Gold Mutual Funds And Other Gold Investment Options
If you want to invest in gold then you have the choice between buying bullion, buying shares or investing in gold mutual funds. All of these investments are associated with gold and are somewhat affected by gold’s price performance in the market. However, each has its own drawbacks and advantages when it comes to exposing your portfolio to precious metals.
Bullion is an actual quantity of gold. When you invest in gold mutual funds this way you actually buy pieces of gold, either in the form of coins, bars or ingots. Many people prefer this method of investment because the physical presence of the gold is reassuring to them. However, gold in this form is not as easily traded as other types of gold investments.
Another way to invest in gold is through purchasing equities in companies that mine gold or explore for it. These investments are risky because they depend on the company’s fundamentals rather than the actual price of gold. However, many people enjoy the research required to determine if a company is a solid investment or not.
Gold mutual funds are a way to diversify your holdings in gold, reduce your personal financial risk and also put the hard work of research and planning into the hands of a professional. Professionals with a great deal of experience and knowledge about the gold market manage these gold mutual funds and guide them on a daily basis. They also incorporate investments which support gold indirectly without being direct investments in the substance itself.
The Qualities Of Gold Mutual Funds
Most gold mutual funds follow strict guidelines about the investments which constitute their funds. As an example, one of these gold mutual funds maintains about 65 percent of its holding either in companies that are directly involved in exploring for gold, mining it or processing the ore that these companies extract from the ground. They include in that quantity many investments in bullion.
However, the other 35 percent may come from companies that support gold production less directly, such as in the designing and engineering of equipment used in mining. They also invest in small quantities of other precious metals, such as copper, silver and platinum. This diversification prevents loss in the case of a drop in the price of bullion. The value of gold mutual funds lies in their ability to profit from more than just one sector of the gold market.
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