Domestic economic signs are mixed. While the U.S. economy advanced at an acceptable pace, 5.6% growth in the first quarter, existing home sales decreased in May, new home sales increased, and interest rates trended upward. The Federal Reserve raised the short term rate to 5.25%. Even with the Dow rallying the last week of June, closing at 11,150, it doesn't seem to have much momentum for further advances. Part of the rally may have been brought on by an increase in consumer confidence reported in June.

The dollar rose for most of the month, but finished in a decline, closing at 85.16, slightly above its May value.

Even with the recent corrections in commodity prices, commodities are still short in supply and high in demand, including oil and gold. China continues to buy oil resources through Sinopec, its national oil company. India shows no signs of slowing its growth and demand. Gold and silver production will not match new demand in the near future. The trend in commodity consumption continues up. Oil ended the month up to $73.93, but natural gas was down.

The war in Iraq has not shown much improvement, and Iran continued to argue with the West over nuclear capabilities. Iran also threatened to use its oil production as a weapon against the West if it is attacked. Israel threatened to affect disagreements over Palestine with more military action. North Korea produced more threats about their nuclear options. In other words, there are several international locations that could become much worse in less than a week. That is really not new but the potential is there for an event to go out of control and throw markets into a panic buy or panic sell.

fn            Fund                1 mo   3 mo  12 mo   2 yr   3 yr
 1 ASA   ASA Ltd              .    2.2   -1.8   67.7   82.9   70.7
 8 FKRCX Franklin Gold & PrMt A    1.4    1.8   72.1   92.9  130.8
20 USAGX USAA Precious Metals .    1.0    3.6   81.8   95.5  157.5
 9 GOLDX Gabelli Gold         .    0.9    3.5   73.1   84.4  116.3
18 USERX US Global Gold Shares.    0.6    7.3  104.2  125.1  205.3
16 SGDAX Scudder Gold & Pr Mt A    0.5    1.5   57.4   62.0  140.8
21 INIVX Van Eck Intl Inv GoldA    0.3    2.5   73.1   90.1  129.9
 5 EKWBX Evergreen Prec Mtls B.    0.2    3.4   74.3   93.6  152.1
 4 INPMX Riversource Prec MtlsA    0.2    0.1   69.5   69.3  112.1
15 RYPMX Rydex Prec Metals    .    0.2   -2.6   52.3   51.6   72.5
14 PMPIX Profund Prec Mtls Ultr   -0.1    1.2   74.3   88.5  104.0
19 UNWPX US Global World Pr Mns   -0.2    3.1   95.7  128.0  255.6
22 VGPMX Vanguard Prec Metals .   -0.3    4.5   71.2  128.1  181.7
17 TGLDX Tocqueville Gold     .   -0.9   -0.4   62.9   82.8  126.1
 7 SGGDX First Eagle Gold A   .   -1.5    1.8   54.6   69.3   92.8
 2 FGLDX AIM Gold & Pr Mtls Inv   -1.7    0.2   59.5   75.5  118.3
 3 BGEIX Amer Cent Global Gold.   -1.9    1.3   65.8   77.2  107.3
11 MIDSX Midas Fund           .   -1.9    7.4  104.5  123.8  170.0
 6 FSAGX Fidelity Select Gold .   -2.0   -2.4   68.6   87.8   96.9
12 OCMGX OCM Gold             .   -2.1    3.9   72.6   80.0  108.7
10 LEXMX ING Precious Metals A.   -2.1   -2.3   67.7   77.7  104.1
13 OPGSX Oppenheimer Gold A   .   -2.7    0.3   67.6   94.8  140.8

XAU dipped to 120.0 before rallying to close at 143.57 as gold fell as low as 559 before closing at 613.5. Most gold funds reached a low before climbing back. XAU and gold stocks have responded better to the gold advance than bullion. The fact that ASA is the fund leader tells me that the international community is also behind this gold advance and gold stock rally. It is not just a New York market rally.

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 June 30, 2006.

					      nav
fn          Fund                  pos  05/31/06 06/30/06
18 USERX US Global Gold Shares.   58.1   15.40    15.49
22 VGPMX Vanguard Prec Metals .   56.9   29.24    29.16
19 UNWPX US Global World Pr Mns   56.7   28.93    28.86
 1 ASA   ASA Ltd              .   54.4   62.46    63.85
21 INIVX Van Eck Intl Inv GoldA   50.8   16.07    16.12
20 USAGX USAA Precious Metals .   50.3   26.77    27.04
 5 EKWBX Evergreen Prec Mtls B.   49.6   53.15    53.26
 6 FSAGX Fidelity Select Gold .   49.5   35.17    34.45
12 OCMGX OCM Gold             .   48.0   18.94    18.55
11 MIDSX Midas Fund           .   47.8    4.13     4.05
 9 GOLDX Gabelli Gold         .   45.2   25.73    25.96
 7 SGGDX First Eagle Gold A   .   45.1   24.11    23.75
 8 FKRCX Franklin Gold & PrMt A   44.8   30.45    30.88
16 SGDAX Scudder Gold & Pr Mt A   44.8   23.18    23.30
 4 INPMX Riversource Prec MtlsA   44.6   14.72    14.75
 2 FGLDX AIM Gold & Pr Mtls Inv   43.5    5.81     5.71
17 TGLDX Tocqueville Gold     .   41.6   50.65    50.21
10 LEXMX ING Precious Metals A.   41.3   10.92    10.69
 3 BGEIX Amer Cent Global Gold.   40.6   18.98    18.62
13 OPGSX Oppenheimer Gold A   .   40.2   29.97    29.15
15 RYPMX Rydex Prec Metals    .   39.9   52.97    53.06
14 PMPIX Profund Prec Mtls Ultr   28.1   46.66    46.61

Although most funds had a significant drop during May and June, they all recovered back to close near their early June values. All are still well above their yearly averages.

