The most surprising index was the Dow Industrials, which rose from 11679 to several new highs, reaching 12,153 before slipping back to 12,100. By the end of the month, the long suffering NASDAQ was showing signs of recovering. Oil continued to slide, falling from 62.91 to 58, and causing gasoline priced to fall further, approaching 2.10 per gallon.

During the third quarter ending in September, GDP growth was a very low 1.6%, new car sales were down over 7%, and combined with slightly higher mortgage rates, the housing market was well into a decline. Personal savings is down but new credit borrowing is up. It indicates that the domestic economy is definitely slowing down, even if the Dow is setting new highs. Debts are increasing faster than income. It can't last forever.

The price of oil remained below the 60 dollar level, but natural gas has been doing better. Overall energy costs have been dropping, including gasoline down to $2.10 per gallon. It is down over 30% from the peak. Most analysts feel that we are near the low.

Exchange Traded Funds (EFTs) are gobbling up much of the investment money going into gold by buying bullion. This takes it off the market, reducing supply and pushing prices higher. Money which might have gone into funds is diverted, but should not negatively affect gold funds.

fn            Fund                1 mo   3 mo  12 mo   2 yr   3 yr
 4 INPMX Riversource Prec MtlsA    9.8    1.3   56.4   55.9   52.4
13 OPGSX Oppenheimer Gold A   .    9.8    3.7   59.7   75.9   74.5
14 PMPIX Profund Prec Mtls Ultr    9.5   -7.9   28.2   30.6   32.9
22 VGPMX Vanguard Prec Metals .    8.9    3.2   47.0   99.4  110.9
17 TGLDX Tocqueville Gold     .    8.8    2.2   52.1   61.5   64.2
 9 GOLDX Gabelli Gold         .    8.4    1.4   49.6   56.9   56.3
20 USAGX USAA Precious Metals .    7.8    2.4   65.1   78.8   78.6
19 UNWPX US Global World Pr Mns    7.6   -2.0   75.1   94.2  115.9
 8 FKRCX Franklin Gold & PrMt A    7.6    1.9   51.1   68.9   75.3
15 RYPMX Rydex Prec Metals    .    7.4   -0.6   36.7   29.8   37.6
 5 EKWBX Evergreen Prec Mtls B.    7.0    0.5   55.7   66.0   74.9
 2 FGLDX AIM Gold & Pr Mtls Inv    7.0    2.3   45.0   57.2   69.6
 3 BGEIX Amer Cent Global Gold.    6.7   -0.5   47.7   48.1   56.2
21 INIVX Van Eck Intl Inv GoldA    6.6    2.2   55.9   63.9   71.1
16 SGDAX Scudder Gold & Pr Mt A    6.2    0.0   46.6   39.6   38.2
12 OCMGX OCM Gold             .    6.1   -1.6   52.4   51.8   50.5
18 USERX US Global Gold Shares.    6.0   -3.3   74.5   93.0  103.8
11 MIDSX Midas Fund           .    5.6   -1.2   66.5   88.6   95.1
10 LEXMX ING Precious Metals A.    4.9   -2.2   42.8   52.6   54.9
 1 ASA   ASA Ltd              .    4.9   -3.1   33.0   47.6   38.4
 6 FSAGX Fidelity Select Gold .    3.7    0.6   43.2   59.9   53.7
 7 SGGDX First Eagle Gold A   .    3.3   -2.2   37.8   42.9   53.4

Riversource(INPMX), Oppenheimer(OPGSX), and Profund(PMPIX) led the way this month as all funds had a very good month. It took a good month to make up for the previous two, and the three month results show exactly that. These numbers also show that most of the fund gains over the past two years were made in the last 12 months.

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 October 31.

