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Gold Funds Quickly Lose Their Glitter

NEW YORK ( TheStreet) -- Investors who hold gold to shield their portfolios from accelerating inflation now wish they were alchemists. Seven of the 10 worst-performing equity mutual funds in January track mining shares.

The Rydex Series -- Precious Metals Fund (RYPMX) tumbled 13% last month, bringing its 12-month gain to 29%. Top holdings include Freeport McMoRan Copper & Gold (FCX - Get Report), Newmont Mining (NEM - Get Report) and Barrick Gold (ABX - Get Report).

Last Friday's jobs report showing unemployment fell to 9.7% in January from 10% in December has the gold bugs in a tizzy. Turning the corner on jobs -- and the economy -- has reduced the fear-based premium that was supporting the price of gold. After hitting a high of $1,217 an ounce in December, the spot price of gold has plunged to around $1,060.

Losing almost as much, GAMCO Gold Fund (GOLDX) dropped 12% on large positions in Randgold Resources (GOLD - Get Report), Goldcorp (GG - Get Report) and Agnico-Eagle Mines (AEM - Get Report).

The only energy mutual fund among the worst performers, Guinness Atkinson Funds -- Alternative Energy Fund (GAAEX) lost 12% of its value in January. The mutual fund is allocated to 48% solar, 28% wind, 10% efficiency, 7% geothermal and 5% hydro-electric. The Alternative Energy Fund returned 28% over one year on the premise of surging global energy demand, limited production capacity, rising costs and a renewed focus on caring for the environment. The tepid global economy and ample supply of crude oil, along with strength of the U.S. dollar, put a lid on crude-oil prices making alternative-energy sources seem less viable.

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AEM $29.82 -2.36%
ABX $12.52 -0.95%
FCX $20.82 3.74%
GOLD $74.55 -2.02%
GG $19.01 -2.61%


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S&P 500 2,117.69 +4.76 0.23%
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