The dollar dipped to a fifteen year low against the pound, partially due to increased jobless claims and an expected lower interest rate soon from the Federal Reserve. The long bond yield has been falling since it peaked at 4.93% in mid October. It closed November at 4.56% and looks to be going lower. Meanwhile, foreign rates are in uptrends.

The economy began to show a few weak spots, primarily a weakening housing market. Existing home sales dropped as inventory increased again and overall home construction decreased. Construction outside home building also decreased in October. National manufacturing unexpectedly decreased, another bit of evidence that the economy is slowing. In addition, the slumping housing market will take spendable cash away from consumers and should have a negative effect upon the markets.

Nevertheless, the Dow hit another all-time high at 12,409, but slipped back to close at 12,194. NASDAQ and S&P numbers have looked better than expected, but how much longer can it continue is the question. Since about 50% of the NYSE volume is from hedge fund activity, we may just be seeing the volatile nature of excess cash. Almost all analysts note that we are over-extended on the buy side.

Oil moved back over $63 as OPEC threatened to cut production. Whatever happens from OPEC, oil seems to have based around $58 and is turning up.

Large gold mines are acquiring new reserves by purchasing smaller producers. Barrick Gold(ABX) bought out Placer Dome(PDG) last summer at a premium, Goldcorp(GG) bought out Glamis Gold(GLG) at a premium, and IAMGold(IAG) bought out Cambior(CBJ) at a premium. Barrick has a final offer out for Novagold(NG), but it hasn't been accepted. All are attempts by larger mines to acquire reserves in the ground cheaper than finding their own, indicating the much higher expected future evaluation of metals not yet mined.

We have always included ASA Limited, a closed-end fund, even though it is not an official mutual fund, and it often pays to check the premium or discount on ASA as the price quoted is the bid/ask market price and the net asset value is different. The current price of ASA is about 13% less than the net asset value, and in an extended bull market, this discount will become a premium, meaning it will trade for more than its net asset value. The astute observer will notice that ASA, like other closed-end funds, has the potential to appreciate more than just the value of its holdings. For more information, see www.asaltd.com.

The fact that ASA trades at a discount is proof that there is no euphoria yet in the gold market, and we are not even close to the top.

Scudder Gold & Precious Metals (SGDAX) changed its name this summer to DWS Gold & Precious Metals, and Gabelli Gold (GOLDX) changed its name to GAMCO Gold.

For comparison purposes with gold funds, as of this month, we have added three Exchange Traded Funds (ETFs: GLD, GDX, SLV) and two indexes (HUI, XAU).

fn            Fund                1 mo   3 mo  12 mo   2 yr   3 yr
25 SLV   iShrs Silver Trust ETF   13.9    8.2                     
12 OCMGX OCM Gold             .   13.0    6.5   59.1   65.8   48.7
14 PMPIX Profund Prec Mtls Ultr   12.4    0.7   29.1   34.3   27.0
15 RYPMX Rydex Prec Metals    .   11.7    6.0   39.6   41.4   33.2
21 INIVX Van Eck Intl Inv GoldA   11.7    7.7   57.0   74.2   69.6
20 USAGX USAA Precious Metals .   11.6    8.8   66.5   91.5   76.6
 6 FSAGX Fidelity Select Gold .   11.6    8.1   39.8   72.2   59.7
11 MIDSX Midas Fund           .   11.6    3.7   70.1  100.0  100.0
26 HUI   Amex Gold Bugs Index .   11.5    1.9   46.0   50.1   43.1
16 SGDAX DWS Gold & Prec Mtls A   11.4    7.6   46.8   49.2   37.7
 3 BGEIX Amer Cent Global Gold.   11.2    6.6   49.3   58.1   53.5
 5 EKWBX Evergreen Prec Mtls B.   11.1    7.0   58.1   75.8   77.6
17 TGLDX Tocqueville Gold     .   11.0   11.3   54.6   71.5   68.6
13 OPGSX Oppenheimer Gold A   .   10.7    9.5   63.4   84.3   79.8
23 GDX   Mkt V Gold Miners ETF.   10.6    3.4                     
 2 FGLDX AIM Gold & Pr Mtls Inv   10.5    6.4   46.7   64.8   66.6
19 UNWPX US Global World Pr Mns   10.4    6.0   75.7   96.0  104.5
 9 GOLDX GAMCO Gold AAA       .   10.1    6.7   49.8   67.3   56.8
 8 FKRCX Franklin Gold & PrMt A    9.9    8.0   50.6   77.6   77.5
18 USERX US Global Gold Shares.    9.9    4.0   77.1   97.1   88.5
 4 INPMX Riversource Prec MtlsA    9.5    6.2   56.9   65.1   47.4
27 XAU   Phlx Gold/Silver Index    8.7    1.7   30.3   39.8   36.1
 1 ASA   ASA Ltd              .    8.5    4.3   31.2   49.3   43.8
10 LEXMX ING Precious Metals A.    8.4    1.5   43.1   57.8   48.8
24 GLD   StrtTrks Gold Shrs ETF    6.9    3.4   31.1   42.7      
 7 SGGDX First Eagle Gold A   .    6.9    1.8   32.7   45.7   51.4
22 VGPMX Vanguard Prec Metals .    4.8    7.0   43.0   90.2  108.9

