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To: 4figureau who wrote (6173)	9/12/2002 11:56:39 AM
From: Jim Willie CB	Read Replies (2) \| Respond to of 89467

curious about secondary commodities (you cover scrap metal) a few years back I learned about three secondarys that offer reliable indications on commodities and pricing 1. scrap metal (principally iron & steel) 2. scrap plastic 3. scrap paperboard (also paper) my guess is the other two scraps are doing well also thanks, jim

To: 4figureau who wrote (6173)	9/12/2002 12:54:22 PM
From: Jim Willie CB	Respond to of 89467

Gold Funds Are Outperforming, But Investors Are Slow to Catch On All That Glitters by Hope Yen (AP Business Writer) Sept. 12 (ABCNews.com) — Economic hard times typically are good for gold prices, so it's no surprise that in a year filled with anxiety about terrorism and concerns about accounting scandals, gold mutual funds have enjoyed solid returns. No other fund category has performed better in the bear market. While almost all categories have posted negative returns, precious metals funds returned an average of 43.51 percent for the first eight months of 2002, according to fund tracker Lipper Inc. That compares to 7.17 percent for real estate funds and 3.46 percent for bond funds, the more popular safe havens for investors. "We're still in the early stages of a bull market — maybe approaching the middle stage — for gold," said Standard & Poor's metals analyst Leo Larkin. Gold prices have now risen to about $320 an ounce from $270 a year ago, due in part to a weakening U.S. dollar and growing tensions with Iraq. Still, investors have largely refrained from pouring money into the funds. Analysts say that's because investors understand that while gold funds help balance against a portfolio's losses in bad times, they also have disadvantages — from poor long-term performance to high expenses. Volatile Investment So far in 2002, precious metals funds saw $322 million of net inflows, the largest amount since $886 million came into the sector in all of 1994, according to AMG Data. But the 2002 figure remains far below the more than $86.6 billion of inflows seen this year for bond funds. "Investors have been so burned by gold funds in the past, they're reluctant to take the leap into them," said Christopher Davis, a mutual fund analyst for Morningstar. Indeed, the funds tend to be more volatile than the metal price itself and their performance can vary widely. Of the 41 precious metals funds tracked by Lipper, returns this year ranged from 22 percent to 78 percent. Even worse, their performance over the long term deteriorates: from a negative return of 0.81 percent over five years to a 2.55 percent negative return over 15 years. Analysts say it's hard to predict how long the present gold run will continue. A wave of mergers in the mining industry has lowered production costs, pushing gold stocks higher. So has companies' recent practice of undoing their hedges, or selling future years' production at current prices, which tends to keep prices down. But analysts are not sure whether these factors will be in play very long, leaving investors' discontent with equities the primary driver behind gold's rise. They also say demand for jewelry, which consumes much of the available gold supply, would likely soften as prices rise. And a move by the Federal Reserve to raise interest rates could dampen inflationary fears, which typically lift gold prices. "So when and if investor sentiment changes, the price itself has a decent chance of falling," said Andrew Clark, a mutual fund analyst with Lipper. A Pricey Hedge There are other drawbacks. Gold stocks are seen as a more aggressive investment than the metal itself, often returning more than 3 times the percentage when gold prices go up. But that also means a sharper hit if prices fall. In addition, expense ratios are higher — on average, 2.01 percent for precious metals funds, compared to 1.84 percent for international funds and 1.45 percent for domestic funds, according to Morningstar's Davis. He attributes that disparity to gold funds' smaller asset bases, as well as the higher costs of researching the mining companies, many of which are located abroad. Financial planners suggest investors consider devoting up to 5 percent of their portfolio to gold funds for diversification. Still, even fund managers acknowledge that the sector's best days may have passed. "It's a little late in the game, because equity funds have already come down 30 to 40 percent in the last 2½ years," said Jean-Marie Eveillard, manager of the First Eagle SoGen Gold Fund, the sector's best performer. "Is it too late? I don't know," he said. "My attitude is you should look at gold as the ultimate hedge. For individuals who perceive they may need insurance, then either the metal itself or a gold fund will be appropriate."