When it comes to investing in gold, investors have limited choices. This paper examines the five largest gold funds. Two of the available options involve owning gold bullion, and the other three involve owning gold mining stocks. Investors make a giant mistake in believing these two different types of gold funds (bullion versus miners’) are more homogenous than heterogeneous. Gold bullion funds track gold prices extremely well. Gold mining funds have many more risk exposures than simply the price of gold and often times do not track gold prices very well.
Author: Kenneth M. Washer, DBA, CFA, CFP, is a professor of finance at Creighton University in Omaha, Nebraska. He has published over 30 articles in journals such as Financial Analysts Journal, Journal of Financial Service Professionals, Journal of Financial Planning, and Journal of Business Ethics. He completed his graduate work at Louisiana Tech University.
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