The dollar cycled between 81.89 and 83.08 before ending at 81.93, and the long bond yield surged from 5.01% to 5.36% before dropping back to 5.13% before the Federal Reserve meeting. It was convenient for bonds to rally just days before a decision was to be made on future rates, driving the yield down and allowing the Board to not increase rates.

The U.S. Treasury is lobbying both China and Russia to keep investing in U.S. debt and U.S. assets, which may be one reason that the stock markets keep hitting new highs every few days. April saw global investors with a net sale of over $28 billion. Included in that number, China has become a net seller of U.S. Treasury bonds, but says it has no intention of doing anything that would devalue their holdings. They also have plenty of dollars from the trade surplus which allows them to continue to buy U.S. assets or gold.

Russian President Putin and President Bush will meet July 1-2 at Kennebunkport, Maine, to discuss a few things, such as the recent subject of missile defense in Europe. Another is Kosovo, where Bush is following Bill Clinton and Europe(NATO) policy in giving Kosovo independence from Serbia. Putin is dead set against it, since Serbia is a Russian ally, and he feels that Europe is ignoring Russian influence.

When hedge fund manager Bear Stearns experienced heavy losses with two funds, Merrill Lynch jumped in to save its investments, but has forced the hedge fund market to take a good look at its evaluation methods, which are vague to say the least. In 1998, the latest hedge fund melt-down also drove gold to new lows, along with the markets.

Existing home sales are still hitting lows, and the average house selling price is still decreasing. This problem just won't go away and we can expect it to have a bigger effect upon the markets in the future.

Domestic politics is in turmoil as the bipartisan immigration bill was defeated in the Senate by a bipartisan force. So far, the Democratic House has not been able to assert itself against the Republican forces, so who knows what laws will be passed.

China's overall trade surplus jumped 73%, indicating it is with more other economies than just the U.S. A few Senators are seriously proposing legislation which would penalize China for its currency manipulation against the dollar. This could easily backfire.

Oil prices surged temporarily when one of Nigeria's oil fields was attacked by rebels. Reports indicate the rebels are more serious this time around. A disruption on oil flow would certainly push the price higher since Nigeria is a major supplier to the U.S. Oil closed the month over 70 again.

fn            Fund                1 mo   3 mo  12 mo   2 yr   3 yr
22 VGPMX Vanguard Prec Metals .    1.1   13.2   27.2  117.7  190.0
10 LEXMX ING Precious Metals A.    0.3   13.4   21.6  104.0  116.2
11 MIDSX Midas Fund           .    0.0    3.9   18.5  142.4  165.2
21 INIVX Van Eck Intl Inv GoldA   -0.5    1.1   13.7   96.9  116.2
15 INPMX Riversource Prec MtlsA   -0.8    6.2   15.6   95.9   95.6
19 UNWPX US Global World Pr Mns   -0.9    4.2   11.0  117.3  153.1
 8 FKRCX Franklin Gold & PrMt A   -1.0    0.8   13.4   95.2  118.7
 9 GOLDX GAMCO Gold AAA       .   -1.1    1.4    6.9   84.9   97.0
 6 FSAGX Fidelity Select Gold .   -1.1   -1.9    6.6   79.7  100.2
12 OCMGX OCM Gold             .   -1.1    0.1    5.8   82.5   90.3
 4 SGDAX DWS Gold & Prec Mtls A   -1.1    0.8    8.6   71.0   76.0
13 OPGSX Oppenheimer Gold A   .   -1.2    4.1   26.0  111.2  145.4
 1 ASA   ASA Ltd              .   -1.3    0.3    3.7   74.9   90.8
 2 FGLDX AIM Gold & Pr Mtls Inv   -1.3    0.3   10.5   76.3   94.0
26 HUI   Amex Gold Bugs Index .   -1.5   -2.5   -2.3   63.4   74.3
20 USAGX USAA Precious Metals .   -1.6   -1.0   14.6  108.3  124.1
 5 EKWBX Evergreen Prec Mtls B.   -1.7   -2.0    6.6   85.9  106.4
17 TGLDX Tocqueville Gold     .   -1.9   -1.0   14.5   86.4  109.2
24 GLD   StrtTrks Gold Shrs ETF   -1.9   -2.2    5.0   48.0       
14 PMPIX Profund Prec Mtls Ultr   -2.1    2.5  -13.8   50.2   62.4
18 USERX US Global Gold Shares.   -2.3   -2.3   -3.2   97.6  117.9
 7 SGGDX First Eagle Gold A   .   -2.5   -3.8    1.0   56.1   70.9
16 RYPMX Rydex Prec Metals    .   -2.7   -0.6    5.4   60.4   59.7
27 XAU   Phlx Gold/Silver Index   -2.7   -0.8   -5.3   46.2   57.6
23 GDX   Mkt V Gold Miners ETF.   -3.2   -4.2   -2.1  	         
 3 BGEIX Amer Cent Global Gold.   -3.9   -4.5   -1.9   62.6   73.7
25 SLV   iShrs Silver Trust ETF   -7.7   -7.5   10.9   	                      