iShares Silver Trust (SLV) displayed an unusually strong advance by edging out the top gold fund, OCM Gold (OCMGX). All gold funds had a good month, and most had an excellent month. All are up for the last 12 months. In November, SLV left GLD in the dust, indicating that, for now, silver is advancing more than gold.

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 November 30.

				      nav
fn          Fund                  pos   10/31/06  11/30/06
23 GDX   Mkt V Gold Miners ETF.   88.8    37.96    41.98
21 INIVX Van Eck Intl Inv GoldA   87.7    16.46    18.38
20 USAGX USAA Precious Metals .   86.7    27.75    30.98
13 OPGSX Oppenheimer Gold A   .   80.3    30.77    34.07
19 UNWPX US Global World Pr Mns   77.4    28.82    31.81
 5 EKWBX Evergreen Prec Mtls B.   74.2    53.61    59.58
17 TGLDX Tocqueville Gold     .   73.9    51.41    57.09
 4 INPMX Riversource Prec MtlsA   73.6    15.22    16.66
 2 FGLDX AIM Gold & Pr Mtls Inv   71.7     5.83     6.44
18 USERX US Global Gold Shares.   71.5    15.27    16.78
 6 FSAGX Fidelity Select Gold .   69.4    34.66    38.67
12 OCMGX OCM Gold             .   68.5    18.09    20.44
16 SGDAX DWS Gold & Prec Mtls A   64.2    23.20    25.85
 8 FKRCX Franklin Gold & PrMt A   64.1    31.26    34.37
11 MIDSX Midas Fund           .   58.9     3.98     4.44
 9 GOLDX GAMCO Gold AAA       .   58.7    25.92    28.53
15 RYPMX Rydex Prec Metals    .   57.3    52.83    59.00
25 SLV   iShrs Silver Trust ETF   55.0   122.68   139.68
22 VGPMX Vanguard Prec Metals .   55.0    29.62    31.05
 3 BGEIX Amer Cent Global Gold.   50.6    18.37    20.43
 7 SGGDX First Eagle Gold A   .   42.6    23.48    25.09
26 HUI   Amex Gold Bugs Index .   41.8   318.84   355.54
10 LEXMX ING Precious Metals A.   35.4    10.46    11.34
24 GLD   StrtTrks Gold Shrs ETF   32.9    60.24    64.39
27 XAU   Phlx Gold/Silver Index   21.6   137.30   149.28
 1 ASA   ASA Ltd              .   21.3    59.80    64.21
14 PMPIX Profund Prec Mtls Ultr   -8.6    41.52    46.66

The Gold Miners ETF (GDX) has maintained most of its gains but started late in May, so statistically it has an advantage over the others. Van Eck International Investors (INIVX) and USAA Gold (USAGX) are the most steady at holding gains among the funds. PMPIX is the only one below its 52 week average.

