The price of gold has held up even in the face of commodity markets declining over the past two months. The price of oil reached over $55 again but ended the month at $49.72, also echoing the commodity pullback.

The GDP growth for the first quarter of 2005 came in at only 3.1%, a two year low, and indicated that the economy is slowing. The Dow closed at 10,192.

The Federal Reserve short term rate was held at 2.75% with expectations that it would be raised to 3% in May (it was). The long bond yield closed at a new recent low of 4.51%, helping to keep home mortgage rates low, now around 5.78%. New and used home sales continued to boom.

The war in Iraq has become old hat news and is no longer affecting the daily or weekly markets like it once did. However, the costs of war are still there. However, now that Iraq has established a government and will soon be administering itself and defending itself against insurgents, the U.S. cost may go down. On the other hand, the budget deficit has also become old news, so war costs are almost ignored. With both the budget and trade deficits being discounted, the dollar's trading range narrowed between 83.40 and 85.20 and had little direct and immediate effect on daily gold prices.

Analysts who are bearish on gold were quick to announce that it was about time for metals and commodities to recognize that the dollar is still king, but for the second month in a row, gold prices held, and only gold stocks tumbled. One reason for the tumble could have been reportings of lower than expected earnings by the major gold stocks, including Newmont Mines (NEM).

One timing factor often significant is that Professional Commercial traders hold a very high position of investment shorts, while large speculators are heavily long. This condition is often an indication of a gold market top, not an oversold low.

Germany reported low growth of less than 1%, with increasing economic gloom. The vote in Europe on the European Union Constitution is coming at the end of May, and both may have an effect on the value of the euro, at least temporarily. I would expect the dollar to be boosted if the Constitution is not approved, and the price of gold could go either way.

fn       Fund                     1 mo   3 mo  12 mo   2 yr   3 yr
 7 SGGDX First Eagle Gold A   .   -6.1   -4.9    4.2   29.5   49.7
22 VGPMX Vanguard Prec Metals .   -6.2   -0.7   25.0   75.5   62.7
17 TGLDX Tocqueville Gold     .   -8.7   -5.7    5.8   45.5   53.0
 8 FKRCX Franklin Gold & PrMt A   -8.9   -6.3    4.3   42.8   27.0
20 USAGX USAA Precious Metals .   -9.3   -7.5    0.1   47.7   53.5
12 OCMGX OCM Gold             .   -9.4   -8.2   -2.1   22.9   40.9
21 INIVX Van Eck Intl Inv GoldA   -9.4   -7.9    3.9   35.4   39.6
 2 FGLDX AIM Gold & Pr Mtls Inv   -9.8   -7.2    5.7   41.7   38.2
11 MIDSX Midas Fund           .   -9.9   -6.7    6.4   43.3   44.5
 9 GOLDX Gabelli Gold         .  -10.0   -8.6    0.3   29.2   35.3
 4 INPMX AXP Precious Metals A.  -10.0   -8.3   -4.9   34.2   29.3
 1 ASA   ASA Ltd              .  -10.1   -7.0   -2.1   -1.7   10.4
 5 EKWBX Evergreen Prec Mtls B.  -10.1   -8.0    3.1   50.4   55.5
13 OPGSX Oppenheimer Gold A   .  -10.1   -7.2    6.0   49.4   35.6
10 LEXMX ING Precious Metals A.  -10.4   -8.7   -1.3   25.1   28.6
 3 BGEIX Amer Cent Global Gold.  -11.0   -9.4    2.0   32.0   31.6
16 SGDAX Scudder Gold & Pr Mt A  -11.0  -11.2   -6.2   56.7   72.5
15 RYPMX Rydex Prec Metals    .  -12.3  -11.8   -6.5   18.7    7.7
18 USERX US Global Gold Shares.  -13.1  -12.9    0.2   51.0   40.4
19 UNWPX US Global World Pr Mns  -13.5   -9.0    5.7   81.2   80.0
14 PMPIX Profund Prec Mtls Ultr  -16.2  -12.5   -0.1   32.5       
 6 FSAGX Fidelity Select Gold .  -16.6  -14.3   -3.2   11.9   10.6

With all funds falling for another month, Vanguard gave up the top spot to First Eagle Gold (SGGDX). This ongoing two month decline has consumed all recent gains by all funds, and pushed a few funds up against their yearly lows. This plunge as a group is one of those moves you wish you could have avoided by selling two months ago.

