A Gold Mutual Fund - Track The Value Of Gold The Easy Way

With the rise in gas prices rising, inflation escalating and a world of uncertainty, many people are turning to gold as a short-term hedge against inflation.  Many people don’t feel comfortable carrying many gold Krugerrand, The Original Gold Bullion Coin or amassing vast amounts of gold chain so they invest a different way. Smart money says, go to the source, diversify and keep as much liquidity as possible. Gold hasn’t beaten inflation although it surged these past few years. The Dow is worth over 13 times more than it’s composite was in January 1980. That was the last peak for gold at $850. Today gold is around $926 and the DOW is over 11,300. Stocks have done better over the long haul, but, if you had picked up gold 10 years ago, you’d make a tidy profit.

Some of the traditional mutual funds on the market that base their funds on gold are:
Aim gold and precious metal, American century global gold, DWS Gold & Precious Metals, Evergreen Precious metal, Fidelity Advisor Gold, Fidelity Select Gold, First Eagle Gold, Franklin Gold and Precious Metals, GAMCO Gold, Midas (cutesy name poor performance), OCM Gold, Oppenheimer Gold & Special Minerals, ProFunds Precious Metals UltraSector Inv, RiverSource Precious Metals & Mining, Rydex Precious Metals, Tocqueville Gold, U.S. Global Inv Gold and Precious Metals, USAA Precious Metals and Minerals, Van Eck Intl Investors Gold, Vanguard Precious Metals and Mining,

Of all the mutual funds listed only one or two had actual gold coin. The rest contained stock of mining companies. Some had a mix of other metals also. The great thing about the use of a mutual fund is that you can strike while the iron is hot and then trade back to a different fund within the fund family free.


There are also ETF’s these are exchange traded funds and new on the scene. IShares COMEX Gold Trust is one. The difference between a traditional mutual fund and an ETF (Exchange Traded Fund) is that you trade the fund on the market to other buyers, at the market price like a stock. With traditional mutual funds you sell them back to the company at the NAV (Net Asset Value) at the close of the market day, so you never really know the price that you’ll get. These funds also approach buying gold through the purchase of stocks of gold producing companies.

There are still good reasons to buy gold. The demand for gold is growing faster than the production. This not only keeps the price alive, but also pushes up the charts.  Managers of hedged mutual funds that sold short (Selling something you don’t own and hoping the price drops so you can fill the order with cheaper stock.) slowly reduce their short position, meaning they believe that the price is rising.

China and India still have a high demand for gold as they enjoy a flourishing economy. Since gold is traditionally a fear purchase that dates back to visions of the economy falling apart and shopping carts filled with paper money to buy a loaf of bread, we have plenty of fear left in our economy so the gold should be a good investment until at least the next US presidential election.

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