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:

The table shows that over the past quarter, these funds have performed exceptionally well. The two ETFs are

iShares COMEX Gold Trust

(IAU) - Get iShares Gold Trust Report

and

streetTRACKS Gold Shares

(GLD) - Get SPDR Gold Trust Report

.

The remainder are closed-end funds, including

TheStreet Recommends

ASA Bermuda Ltd.

(ASA) - Get ASA Gold and Precious Metals Limited Report

, which is trading at a healthy discount of 13.88% and posting some very impressive results.

The

(GGN) - Get GAMCO Global Gold. Natural Resources & Income Trust Report

Gabelli Global Gold, Natural Resources & Income Trust (GGN) and the

(CEF) - Get Sprott Physical Gold and Silver Trust Units Report

Central Fund of Canada (CEF) are trading at premiums of 3.33% and 9.39%, respectively.

ASA, which invests primarily in South African companies involved in gold mining and related activities, has the lowest rating of the group because of its higher risk score. However, when the risk is high, so too is the reward. This fund has had an exceptional month and quarter, and it is clearly the best value investment in the table.

Gabelli Global Gold is also worth a look, despite trading at a small premium. Remember, when buying closed-end funds you want one that trades at a discount to its NAV of around 10% or more. ASA not only fits that criterion, it also has the best performance so far in 2007.

Note: Buying at a discount will in some ways reduce the risk of capital loss, whereas buying in at a premium is less likely to do so. However, this does not mean that a discount cannot increase, so investors should fully understand the risks associated and assess their own willingness and ability to take those risks.

The list below shows open-end funds that also invest in gold and other precious metals.

Don't forget to consider the expense structure of open-end funds compared with those of ETFs and closed-end funds. The open-end funds below have higher fee structures that detract from returns -- in particular, front load, early withdrawal and 12b-1 fees.

Sam Patel, CFA, is the manager of mutual fund research for the TheStreet.com Ratings.

In keeping with TSC's Investment Policy, employees of TheStreet.com Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

While Patel cannot provide investment advice or recommendations, he appreciates your feedback;

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