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 April 29, 2005.

fn        Fund                     pos     nav
22 VGPMX Vanguard Prec Metals .   55.7   16.34
13 OPGSX Oppenheimer Gold A   .   -8.0   16.43
19 UNWPX US Global World Pr Mns  -16.3   14.11
17 TGLDX Tocqueville Gold     .  -28.4   29.59
11 MIDSX Midas Fund           .  -32.4    1.82
 8 FKRCX Franklin Gold & PrMt A  -35.9   16.23
21 INIVX Van Eck Intl Inv GoldA  -36.1    8.44
 2 FGLDX AIM Gold & Pr Mtls Inv  -38.3    3.22
 4 INPMX AXP Precious Metals A.  -44.4    8.08
 5 EKWBX Evergreen Prec Mtls B.  -51.5   27.54
18 USERX US Global Gold Shares.  -52.1    6.76
 7 SGGDX First Eagle Gold A   .  -54.6   14.82
16 SGDAX Scudder Gold & Pr Mt A  -56.3   14.30
20 USAGX USAA Precious Metals .  -57.0   13.40
10 LEXMX ING Precious Metals A.  -57.3    5.76
 1 ASA   ASA Ltd              .  -59.9   35.04
 3 BGEIX Amer Cent Global Gold.  -61.5   10.08
 9 GOLDX Gabelli Gold         .  -62.5   13.74
12 OCMGX OCM Gold             .  -67.8    9.85
14 PMPIX Profund Prec Mtls Ultr  -75.3   23.11
 6 FSAGX Fidelity Select Gold .  -82.1   21.92
15 RYPMX Rydex Prec Metals    .  -97.8   31.27

Vanguard (VGPMX) is the only fund above its 52 week average and only Oppenheimer Gold (OPGSX) offers any statistical competition.

The following list shows the approximate size of funds as measured in total assets under management. (In $millions as of the end of April) 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 .   754
 3 BGEIX Amer Cent Global Gold.   581
 6 FSAGX Fidelity Select Gold .   565
17 TGLDX Tocqueville Gold     .   457
 7 SGGDX First Eagle Gold A   .   453
 8 FKRCX Franklin Gold & PrMt A   408
 1 ASA   ASA Ltd              .   335
20 USAGX USAA Precious Metals .   285
19 UNWPX US Global World Pr Mns   243
 9 GOLDX Gabelli Gold         .   242
21 INIVX Van Eck Intl Inv GoldA   206
13 OPGSX Oppenheimer Gold A   .   204
15 RYPMX Rydex Prec Metals    .   188
16 SGDAX Scudder Gold & Pr Mt A   105
 2 FGLDX AIM Gold & Pr Mtls Inv    96
10 LEXMX ING Precious Metals A.    73
18 USERX US Global Gold Shares.    63
12 OCMGX OCM Gold             .    61
14 PMPIX Profund Prec Mtls Ultr    52
 4 INPMX AXP Precious Metals A.    51
11 MIDSX Midas Fund           .    49
 5 EKWBX Evergreen Prec Mtls B.    38

Based on recent size of assets under management, Vanguard Precious Metals(VGPMX) still holds the top spot, and American Century Gold(BGEIX) is now larger than Fidelity Gold(FSAGX) . 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    1.57
11 MIDSX Midas Fund           .    1.18
19 UNWPX US Global World Pr Mns    1.17
18 USERX US Global Gold Shares.    1.12
22 VGPMX Vanguard Prec Metals .    1.10
21 INIVX Van Eck Intl Inv GoldA    1.05
 3 BGEIX Amer Cent Global Gold.    1.04
 6 FSAGX Fidelity Select Gold .    1.03
 2 FGLDX AIM Gold & Pr Mtls Inv    1.00
13 OPGSX Oppenheimer Gold A   .    0.99
 5 EKWBX Evergreen Prec Mtls B.    0.97
15 RYPMX Rydex Prec Metals    .    0.97
16 SGDAX Scudder Gold & Pr Mt A    0.97
 8 FKRCX Franklin Gold & PrMt A    0.96
 1 ASA   ASA Ltd              .    0.95
 9 GOLDX Gabelli Gold         .    0.94
 4 INPMX AXP Precious Metals A.    0.88
12 OCMGX OCM Gold             .    0.84
10 LEXMX ING Precious Metals A.    0.84
20 USAGX USAA Precious Metals .    0.84
17 TGLDX Tocqueville Gold     .    0.83
 7 SGGDX First Eagle Gold A   .    0.73

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 has caught them too.

First Eagle (SGGDX) and Vanguard(VGPMX) were the best survivors for the month, and after two months of plunging, only half of the funds are up over the latest 12 months. For 2005, the average fund is down 15%.

In the past, a significant drop in XAU and gold stocks without a drop in gold resulted in gold joining in the fall before the stocks recovered. In other words, stocks led the collapse, and gold eventually followed. Once gold joined in the decline, stocks usually rallied above a support level and a recover was eventually re-initiated. Gold followed with an economically fundamental base and the bull market resumed. How long that will be is the question.

The link between gold and the dollar seems to have disconnected over the past three weeks as both edged up, independent of each other. Gold stocks, however, may have noticed the dollar's advance and given up early.

One analyst pointed out that there had been very little investment over the past ten years by major gold mining companies in new exploration. There are, however, many smaller companies looking for the mother lode. A good, small exploration stock could be one to take off first when it finds some value in the ground.