Should i invest in precious metal funds

As the Financial Analysts Journal article shows, it seems clear that different vehicles for investing in precious metals can have strikingly different returns and diversification properties. Investors will want to devote as much thought to how they gain their exposure to precious metals as to their decision to invest in precious metals in the first place.

The article confirms that equity precious-metal funds can be a poor hedging instrument because they experience the most volatility and do not effectively hedge against extremely negative equity market conditions — which is one of the foremost reasons why many investors seek exposure to precious metals. Equity funds may be most attractive to investors looking to speculate on short-term movements in the price of gold.

Meanwhile, although synthetic ETFs are often promoted as a design improvement over bullion ETFs, they seem to offer much lower returns without the advantage of reducing tracking error. Investors may regard these findings as leading to the conclusion that they would be better off buying physical gold and hiding it.

The obvious risks of this course of action make it inadvisable, particularly for institutional investors. But the findings should, at least, lead to greater consideration and deeper analysis of how to gain exposure to precious metals. Ultimately, once investors have decided to get from A to B they need to devote some thought to which vehicle to select for the journey. Site powered by Webvision Cloud. Skip to main content Skip to navigation. Looking towards a new Japan.

Take care with precious metals. No comments. Key points Most investors in precious metals do so through funds Such portfolios vary considerably in terms of returns and diversification properties Exchange trade funds ETFs in this area can invest directly into bullion, or into synthetic portfolios or into mining stocks Investors into this asset class should carefully consider which vehicle to use.

Related Companies. View profile. Looking towards a new Japan 1 Looking towards a new Japan. Currently reading Take care with precious metals. Two sides of the bitcoin. And if you look at gold prices, its value is all based off of emotion. These precious metals are just a just a commodity like a bushel of wheat or a barrel of oil or, in more recent times, toilet paper and hand sanitizer.

But when people make decisions based on fear or greed , they make poor investment decisions. That means you need to invest in things that will make you more money over time—like real estate and mutual funds.

Ready to get started? Connect with a SmartVestor Pro in your area today. Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since Millions of people have used our financial advice through 22 books including 12 national bestsellers published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Guided Plans. Trusted Pros. Free Tools. Since gold either holds value or increases in worth, it becomes a means of rebuilding whatever came apart during the political crisis.

See it as one more way to insulate yourself from events that would otherwise lead to financial ruin. Diversify a Portfolio with Gold Diversification is key to the success of any investor. Concentrating too much on one type of investment means that losses in that area cannot be offset by increases in value by other assets.

For this reason, many experts recommend a combination of stocks, bonds, mutual funds, real estate, and precious metals to avoid incurring severe losses. This is where including something like gold mutual funds can make a difference. The result is that you may be in a better position to hold onto those stocks until they recover and begin generating returns. Should You Consider Investing in Gold? The bottom line is that gold is an investment that should be seriously considered.

Talk with a precious metals expert and explore the different ways that you can secure a stake in the gold market. Eric Huttman. Luigi Wewege. Matt Lonsdale. Artyom Goryushin. Blog article. News in your inbox For Finextra's free daily newsletter, breaking news and flashes and weekly job board. Sign Up. Channels Markets Predictions. Personal Finance. External what does this mean? This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.

Report abuse. Join the discussion.