Suicide bombings in London and Iraq continued to plague civilized life and commerce but have not yet made a major effect on gold markets. In addition, all other markets have generally learned to shrug off results of the Iraq war and Islam Radicalism terrorism. The costs to the U.S. budget deficit continue to mount, with or without publicity.

For the month, the price of gold dropped from 435.9 to 419.6 before rallying to close with a surge at 429.9. Gold funds and the XAU index did not join in the advance. After opening at 93.01, XAU dipped to 89.84 before climbing back to 93.18, then slid back down to close at 90.76. Gold stocks were erratic, some climbing and reversing down, while others fell and reversed up. There is not much of a trend. Perhaps the climbing price of gold will take the lead. After silver had a lousy June, it looked like it was trying to get back on the positive train in the last two weeks of July.

The dollar index fluctuated between 88.38 and 90.44, closing at 89.34. Intraday movements did not show much of a connection between gold and the dollar. The long bond rate slowly advanced from a low of 4.21%, eventually reaching 4.47%.

The housing market had another banner month in June and part of July, setting new sales records and new home prices. However, the party seems to be over in Australia and Britain as homes sales are slowing and prices actually decreasing. I'll believe it when I see it.

Stock indexes reached new four year lows, including NASDAQ and S&P500. The Dow closed the month at 10,640, up from June's 10,274.

Oil has been up and down around 60 for over six weeks and closed this month back up at 60.57. A few analysts have stated that there will soon be an abundance of petroleum supplies and the price of oil is certain to go back down. They assume peace, new discoveries, and a slight recession.

fn       Fund                     1 mo   3 mo  12 mo   2 yr   3 yr
22 VGPMX Vanguard Prec Metals .    7.4   15.9   35.1   70.5  126.6
18 USERX US Global Gold Shares.    0.8   14.3   18.0   43.2  100.1
19 UNWPX US Global World Pr Mns    0.6   10.5   23.1   71.7  138.1
 4 INPMX AXP Precious Metals A.    0.1    7.8    4.5   19.4   67.8
 2 FGLDX AIM Gold & Pr Mtls Inv    0.0   11.2   11.7   31.1   74.4
 6 FSAGX Fidelity Select Gold .   -0.2   10.3   11.1   11.3   50.7
11 MIDSX Midas Fund           .   -0.5    8.2   11.9   24.7   80.8
20 USAGX USAA Precious Metals .   -0.9   10.8    9.5   30.8   95.3
 9 GOLDX Gabelli Gold         .   -1.1    8.9    6.1   18.1   71.7
 8 FKRCX Franklin Gold & PrMt A   -1.3    9.7    8.9   27.1   71.3
10 LEXMX ING Precious Metals A.   -1.6    9.2    7.1   14.3   57.7
13 OPGSX Oppenheimer Gold A   .   -1.6    9.4   10.9   33.8   80.6
21 INIVX Van Eck Intl Inv GoldA   -1.6    8.5   10.6   23.1   70.1
 7 SGGDX First Eagle Gold A   .   -1.8    4.3    5.8   17.4   63.7
 5 EKWBX Evergreen Prec Mtls B.   -2.2    8.8    9.7   35.2   94.4
17 TGLDX Tocqueville Gold     .   -2.2    7.1   12.1   29.2   87.6
15 RYPMX Rydex Prec Metals    .   -2.2    9.0   -2.0    5.9   38.9
12 OCMGX OCM Gold             .   -2.4    6.9    4.5   12.3   59.1
 3 BGEIX Amer Cent Global Gold.   -2.9    8.1    6.0   16.9   63.6
 1 ASA   ASA Ltd              .   -3.1    7.7    3.8   -6.4   42.1
14 PMPIX Profund Prec Mtls Ultr   -3.4   11.8    3.6    8.7   55.0
16 SGDAX Scudder Gold & Pr Mt A   -4.0    6.6    1.9   32.5  107.3

July could not match the gains of June as gold established a base near 420. By the end of the month, gold's advance to 429 hadn't shown up in the gold stocks and funds, but further gold gains would certainly push funds higher in August. Vanguard(VGPMX) continues to move ahead of the pack.

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 July 29, 2005.

fn        Fund                     pos     nav
22 VGPMX Vanguard Prec Metals .  100.0   18.93
13 OPGSX Oppenheimer Gold A   .   31.6   17.98
19 UNWPX US Global World Pr Mns   28.6   15.59
18 USERX US Global Gold Shares.   16.7    7.73
 2 FGLDX AIM Gold & Pr Mtls Inv   12.1    3.58
20 USAGX USAA Precious Metals .   10.3   14.85
17 TGLDX Tocqueville Gold     .   10.2   31.70
 4 INPMX AXP Precious Metals A.    9.7    8.71
 6 FSAGX Fidelity Select Gold .    8.6   24.18
21 INIVX Van Eck Intl Inv GoldA    7.6    9.16
10 LEXMX ING Precious Metals A.    6.1    6.29
 8 FKRCX Franklin Gold & PrMt A    5.6   17.81
16 SGDAX Scudder Gold & Pr Mt A   -5.3   15.24
11 MIDSX Midas Fund           .   -6.3    1.97
 5 EKWBX Evergreen Prec Mtls B.   -8.2   29.95
 9 GOLDX Gabelli Gold         .  -11.4   14.96
12 OCMGX OCM Gold             .  -13.0   10.53
 1 ASA   ASA Ltd              .  -21.5   37.62
 3 BGEIX Amer Cent Global Gold.  -22.2   10.90
 7 SGGDX First Eagle Gold A   .  -23.5   15.45
15 RYPMX Rydex Prec Metals    .  -27.5   34.07
14 PMPIX Profund Prec Mtls Ultr  -30.8   25.84

Vanguard (VGPMX) keeps on keepin' on, setting a new yearly high, as several others are not too far behind.

