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), Newmont Mining ( NEM) and Barrick Gold ( ABX).

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), Goldcorp ( GG) and Agnico-Eagle Mines ( AEM).

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.

As the economic recovery slowly builds momentum, it may be wise to lighten up on precious-metals holdings. On the other hand, over the next year, stimulative investments in alternative-energy projects should increase along with the economy.

For the best-rated mutual funds, check out our Top Mutual Funds page.

-- Reported by Kevin Baker in Jupiter, Fla.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

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