Precious Metals Mutual Funds

Precious metal mutual funds have been increasing in popularity in recent years. One of the reasons for this is the fact that metals have increased in price considerably in recent years. Metal prices and metal stocks are very highly correlated.

As you can see from the chart above, Gold prices hit $1,000 for the first time ever in March 2008. An increase of more than 300% from 2002.

Stocks in many of the gold mining companies have increased by a similar amount.

However, gold has been higher in the the 1970's if we look at an inflation adjusted price. It reached $850 in 1978. This is the equivalent of around $2000 if we adjust the price for inflation.

Silver has also increased by a similar percentage in recent years as well.

Some of the best performing gold mutual funds over the last five years are:

Fund Name	Symbol	Ann. Ret.
Vanguard Precious Metals and Mining	VGPMX	39.86%
U.S. Global Investors WorldPrecMineral	UNWPX	38.65%
USAA Precious Metals and Minerals	USAGX	36.40%
Oppenheimer Gold & Special Minerals A	OPGSX	35.19%
Evergreen Precious Metals I	EKWYX	34.82%
Oppenheimer Gold & Special Minerals N	OGMNX	34.76%
U.S. Glb Inv Gold and Precious Metals	USERX	34.45%
Evergreen Precious Metals A	EKWAX	34.44%
Oppenheimer Gold & Special Minerals C	OGMCX	34.20%
Oppenheimer Gold & Special Minerals B	OGMBX	34.14%

Please note that past performance is not necessarily any relation to future performance. There are many things that affect the price of gold and other metals including:

The US Dollar

As gold is price in US Dollars, the strength of the dollar can hugely affect the price. Infact in some cases it has been an effective dollar hedge. Typically when the dollar appreciates, gold depreciates and vise versa.

World Gold Production

As gold has increased in value in recent years, it has become a lot more attractive to mine, as there is a lot more money to be made.

Other ways to invest in gold

There are alternatives to mutual funds if you wish to invest in precious metals such as gold or silver. Firstly there are ETFs (Exchange Traded Funds). These are funds that are design to track the actually price of the underlying, rather than the share price of a particular company. Many of them allow speculators to go short as well as long. ETFS Securities offer a gold fund that historically has closely followed the spot gold price.

If you liked this article subscribe to our Free Newsletter

Post Your Comment Add to del.icio.us

No comments so far. Be the first to comment!