The following list shows the approximate size of funds as measured in total assets under management. (In $millions as of the end of July) 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 .	  1382
 6 FSAGX Fidelity Select Gold .	   624
 3 BGEIX Amer Cent Global Gold.	   589
 7 SGGDX First Eagle Gold A   .	   497
17 TGLDX Tocqueville Gold     .	   482
 8 FKRCX Franklin Gold & PrMt A	   443
 1 ASA	  ASA  Ltd            .    360
20 USAGX USAA Precious Metals .    301
19 UNWPX US Global World Pr Mns    265
 9 GOLDX Gabelli Gold         .    239
13 OPGSX Oppenheimer Gold A   .    232
21 INIVX Van Eck Intl Inv GoldA    228
15 RYPMX Rydex Prec Metals    .    122
16 SGDAX Scudder Gold & Pr Mt A    114
 2 FGLDX AIM Gold & Pr Mtls Inv     98
10 LEXMX ING Precious Metals A.     78
12 OCMGX OCM Gold             .     67
18 USERX US Global Gold Shares.     63
 4 INPMX AXP Precious Metals A.     60
14 PMPIX Profund Prec Mtls Ultr     58
11 MIDSX Midas Fund           .     49
 5 EKWBX Evergreen Prec Mtls B.     38

Vanguard Precious Metals(VGPMX) continues to be the largest gold fund and has increased its size significantly this spring to over a billion dollars in assets. Its results over the past year have set it above the other funds and undoubtedly has helped to add to its asset size from new investors.

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    1.64
16 SGDAX Scudder Gold & Pr Mt A    1.45
 4 INPMX AXP Precious Metals A.    1.39
21 INIVX Van Eck Intl Inv GoldA    1.31
15 RYPMX Rydex Prec Metals    .    1.24
19 UNWPX US Global World Pr Mns    1.20
 6 FSAGX Fidelity Select Gold .    1.15
18 USERX US Global Gold Shares.    1.12
 3 BGEIX Amer Cent Global Gold.    1.07
12 OCMGX OCM Gold             .    1.05
10 LEXMX ING Precious Metals A.    1.03
 9 GOLDX Gabelli Gold         .    0.98
11 MIDSX Midas Fund           .    0.96
 1 ASA   ASA Ltd              .    0.95
13 OPGSX Oppenheimer Gold A   .    0.93
 5 EKWBX Evergreen Prec Mtls B.    0.90
20 USAGX USAA Precious Metals .    0.86
 2 FGLDX AIM Gold & Pr Mtls Inv    0.85
22 VGPMX Vanguard Prec Metals .    0.84
17 TGLDX Tocqueville Gold     .    0.82
 8 FKRCX Franklin Gold & PrMt A    0.75
 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. This policy produces a higher volatility rating and possibly better returns in an up market.

Vanguard continued to maintain its top position over the last month as most funds had an uninteresting month while holding onto most of June's gains.

The Chinese decision to revalue the yuan by a 2.1% adjustment is minor and will have little effect upon current alignments, but the window is open for further adjustments as necessary. The immediate effect is that foreign prices in China will be slightly cheaper, and items such as gold lost value, approximately $9, overnight. Further valuations will have the effect of lowering domestic prices in yuan, including gold, and will encourage the government to support gold for its citizens. As a matter of fact, gold made up the $9 in the last two weeks of the month.

If the Chinese diversify more into other currencies for their foreign exchange, the need for holding more U.S treasuries will decrease, with resultant lower treasury demand and an upward movement of bond yields. This will eventually affect mortgage rates.

While gold has jumped onboard the up wagon, gold stocks had a very difficult time gaining during the last few days of July as they seesawed their way all over the chart. Gold has its eyes set on the recent high of 441.7 reached in June, and maybe higher. It won't be able to sustain its move, however, if stocks don't join in. On the other hand, XAU is well above its low in May of 78.73, so it is holding as if waiting for permission. Somehow, a rising gold price is not enough.

Commodity and resource stocks have received permission as they have done well. Vanguard's total name is Vanguard Precious Metals and Mining Fund (VGPMX), and their portfolio extends into other mines and metals besides precious metals, probably more than the average gold fund. At last check, they hold a substantial position in BHP Billiton, a huge resources stock, and the world's largest silver producer, which has done very well over the last year. This would explain at least part of the recent divergence of VGPMX from the rest of the group.