actual gold

Gold Mutual Funds Are A Top Mutual Fund

For years we have heard that gold is a hedge against uncertainty in the markets. It’s almost universally true that when the markets are down and the dollar is falling, gold will hold it’s value and even tends to go up in value. During these uncertain economic times having gold as part of your overall portfolio is a smart thing to do. And for those of you who don’t want to deal with buying gold bricks, gold mutual funds can offer you the same safeguards.

Gold mutual funds are simply another, safer and more convenient way to invest in gold. You don’t haver to actually purchase the gold or hold it. Instead you pay a mutual fund to buy the gold on your behalf and you are the owner of however many units of gold you’ve purchased. The actual gold will be held at a secure location, usually a bank.

Since your purchase is backed up by a tangible product it is very safe. If you choose to sell off your shares of gold you will get that days prevailing rate.

Of course, not all mutual funds operate this way. Some don’t actually own any gold at all. They invest instead in such things as gold mining companies rather than the actual gold bricks. For that reason it’s important to understand that the price movements of the mutual fund may actually not correlate to what is going on with the actual price of gold.

For example, let’s say the mutual fund you are in has invested heavily in a gold mining operation in a third world country. If something happens in that region, such as political unrest or a natural disaster, and the mine has to be shut down for a period of time, the price movement will be downward even though the actual price of gold is going up.

Remember, too, that the closer the mutual fund stays to the actual gold, actual mining companies, the more the price movement will mirror the actual price of gold.

If the mutual funds invests in companies that simply make their product out of gold, for example, and are further away from the actual gold itself, the more variance between the price movements in the mutual fund and the actual price of gold.

There are many gold mutual funds you can invest in and it’s important that you locate the top mutual fund before you invest. That can be a little bit misleading, ultimately whatever the “top” fund is will be whatever funds is most closely aligned with your goals.

The whole point is that no matter what you are investing in, you need to take the time to educate yourself on the ins and outs of that particular investment. You should never just turn over your money and hope for the best.

When investing in gold mutual funds it’s important to be willing to invest the time to educate yourself. The top mutual fund for you may not be the same as the top mutual fund for your neighbor.

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Consider Gold Mutual Funds When You Compare Mutual Funds

If you are thinking about buying a mutual fund, it’s important to be willing to spend the time to compare mutual fund and find the best one for you and your goals. This is particularly important if you are buying gold mutual funds as a hedge against an iffy market.

Most investors know, or at least have heard, that buying gold to protect them in uncertain economic times is a sound idea. What they may not know is that you don’t have to actually go out and buy some gold bars, though you can if you want to.

A lot of investors want the security but they don’t want difficulty of making sure that the gold bars are worth the asking price not to mention the shipping and storing hassles.

So, if buying gold bars does not sound like your cup of tea, you can get the same advantages if you compare mutual funds and buy the best gold mutual funds you can find.

Gold mutual funds don’t all invest in actual gold. Some do, but most invest in companies that deal in gold such as mining companies and jewelers. For the ones that do actually buy and sell actual gold bars, those bars are then stored in a bank or other secure location.

Most owners can choose to get the actual gold or they can opt for the cash value of the gold. Remember, that the cash value will be determined when you sell off your gold and it could be less than when you bought it (though with today’s overheated market that’s not very likely).

If you invest in gold mutual funds that invest in companies remember that the further that company is from the actual gold, say a company that uses gold to produce their products, the wider the variance you will see between the price movement of your mutual fund and the actual price of gold.

The closer you are to the actual gold, like with an actual gold mine, the less variance you will typically see. Another thing to keep in mind is that gold mines can suffer from bad weather or labor unrest and that can drive your mutual fund down. Many gold mutual funds investors actually see their prices going down even while the price of gold goes up.

Remember, too, that all mutual funds are not created the same. They all have their own philosophies and managers and some will simply fit into your overall investing strategy better than others. Take your time and look over the prospectus from any mutual fund before you invest.

You know that all investments carry some risk. To minimize that risk, make sure you have educated yourself about your various options and you’ve done some research into the fund and the fund manager and have an idea of what their track record is.

When shopping, don’t forget to compare mutual funds and especially gold mutual funds to find the one that fits your goals and investment style.

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