The following list shows the approximate size of funds as measured in total assets under management. (In $millions as of the end of June) 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 .   3635
 6 FSAGX Fidelity Select Gold .   1263
 3 BGEIX Amer Cent Global Gold.    978
 7 SGGDX First Eagle Gold A   .    851
17 TGLDX Tocqueville Gold     .    835
 8 FKRCX Franklin Gold & PrMt A    812
19 UNWPX US Global World Pr Mns    708
 1 ASA   ASA Ltd              .    617
20 USAGX USAA Precious Metals .    553
13 OPGSX Oppenheimer Gold A   .    512
 9 GOLDX Gabelli Gold         .    421
21 INIVX Van Eck Intl Inv GoldA    345
15 RYPMX Rydex Prec Metals    .    201
16 SGDAX Scudder Gold & Pr Mt A    188
18 USERX US Global Gold Shares.    161
 2 FGLDX AIM Gold & Pr Mtls Inv    149
10 LEXMX ING Precious Metals A.    127
11 MIDSX Midas Fund           .    114
14 PMPIX Profund Prec Mtls Ultr    113
12 OCMGX OCM Gold             .    110
 4 INPMX Riversource Prec MtlsA     87
 5 EKWBX Evergreen Prec Mtls B.     71

Vanguard continues to lead all others by far with total assets under management, but there are many other funds not quite as large. In addition, the gold and silver ETFs has provided a vehicle for investing in precious metals which might have gone into gold funds, but didn't.

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
11 MIDSX Midas Fund           .   1.48
14 PMPIX Profund Prec Mtls Ultr   1.47
18 USERX US Global Gold Shares.   1.43
19 UNWPX US Global World Pr Mns   1.20
20 USAGX USAA Precious Metals .   1.17
22 VGPMX Vanguard Prec Metals .   1.12
 5 EKWBX Evergreen Prec Mtls B.   1.10
10 LEXMX ING Precious Metals A.   1.09
 3 BGEIX Amer Cent Global Gold.   1.09
 8 FKRCX Franklin Gold & PrMt A   1.07
 9 GOLDX Gabelli Gold         .   1.07
21 INIVX Van Eck Intl Inv GoldA   1.07
12 OCMGX OCM Gold             .   1.05
 4 INPMX Riversource Prec MtlsA   1.02
13 OPGSX Oppenheimer Gold A   .   1.01
 2 FGLDX AIM Gold & Pr Mtls Inv   0.94 
 1 ASA   ASA Ltd              .   0.92
15 RYPMX Rydex Prec Metals    .   0.92
17 TGLDX Tocqueville Gold     .   0.89
16 SGDAX Scudder Gold & Pr Mt A   0.83
 6 FSAGX Fidelity Select Gold .   0.79
 7 SGGDX First Eagle Gold A   .   0.76

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 portfolio 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 funds lost a load of value in May and early June, but recovered well during late June to make June a fairly level month. Silver and gold were both down, but XAU was up. We may be seeing the momentum switch back to gold stocks from bullion. In the last six months, bullion was up 18.6% and XAU was up only 12.1%.

I will repeat that the fact that ASA was the leader in June with an advance may indicate that the international community is responding to the turn in bullion by buying stocks. In this case, ASA is primarily South African invested.

The oil market, the subject of many studies, continues to climb. There are many analysts who believe that, although the main trend in the future is definitely higher prices, the short term has the possibility of excess inventory and a fall in prices. This would probably affect the price of gold. So far, oil is still going up, closing over $73. A military flareup in the Middle East would abruptly change the situation and drive oil skyward. This would probably carry gold up too.

The domestic economy is mixed in that there are signs and arguments in both directions, bull or bear. Housing seems to be slowing, but new home sales increased in May even as mortgage rates increased. The large inventory of existing homes will eventually wear down any good housing news for months. Higher mortgage expenses will reduce the number of eligible buyers unless prices come down. The housing market is no longer a source of investment funds, and this will hold back markets for just about everything.

The short term rate, 5.25%, is now higher than the long term yield, 5.20%, a general sign of a recession approaching. This may or not affect gold, but it should at least affect the Dow. Meanwhile, as the Dow has been climbing, the NASDAQ and QQQ have had difficulties making gains. The recent late-month rally was brought on with the feeling by investing experts that the Federal Reserve will not raise rates again. I think the Fed might only if the long bond yield climbs enough to justify it. That would occur only if foreigners slowed their investments in Treasury bills.

One reason that gold rallied was the quick drop by the dollar during the last week of June. Gold is still closely tied to a weak dollar and if it continues to be weak, falling under 85, then gold will keep climbing and gold funds will keep going up.

From an official standpoint, of the 22 funds covered, 20 are non-diversified, open-ended mutual funds. That essentially means that they concentrate their investments in one industry, this being gold bullion, gold mining, and gold production. The exceptions are ASA, a diversified, closed end investment company, and Gabelli Gold (GOLDX), officially a diversified, open-ended mutual fund. I can't tell any difference between GOLDX and the rest, but officially they are different. ASA is a closed end investment company and not an official mutual fund. I track it because it is an investment like a mutual fund but one that you can trade during the day.