Gold Mutual Funds Lead the List for 2002

Mutual Fund rating service Morningstar.com recently ranked the top-performing mutual funds for the year-to-date 2002. Out of the top 50 funds ranked, gold mutual funds overwhelmingly dominated the list, along with a few bear market equity funds (e.g. Prudent Bear Fund).

The ranking of funds includes the following top-performers along with percentage gain for the year:

1. First Eagle SoGen Gold (+83%)
2. Monterey OCM Gold (+68%)
3. Tocqueville Gold (+64%)
4. Gabelli Gold (+64%)
5. Van Eck Intl. Investors Gold (+63%)
6. Prudent Bear (+53%)
7. American Century Global Gold (+53%)
8. U.S. Global Investors Gold Shares (+53%)
9. American Century Global Gold Adv. (+53%)
10. ING Precious Metals A (+52%)

The message from this list of top fund performers is that gold is definitely the way to go in this troubled market. Based on the configuration of gold cycles heading into Year 2003, next year's aggregate gold fund performance should be considerably greater than the preliminary (gold) bull market year of 2002. The market for mutual funds has spoken, and when the vast majority of the top 50 performers involve gold shares the verdict on gold's future is obvious.

Following is how some of the top 10 precious metals mutual funds look from a chart standpoint. Included below is our updated technical comments and entry/exit levels.

The American Century Global Gold Fund (BGEIX) currently trades at $7.25. The fund is beneath the three most recent peaks in its 3-day swing chart but above the two most recent valleys. Sell this fund on a close below $7.00. However, the fund should be repurchased on a close above the pivotal $8 level. A close above $8 would suggest a test of the $10 high for 2002 will be tested by early January.

The Gabelli Gold Fund (GOLDX), currently at $9.74, should be sold on a close beneath $9.50 as a precautionary measure. The fund may be repurchased on a close above $10.50 with measuring implications up to $13 if this level is penetrated.

The year's top-performing gold mutual fund, the First Eagle SoGen Gold Fund (SGGDX), has been trading in a tight trading range over the past 3 ½ months between $10-$12. Buy SGGDX on a decisive close above $12 as this would suggest a trading range breakout with minimum upside implications to $14 and likely to $16-$18 before peaking.

The Rydex Precious Metals Fund (RYPMX) has been testing an extremely important short-term uptrend line near $25 and is very close to this level once again. A close beneath $24.85 would signal that traders should close out all long positions in this fund. A close above $27.50 sends a preliminary buy signal while a close above $28 sends a confirmed buy signal.