Metals Funds Boosted by Bhutto Assassination

The markets were given a sad reminder this week, with the assassination of former Pakistani Prime Minister Benazir Bhutto, that we still live in a dangerous world.

Events like these tend to spark a flight toward investments viewed as as safe havens, such as gold and other precious metals.

When this second attempt on her life in just two months time proved successful, the hope for a return to democracy in Pakistan was dashed.

Bhutto's death showed the other potential candidates that it is not safe to campaign. If President Pervez Musharraf goes ahead with the planned Jan. 8 elections in the absence of viable opposition, the vote would be a sham. If he suspends the elections, that might mean a return to martial law. Either way, that nuclear-armed nation is not close to becoming a stable democracy.

Countries around the world condemned the killing. Plus, the United Nations Security Council issued a statement that "terrorism in all its forms and manifestations constitutes one of the most serious threats to international peace and security." Investors know that peace, security and stability provide the base upon which prosperity is built.

Closer to home, a weaker greenback also boosted the price of dollar-denominated assets such as precious metals. After trending higher since late November, the greenback reversed course on higher-than-expected core inflation for November of 2.2% over last year. The weekly report of rising initial jobless claims of 349 thousand and continuing claims of 2.713 million confirmed the economic softness.

Rising precious metals prices mean that mining companies can sell their gold and platinum at widening profit margins.

The average precious-metals fund we track climbed 6.20% for the week ending Thursday, Dec. 27.

The top-performing fund this week is (ASA Quote)ASA Ltd. (ASA), a closed-end fund that gained 8.75% for the period under review. As of Aug. 31, the fund invested 10.3% of its assets in Anglo Platinum (AGPPY Quote), the world's largest platinum producer, and 7.6% of assets in Impala Platinum Holdings(IMPUY Quote), the second-largest producer.

In second place, the (FKRCX Quote)Franklin Gold and Precious Metals Fund (FKRCX) did nearly as well, returning 8.38%. This more than covered the 5.75% front load charged to investors.

The fund also benefited from the 14.86% rise in Anglo Platinum Ltd and the 17.0% jump in Impala Platinum Holdings Ltd. These, along with Newcrest Mining (NCMGY Quote), Barrick Gold (ABX Quote) and Goldcorp(GG Quote), round out its top five portfolio positions.

This week the price of platinum set a new record high of $1,545.75 per Troy ounce.

Best Performing Precious Metals Funds Ranked by return for the week ending Dec. 27, 2007
Fund	Ticker	Rating	Fund Type	1 Week Total Return
ASA Ltd	ASA	C+	Closed-End	8.75%
Franklin Gold and Precious Metals Fund	FKRCX	C	Open-End	8.38%
ProFunds Precious Metals UltraSector ProFund	PMPIX	D	Open-End	8.13%
Van Eck International Investors Gold Fund	INIVX	D+	Open-End	7.94%
DWS Gold & Precious Metals Fund	SCGDX	D+	Open-End	7.78%
USAA Precious Metals and Minerals Fund	USAGX	C	Open-End	7.78%
Market Vectors Gold Miners ETF	GDX	B	ETF	7.63%
US Global Investors World Precious Minerals Fund	UNWPX	C	Open-End	7.57%
GAMCO Gold Fund Inc	GOLDX	D+	Open-End	7.29%
American Century Global Gold Fund	BGEIX	C-	Open-End	7.26%
Source: TheStreet.com Ratings

For an explanation of our ratings, click here.

(GGN Quote)The Gabelli Global Natural Resources & Income Trust (GGN) lagged all other precious-metals funds. It rose just 2.53%, including a 25-cent special cash dividend, even though the value of its net assets rose 4.95%.

This closed-end fund's discount to net asset value widened to 4.54% from 1.42% at the beginning of the period. The fund diversifies its 62.7% concentration of mining shares with 34.0% oil and gas and 2.1% coal, but clearly investors were favoring pure plays in precious metals this week. **

Worst Performing Precious Metals Funds Ranked by returns for the week ending Dec. 27, 2007
Fund	Ticker	Rating	Fund Type	1 Week Total Return
Gabelli Global Gold Natural Res & Inc Trust	GGN	A	Closed-End	2.53%
SPDR S&P Metals & Mining ETF	XME	B	ETF	3.04%
iShares Silver Trust	SLV	C-	ETF	3.09%
PowerShares DB Gold Fund	DGL	U	ETF	3.51%
iShares COMEX Gold Trust	IAU	A	ETF	3.59%
Streettracks Gold Trust	GLD	A-	ETF	3.67%
ING Global Natural Resources Fund	LEXMX	C	Open-End	3.86%
Vanguard Precious Metals and Mining Fund	VGPMX	C+	Open-End	4.09%
RiverSource Precious Metals and Mining Fund	INPMX	D+	Open-End	5.66%
First Eagle Gold Fund	SGGDX	D+	Open-End	5.96%
Source: TheStreet.com Ratings

For an explanation of our ratings, click here.

Have a happy and safe new year!