				      nav
fn          Fund                  pos   09/29/06  10/31/06
22 VGPMX Vanguard Prec Metals .   61.4    27.21    29.62
20 USAGX USAA Precious Metals .   57.7    25.75    27.75
21 INIVX Van Eck Intl Inv GoldA   57.0    15.44    16.46
19 UNWPX US Global World Pr Mns   56.3    26.78    28.82
13 OPGSX Oppenheimer Gold A   .   55.4    28.03    30.77
18 USERX US Global Gold Shares.   54.4    14.40    15.27
 4 INPMX Riversource Prec MtlsA   54.0    13.86    15.22
 5 EKWBX Evergreen Prec Mtls B.   51.5    50.10    53.61
 6 FSAGX Fidelity Select Gold .   51.0    33.41    34.66
 2 FGLDX AIM Gold & Pr Mtls Inv   50.0     5.45     5.83
17 TGLDX Tocqueville Gold     .   48.5    47.27    51.41
 8 FKRCX Franklin Gold & PrMt A   48.3    29.06    31.26
 9 GOLDX Gabelli Gold         .   44.8    23.91    25.92
16 SGDAX Scudder Gold & Pr Mt A   43.5    21.84    23.20
11 MIDSX Midas Fund           .   43.5     3.77     3.98
 7 SGGDX First Eagle Gold A   .   41.3    22.74    23.48
12 OCMGX OCM Gold             .   40.8    17.05    18.09
15 RYPMX Rydex Prec Metals    .   38.6    49.18    52.83
 3 BGEIX Amer Cent Global Gold.   36.8    17.22    18.37
10 LEXMX ING Precious Metals A.   35.3     9.97    10.46
 1 ASA   ASA Ltd              .   17.3    57.00    59.80
14 PMPIX Profund Prec Mtls Ultr    2.7    37.91    41.52

Vanguard(VGPMX) gets credit for holding onto most of its annual gains, but there are many funds holding up very well. All are above their 52 week average, with more to come.

The following list shows the approximate size of funds as measured in total assets under management. (In $millions as of the end of August) 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 .   3693
 6 FSAGX Fidelity Select Gold .   1271
 3 BGEIX Amer Cent Global Gold.    964
17 TGLDX Tocqueville Gold     .    855
 7 SGGDX First Eagle Gold A   .    841
 8 FKRCX Franklin Gold & PrMt A    822
19 UNWPX US Global World Pr Mns    707
 1 ASA   ASA Ltd              .    578
20 USAGX USAA Precious Metals .    567
13 OPGSX Oppenheimer Gold A   .    541
 9 GOLDX Gabelli Gold         .    420
21 INIVX Van Eck Intl Inv GoldA    352
15 RYPMX Rydex Prec Metals    .    200
16 SGDAX Scudder Gold & Pr Mt A    188
18 USERX US Global Gold Shares.    159
 2 FGLDX AIM Gold & Pr Mtls Inv    152
10 LEXMX ING Precious Metals A.    124
11 MIDSX Midas Fund           .    112
12 OCMGX OCM Gold             .    107
14 PMPIX Profund Prec Mtls Ultr    101
 4 INPMX Riversource Prec MtlsA     89
 5 EKWBX Evergreen Prec Mtls B.     71

With a rising gold price, each of these funds increased their asset holdings, but the metal EFTs are getting even more of the gold investment dollars by buying bullion, and expanding further. For quick traders, ETFs appear to be better, but funds offer a much more leveraged increase in value as gold goes up and equities go up even more. For the long term, gold funds are much better and more rewarding. ETF purchases of bullion also act as a bulldozer pushing metal prices higher. Someday, at the peak, liquidation of ETFs will have the opposite effect, but I'm not going to worry about that for a few years at least, maybe twenty.

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 had a good month, finally. The previous two months had not been too good, but signs are indicating that we may be setting up for a new offensive advance as gold passed through 600, going up.

Both silver and gold have settled into a trading range and are now testing top resistance levels. That includes platinum and paladium. Most analysts I review think we are breaking upward, but there is always one or more that worry that central banks will once again sell a few tons in the hope of ruining the party. Even if that happens, the climbout is coming. Perhaps after the election.

All major stock indices are up for the month and the financial pundits love it, but I wouldn't bet too much on it going much higher.

With 30 year Treasury bond yields around 4.80%, well below the Federal Reserve peg at 5.25%, you can count on the Feds NOT raising its short term rate, and maybe even making a decrease next time around. The only exception would be if bonds drop, causing the yields to approach 5.25% again. Since bonds have gyrated up and down over the past six weeks from a yield of 4.95% to 4.71%, back up to 4.95% and back down to 4.67%, this might happen sooner than I think.

The war in Iraq has turned into the biggest factor in the coming election, but I don't see much changing there in the near future. There is always room for something new to erupt in that area, however.

In the three trading days of November so far, gold and silver have shown positive indications of starting a new move pushing against resistance levels. Further breakouts would be a very good sign.