The dollar index reached a six year low at 90.23, and the dollar was down against all major currencies as the trend appears to be enduring. The euro reached a new high against the dollar at 1.2015 before closing the month at 1.1996. The British pound reached a five year high. Hedge funds in Europe are starting to bet against the dollar and international investors Soros and Buffett both think its going down more, taking substantial positions in foreign currencies.

Economically, most of the world seems to be booming as most stock exchanges are up and currencies are strengthening, particularly against the dollar. The U.S. trade deficit, the latest at $41b, is helping the export business for just about everyone else. In the words of Warren Buffett, we are selling our national assets to foreigners. Of course, we can't keep doing this forever because it will become much more difficult for the rest of the world to keep financing our spending. Latest reports give the impression that the international investor is getting second thoughts. Only the central banks are investing in U.S. debt to keep the dollar from falling too fast. If it weren't for the Bank of Japan actively supporting the dollar against the yen, it would have gone down further. Japan can't keep this up much longer because it's becoming very expensive to them.

Domestically, the U.S. economy has been cruising lately with the latest estimate for the third quarter GDP up 8.2%. Consumer sentiment as measured by the University of Michigan rose substantially in early November, and the Dow closed at 9782. The long bond yield closed at 5.13% as most interest rates have remained low. The housing market of existing home sales continues to boom, up over 12% from last year. Auto sales surged again as consumers came back to the new car market. Financed cars turned back in usually owed more than they were worth. Autos are just one of the many reasons that consumer debt is still increasing, and today's ratio of debt per GDP is comparable only to 1929.

As U.S. congressmen have become aware of the loss of domestic jobs lately, there were indications of a perceived need for protectionist legislation. The World Trade Organization decided that the tariff on steel imports to the U.S. was illegal and Europeans were organizing penalty fees of their own. China complained about the steel tariff and threatened to restrict our exports to them.

fn       Fund                     1 mo   3 mo  12 mo   2 yr   3 yr
17 USERX US Global Gold Shrs  .   18.8   43.4  125.0  231.8  278.8
18 UNWPX US Global World PrecM.   16.5   53.6  148.4  257.4  295.8
14 RYPMX Rydex Prec Metals    .   16.2   23.1   71.5  117.4  169.0
12 OMCGX Monterey OCM Gold    .   14.4   30.2   93.3  209.0  313.4
19 USAGX USAA Gold            .   13.7   35.9  111.6  212.5  324.8
 9 LEXMX ING Precious Metals  .   13.5   25.5   77.9  160.9  233.3
 2 BGEIX Amer Cent Global Gold.   13.2   25.1   88.4  171.1  273.1
 3 INPMX AXP Precious Metals A.   13.2   35.4  100.9  179.7  202.5
15 SGDAX Scudder Gold & Pr Mts.   13.2   47.8  151.5  254.2  329.4
20 INIVX Van Eck Intl Inv GoldA   12.9   27.5   92.5  198.4  262.3
13 OPGSX Oppenheimer Gold A   .   12.5   35.2   93.7  143.1  203.4
10 FGLDX INVESCO Gold & Pr Mtl.   12.5   27.0   79.2  145.5  215.2
 7 FKRCX Franklin Gold & PrM A.   11.5   24.4   79.2  123.1  152.5
21 VGPMX Vanguard Prec Metals .   11.0   28.4   77.1  118.5  173.2
 8 GOLDX Gabelli Gold         .   10.7   27.4   92.5  202.8  292.6
 4 EKWBX Evergreen Prec Mtls B.   10.6   33.6  104.3  192.1  280.9
 6 SGGDX First Eagle Gold     .    9.6   18.2   67.8  194.9  312.5
 5 FSAGX Fidelity Select Gold .    9.0   20.9   70.2  133.0  205.6
11 MIDSX Midas Fund           .    8.8   24.7   83.1  163.3  204.4
16 TGLDX Tocqueville Gold     .    8.7   26.9   92.9  203.3  273.6
 1 ASA   ASA Ltd              .    8.5    8.7   58.7  147.1  250.7

November was not quite as good as October, but both were excellent months for gold funds. The last four months have created an advance in gold stocks which we usually hope for but don't expect to see. U.S. Global Gold Shares (USERX) and World Precious Minerals (UNWPX) have been in the front, with Rydex Precious Metals (RYPMX) close behind. Scudder Gold (SGDAX) remains the top fund for 2003 so far.

Every fund has doubled within the last two years, some tripled.

The Position indicator gives the relative position of a fund between its 52 week high and low. Its high is represented by +100 and its low by -100. As of November 28, 2003.

fn        Fund                      pos     nav
15 SGDAX Scudder Gold & Pr Mts.    100.0   23.38
18 UNWPX US Global World PrecM.    100.0   18.69
17 USERX US Global Gold Shrs  .    100.0    9.09
 4 EKWBX Evergreen Prec Mtls B.    100.0   34.29
 3 INPMX AXP Precious Metals A.    100.0   13.57
19 USAGX USAA Gold            .    100.0   18.73
13 OPGSX Oppenheimer Gold A   .    100.0   22.61
12 OMCGX Monterey OCM Gold    .    100.0   14.46
 8 GOLDX Gabelli Gold         .    100.0   18.75
 2 BGEIX Amer Cent Global Gold.    100.0   13.57
16 TGLDX Tocqueville Gold     .    100.0   37.72
11 MIDSX Midas Fund           .    100.0    2.22
20 INIVX Van Eck Intl Inv GoldA    100.0   11.91
10 FGLDX INVESCO Gold & Pr Mtl.    100.0    4.05
 7 FKRCX Franklin Gold & PrM A.    100.0   19.60
 9 LEXMX ING Precious Metals  .    100.0    7.88
21 VGPMX Vanguard Prec Metals .    100.0   17.22
14 RYPMX Rydex Prec Metals    .    100.0   44.30
 6 SGGDX First Eagle Gold     .    100.0   17.52
 5 FSAGX Fidelity Select Gold .    100.0   31.51
 1 ASA   ASA Ltd              .     99.7   47.16