Vanguard Precious Metals(VGPMX) and ING Precious Metals (LEXMX) are the only two funds to give us a positive month and also hold the two top spots for the latest three month period, well above the herd.

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 the end of June:

				           nav
fn          Fund                  pos   05/31/07  06/29/07
22 VGPMX Vanguard Prec Metals .  100.0    33.38    33.75
11 MIDSX Midas Fund           .   88.4     4.80     4.80
10 LEXMX ING Precious Metals A.   72.2    12.25    12.29
13 OPGSX Oppenheimer Gold A   .   53.8    32.20    31.81
 8 FKRCX Franklin Gold & PrMt A   43.7    33.54    33.20
 2 FGLDX AIM Gold & Pr Mtls Inv   42.7     6.25     6.17
20 USAGX USAA Precious Metals .   42.3    28.86    28.39
21 INIVX Van Eck Intl Inv GoldA   33.1    16.42    16.34
24 GLD   StrtTrks Gold Shrs ETF   31.9    65.54    64.27
17 TGLDX Tocqueville Gold     .   30.3    53.14    52.13
15 INPMX Riversource Prec MtlsA   28.7    15.08    14.96
16 RYPMX Rydex Prec Metals    .   22.3    57.44    55.90
 1 ASA   ASA Ltd              .   20.8    65.38    64.56
 5 EKWBX Evergreen Prec Mtls B.   20.3    54.86    53.93
19 UNWPX US Global World Pr Mns   17.7    28.60    28.34
23 GDX   Mkt V Gold Miners ETF.   12.8    39.16    37.89
26 HUI   Amex Gold Bugs Index .    8.7   334.20   329.35
 9 GOLDX GAMCO Gold AAA       .    4.9    25.46    25.19
12 OCMGX OCM Gold             .    0.4    18.09    17.89
 4 SGDAX DWS Gold & Prec Mtls A   -1.7    21.24    21.00
25 SLV   iShrs Silver Trust ETF   -1.7   133.83   123.50
 6 FSAGX Fidelity Select Gold .   -5.9    34.33    33.96
18 USERX US Global Gold Shares.   -8.0    15.34    14.99
 7 SGGDX First Eagle Gold A   .  -22.3    20.81    20.28
 3 BGEIX Amer Cent Global Gold.  -22.6    19.01    18.26
27 XAU   Phlx Gold/Silver Index  -25.0   139.76   135.95
14 PMPIX Profund Prec Mtls Ultr  -60.0    38.83    38.03

The top funds are those who can hold onto gains once they have them, and some plunge with any weakness. Profund Precious Metals (PMPIX) has a way to go before it gets back into the top funds. XAU, usually considered a gold market representative, is near the bottom and is not a good representative of gold funds and the gold market.

