Finding Gems in Metals

Editor's note: As a special feature for April, TheStreet.com offers a series reviewing the first-quarter performance of mutual funds and ETFs. This is the third installment.

Investing legend Warren Buffett never found precious metals to be all that precious.

"We melt it down, dig another hole, bury it again and pay people to stand around guarding it," he said about gold in a 1998 speech at Harvard University. "It has no utility. Anyone watching from Mars would be scratching their head."

It may not have utility, but it certainly has value, and we believe it's worth a look as an investment.

Although there is demand for precious metals and minerals in various production processes, their recent rise is not likely the result of global supply and demand forces as determined by production.

More likely, the key issue is that wealthy investors in emerging markets, such as Brazil, Russia, India and China, are seeking a way out of their unstable local currencies.

One way out is with precious metals.

Central banks, and countries such as Saudi Arabia that are flush with petrodollars, have been investing in gold and other precious metals to diversify their reserves away from U.S. Treasury debt. Hedging activity may also be playing a role in gold's recent rise.

If you are concerned that emerging nations are going to see trouble in 2007, and that the movement of investment dollars into precious metals will continue, then you will want to take a look at the funds below that our models have screened as some of the best-performing.

First we look at closed-end funds and ETFs:

Best-Performing Precious-Metal Closed-End and Exchange-Traded Funds
Name & Ticker	TSC Rating	First Quarter ('07) Return	1-Week Return	1-Month Return
Gabelli Global Gold Nat Res&Income - GGN	A	20.76	-1.33	7.19
ASA Limited - ASA	C	15.89	3.28	15.78
streetTRACKS Gold Shares - GLD	B+	10.38	2.81	5.85
iShares COMEX Gold Trust - IAU	A-	10.12	2.76	5.78
Central Fund of Canada - CEF	C+	6.8	1.71	5.9
Source: Bloomberg, TheStreet.com. Data as of 4/13/2007