All funds set a new high during the last week of November as the dollar weakness has become obvious. This is the third month where most funds set a new high on the last day of the month. It can't be because of payday, but it might be due to payroll deductions set up for gold fund investment accounts.

This indicator demonstrates a fund's ability to retain previous advances without falling out of bed when gold has a bad month or two, but in this case we haven't had a bad month since June.

The following list shows the approximate size of funds as measured in total assets under management in $millions. (As of November 28) 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
 5 FSAGX Fidelity Select Gold .   843
21 VGPMX Vanguard Prec Metals .   674
 2 BGEIX Amer Cent Global Gold.   625
 1 ASA   ASA Ltd              .   451
 7 FKRCX Franklin Gold & PrM A.   416
20 INIVX Van Eck Intl Inv GoldA   337
 6 SGGDX First Eagle Gold     .   279
 8 GOLDX Gabelli Gold         .   276
19 USAGX USAA Gold            .   273
16 TGLDX Tocqueville Gold     .   252
18 UNWPX US Global World PrecM.   199
13 OPGSX Oppenheimer Gold A   .   199
10 FGLDX INVESCO Gold & Pr Mtl.   156
 9 LEXMX ING Precious Metals  .   129
14 RYPMX Rydex Prec Metals    .   124
 3 INPMX AXP Precious Metals A.    80
17 USERX US Global Gold Shrs  .    79
11 MIDSX Midas Fund           .    71
 4 EKWBX Evergreen Prec Mtls B.    56
12 OMCGX Monterey OCM Gold    .    55
15 SGDAX Scudder Gold & Pr Mts.    38

The total capitalization of all gold mining investment worldwide was less than $90 billion, but with each month producing a 15-20% asset growth, total assets are increasing substantially.

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
15 SGDAX Scudder Gold & Pr Mts.   1.75
18 UNWPX US Global World PrecM.   1.73
17 USERX US Global Gold Shrs  .   1.48
 4 EKWBX Evergreen Prec Mtls B.   1.33
 3 INPMX AXP Precious Metals A.   1.26
19 USAGX USAA Gold            .   1.23
13 OPGSX Oppenheimer Gold A   .   1.18
12 OMCGX Monterey OCM Gold    .   1.08
 8 GOLDX Gabelli Gold         .   1.06
 2 BGEIX Amer Cent Global Gold.   1.03
16 TGLDX Tocqueville Gold     .   1.01
11 MIDSX Midas Fund           .   0.97
20 INIVX Van Eck Intl Inv GoldA   0.97
10 FGLDX INVESCO Gold & Pr Mtl.   0.95
 7 FKRCX Franklin Gold & PrM A.   0.93
 9 LEXMX ING Precious Metals  .   0.92
21 VGPMX Vanguard Prec Metals .   0.90
14 RYPMX Rydex Prec Metals    .   0.90
 6 SGGDX First Eagle Gold     .   0.78
 5 FSAGX Fidelity Select Gold .   0.77
 1 ASA   ASA Ltd              .   0.69

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.

The top funds for November were US Global Gold Shares(USERX), US Global World Precious Minerals (UNWPX), and Rydex Precious Metals (RYPMX). With the surge in gold funds entering a fifth month, we should at least be considering just how long this advance can last before we see a major correction. The last correction in June and July dropped some funds 30% in three weeks. This advance started immediately after that, and a move of this magnitude can certainly be classified as overbought.

Fundamentally, the weak dollar is providing substantial reason to invest in precious metals, but the 400 level has been providing a strong resistance to further penetration. During the latest run on the dollar, it fell to 1.2015 euro, but still didn't fold. Gold punched through 400 but fell immediately back.

In Europe, the basis of the euro is that the many participating nations will work together, but the larger (France and Germany) recently received favored waivers to the rules to work out their large deficits. If the big boys get exceptions that they want, it will eventually become unstable. The thought of such an occurrence will restrict its use as a foreign currency and support gold instead.

One addition to the short term dollar weakness has been increased terrorist activity in Turkey and Iraq. Suicide bombers are becoming more daring and experienced, creating doubt about the war, and indirectly about the dollar.

Job growth coming out of this recession does not compare with previous recessions. This one is weak in real jobs creation. Much of the high tech gains and profits lately are due solely to business with the U.S. government.

If the current world economy is sustained by the U.S. trade deficit, what happens if the dollar slips enough to seriously cut imports and reduce the deficit?

The CRB index is up 29% in two years, measuring basic commodities. Inflation is not dead, just hiding.

The mutual fund industry is still being investigated as more fund companies report improper management sales methods. This will certainly help to clean up an industry left on its own for years.