You don't invest directly in gold when you invest in gold funds. The most common means of buying gold directly is in gold bars. The most common way to invest in gold as an investment security is through an exchange-traded fund (ETF), such as SPDR Gold Shares (GLD). Gold ETFs are exchange-traded funds that offer investors exposure to gold without having to directly buy, store and resell the precious metal.
Some gold ETFs directly track the price of gold, while others invest in companies in the gold mining industry. This ETF invests directly in gold held in a London vault and overseen by the ICBC Standard Bank, and its price should follow the spot price of the precious metal relatively closely. SPDR has long had an absolute dominance in the gold trading market, but the iShares Gold Trust slowly depleted the assets of the buy-and-hold crowd. Through a wholly owned subsidiary, the fund also invests up to 25% of its assets directly in gold and other precious metals.
These funds offer the combined benefits of investing in physical gold and professional fund management. Investors tend to turn to precious metals when there is an investment crisis because gold often retains its value during those times. Investors in gold and gold exchange-traded funds (ETFs) haven't had much to brag about in the past year or so. Both types of funds can offer decent returns that have some relationship to the price of gold and can adapt to different investment objectives.
Its investments also include foreign and domestic shares of companies of any size that provide goods and services in all sectors related to gold mining and precious metal industries. By using the potential of gold as a commodity, managers seek to create wealth through gold mutual funds. These funds are a more comfortable option for investing in gold than maintaining it as a physical asset. Gold funds are an ideal investment option for investors looking to protect their capital against inflation.
Some investors prefer the security of physically holding their gold investments and storing them in a secure location that they can access at any time. This iShares gold ETF isn't as liquid as SPDR Gold stocks, and its supply and demand spreads aren't as tight, making it not ideal for short-term traders. The most obvious metrics to consider when reviewing a gold investment fund for investment purposes include the overall and annual performance of a fund. For investors who don't have the time to research the markets thoroughly to choose good investment assets, mutual funds offer a relatively safe, convenient and viable investment solution.