We have preached this sermon before: The United Services Gold Shares fund is the best demonstration we have that over a long period, market-timing can add immense value to a portfolio. Over 10 years, from 1983 to 1993, buy-and-hold investors had a cumulative loss of 39.5 percent, while those who used our market-timing system with the exact same fund more than doubled their money. However, even with market-timing, United Services Gold Shares is too volatile to make up a major part of an investment portfolio.

As you may recall, 1993 was an excellent year for gold funds, and we received a fair amount of attention for our skill at timing this type of fund. Since then, I have been asked many times what I think the future holds for gold. I have spent enough time studying the table below to conclude that there just isn't a pattern that might repeat itself. Look at the huge gains in 1979 and 1980, followed by a 28 percent loss in 1981, then a 72 percent gain in 1982. Could anybody have predicted that? I don't think so.

We had a good year we had with United Services Gold Shares in 1989, and the three years after that were awful -- followed by an outstanding year in 1993. This is why we tend to think of gold funds as a speculation instead of an investment. Some investors, however, just love gold. The table shows they would be very smart to use market timing.

Important Note: Paul A. Merriman & Associates (PM&A) started managing funds with the Merriman Equity, Bond and Gold Switch Models on July 31, 1983. The Models are hypothetically applied to the funds prior to July 31, 1983. Average 90-day US Treasury Bill rates are assumed while in money market funds prior to July 31, 1983. Results do not include taxes or management fees. The study assumes dividends and capital gains are reinvested. Past results are not necessarily indicative of the future.