, which could be affecting the markets.

In the Middle East, both sides are considering talking more than before, but it is still a tenderbox waiting to erupt again. Because a large amount of gold moves through this region and is traded there, an expanded war could have a much more emphatic impact on gold.

Argentine citizens who happened to hold gold, dollars or other tangible assets have been able to get through the storm much easier than the average citizen who went along from paycheck to paycheck. Savings didn't matter much if it was in the bank.

In Japan, the recent surge in gold purchases is also an indication that they are getting the impression that the yen is not the safe refuge for the Japanese citizen it has been for years.

President Chavez equals marginally higher oil prices and Venezuela is a major source of U.S oil.

Although there were still international events affecting the precious metals markets, the overriding factor has become the slowly weakening dollar. With most currencies recently reaching three to four month highs against the dollar, the trend is evident. How long it will continue is not.