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 .    3760
 6 FSAGX Fidelity Select Gold .    1342
 3 BGEIX Amer Cent Global Gold.     959
 8 FKRCX Franklin Gold & PrMt A     948
19 UNWPX US Global World Pr Mns     913
17 TGLDX Tocqueville Gold     .     844
13 OPGSX Oppenheimer Gold A   .     668
 7 SGGDX First Eagle Gold A   .     667
 1 ASA   ASA Ltd              .     648
20 USAGX USAA Precious Metals .     645
21 INIVX Van Eck Intl Inv GoldA     416
 9 GOLDX GAMCO Gold AAA       .     385
23 GDX   Mkt V Gold Miners ETF.     326
18 USERX US Global Gold Shares.     221
16 RYPMX Rydex Prec Metals    .     194
 4 SGDAX DWS Gold & Prec Mtls A     171
14 PMPIX Profund Prec Mtls Ultr     159
 2 FGLDX AIM Gold & Pr Mtls Inv     150
11 MIDSX Midas Fund           .     149
10 LEXMX ING Precious Metals A.     142
12 OCMGX OCM Gold             .     104
15 INPMX Riversource Prec MtlsA      88
 5 EKWBX Evergreen Prec Mtls B.      73

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    1.70
26 HUI   Amex Gold Bugs Index .    1.45
25 SLV   iShrs Silver Trust ETF    1.33
27 XAU   Phlx Gold/Silver Index    1.11
13 OPGSX Oppenheimer Gold A   .    1.08
24 GLD   StrtTrks Gold Shrs ETF    1.07
 4 SGDAX DWS Gold & Prec Mtls A    1.04
11 MIDSX Midas Fund           .    1.03
 3 BGEIX Amer Cent Global Gold.    1.00
 9 GOLDX GAMCO Gold AAA       .    1.00
 1 ASA   ASA Ltd              .    1.00
16 RYPMX Rydex Prec Metals    .    0.98
18 USERX US Global Gold Shares.    0.98
 8 FKRCX Franklin Gold & PrMt A    0.97
10 LEXMX ING Precious Metals A.    0.97
 5 EKWBX Evergreen Prec Mtls B.    0.95
17 TGLDX Tocqueville Gold     .    0.95
 7 SGGDX First Eagle Gold A   .    0.95
15 INPMX Riversource Prec MtlsA    0.95
20 USAGX USAA Precious Metals .    0.94
21 INIVX Van Eck Intl Inv GoldA    0.90
 2 FGLDX AIM Gold & Pr Mtls Inv    0.88
12 OCMGX OCM Gold             .    0.88
 6 FSAGX Fidelity Select Gold .    0.82
19 UNWPX US Global World Pr Mns    0.81
22 VGPMX Vanguard Prec Metals .    0.78
23 GDX   Mkt V Gold Miners ETF.    0.75

The beta for each fund may change as the fund advances and declines, but the general position on the list 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.

There is an active discussion between analysts whether gold will keep on falling or bottom out and start the big rally expected by almost everyone. The question is when.

Conventional wisdom says that a higher interest rate will support the dollar and hurt metal prices, and for June it was partially true. Interest rates increased up until the final week and the dollar responded with a rally above 83. At the same time, gold fell off its 671 high position to test 640 again, which it seems to have done as interest rates came back down and the dollar weakened.

The Commitment of Traders (COT) data from mid June showed that there was a noticeable decrease in the commercial short interest, which usually means that gold will go up. The commercial side of trading is done mostly by professional gold producers selling their product and when their short interest decreases it indicates that they no longer think gold will go down. That is a very general statement, but a tendency which normally holds.

The Kosovo conflict between Russia and the U.S. could be much more than meets the eye since neither is willing to back down, and Russia controls much of Europe's gas supply. If Bush is forced by Europe to back down, the dollar could take a significant hit.

The dollar was able to extend over 83, but could not hold at that value, and closed the month falling to the low range of recent fluctuations.