The following list shows the approximate size of funds as measured in total assets under management. (In $millions as of the end of November) 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 .   3459
 6 FSAGX Fidelity Select Gold .   1528
 3 BGEIX Amer Cent Global Gold.   1073
19 UNWPX US Global World Pr Mns   1025
 8 FKRCX Franklin Gold & PrMt A    981
17 TGLDX Tocqueville Gold     .    925
 7 SGGDX First Eagle Gold A   .    826
13 OPGSX Oppenheimer Gold A   .    716
20 USAGX USAA Precious Metals .    704
 1 ASA   ASA Ltd              .    645
21 INIVX Van Eck Intl Inv GoldA    468
 9 GOLDX GAMCO Gold AAA       .    436
18 USERX US Global Gold Shares.    248
16 SGDAX DWS Gold & Prec Mtls A    211
15 RYPMX Rydex Prec Metals    .    205
14 PMPIX Profund Prec Mtls Ultr    195
 2 FGLDX AIM Gold & Pr Mtls Inv    156
11 MIDSX Midas Fund           .    138
10 LEXMX ING Precious Metals A.    131
12 OCMGX OCM Gold             .    119
 4 INPMX Riversource Prec MtlsA     98
 5 EKWBX Evergreen Prec Mtls B.     81

We now have at least four gold funds with over a billion dollars in assets under management, a number which will grow even more in the near future. Since gold and gold funds are nowhere near a favorite approved investment, we have a long way to go, and these funds will bring in more assets as gold advances. The ETFs continue to grow, causing the removal of both silver and gold bullion off the market, and cutting down on market supply while increasing market demand. That is a recipe for climbing prices.

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
18 USERX US Global Gold Shares.   1.41
11 MIDSX Midas Fund           .   1.37
14 PMPIX Profund Prec Mtls Ultr   1.29
19 UNWPX US Global World Pr Mns   1.20
20 USAGX USAA Precious Metals .   1.18
12 OCMGX OCM Gold             .   1.15
26 HUI   Amex Gold Bugs Index .   1.10
13 OPGSX Oppenheimer Gold A   .   1.05
 3 BGEIX Amer Cent Global Gold.   1.03
10 LEXMX ING Precious Metals A.   1.03
25 SLV   iShrs Silver Trust ETF   1.01
 9 GOLDX GAMCO Gold AAA       .   1.01
21 INIVX Van Eck Intl Inv GoldA   1.01
 4 INPMX Riversource Prec MtlsA   1.00
 8 FKRCX Franklin Gold & PrMt A   1.00
17 TGLDX Tocqueville Gold     .   0.99
 5 EKWBX Evergreen Prec Mtls B.   0.99
 2 FGLDX AIM Gold & Pr Mtls Inv   0.85
27 XAU   Phlx Gold/Silver Index   0.85
 1 ASA   ASA Ltd              .   0.84
15 RYPMX Rydex Prec Metals    .   0.83
24 GLD   StrtTrks Gold Shrs ETF   0.81
22 VGPMX Vanguard Prec Metals .   0.78
16 SGDAX DWS Gold & Prec Mtls A   0.77
 7 SGGDX First Eagle Gold A   .   0.75
 6 FSAGX Fidelity Select Gold .   0.63
23 GDX   Mkt V Gold Miners ETF.   0.57

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.

The high ratings for USERX and MIDSX can be directly attributed to their unusually strong recent advances.

Gold funds had a second good month, and may be benefiting from a historic breakout in the price of gold. After reaching 650, an expected resistance level, gold may take some time to regroup, but with the dollar dropping and oil once again on the rise, gold will not go down much.

Another perspective: it looks like gold is mounting its horse as it prepares to gallup to new highs, but one month does not a bull market make. The fact that silver and platinum are both advancing with strength makes for good signals, but it has mostly been on the judgment that the dollar is about to roll over. If the dollar should rally back up, this would give gold and silver an opportunity to fall back.

Silver, as measured by SLV, is showing even more strength than gold, and the new ETF is definitely sucking up excess silver from the market. SLV may turn out to be the true star climber in the next two months.

The war in Iraq is not producing any good news and the old news is beginning to cast doubts on our success for peace. Although it definitely affected the election, it has not yet affected the markets.

I expect the falling, not sliding, housing market to eventually drag the Dow and NASDAQ back to reality, and the yields from Treasury bonds tells us a recession is probable, so I think that gold stocks could also come down unless the dollar rolls over and drops. In that case, gold and silver will do very well some more.