Precious metal mutual funds are clearly a type of mutual fund that trades in precious metals such as gold and silver.
Your investment portfolio is currently on the right track, but it will always help diversify it further to accommodate new ones like this type of mutual fund. Indeed, with the global recession unfolding today, this type of investment can be a life-saving boon to your portfolio if stocks and currencies continue to decline due to internal economic problems.
The truth about gold funds
Of the various types of precious metal mutual funds, gold funds are by far the most popular and well-known. Investing in gold is probably the safest option as it is the least volatile. The price can go up and down, but gold plays an important role in the world and always remains valuable.
In addition to being one of the most common foundations in jewelry making, gold is widely used in industries such as electronics and dentistry. But more importantly, it is also considered an acceptable means of payment.
When looking for the best gold investment fund, finance professionals generally recommend the following:
* Fidelity Select Gold is a non-distributing fund. With a 25% increase in asset value in 2011, it is considered by many to be one of the best gold funds around. Its investment is primarily in gold, including, but not limited to, gold bars and coins. The three-year fund in precious metals generates 32.22% per annum.
* OCM Gold Investor – Its five-year fund has an annual return of 12.88%. You must invest at least $ 5,000 and the expense ratio must not exceed 1.80%. However, the industry average is 1.39%. It invests in both local and foreign mining companies.
* GAMCO Gold AAA – At least 80% of a company's assets are related to gold and most of the money is used to buy foreign stocks. Its 10-year precious metals program generates 23.42% annual sales.
Most people choose to invest more in gold for the following reasons:
• System problems – can be political in nature – for example, what leads the government to impeachment proceedings (for example, finances, when most banks face debt problems) or what is causing fear in the country. When the stability of the economy is at stake, most investors will immediately evacuate to invest in gold as its value is less prone to economic problems.
• Inflation – When the price of real estate, bonds or stocks is unreliable due to inflation, investors also prefer to trade precious metals as commodities.
• War or insurrection. If a country can be ravaged by war or rebellion, there is really no way to predict how it will affect its currency. Therefore, even in these cases, investors prefer to play it safe by investing in gold. More importantly, if you want to leave your home country in a safer place, it is useful for traveling as you can convert all your savings into gold instantly.
How about silver?
Silver also plays an important role around the world, but since it is not as important as gold, its price tends to be more volatile. When you invest in silver, you need a smaller amount to make a significant profit. On the other hand, investing in silver is an undeniable risk and you can lose even more if things don't go as planned.
In general, the following factors affect the price of this type of precious metal mutual fund:
* Innovations that require the use of silver. The price of silver is expected to rise as new trends, technologies or innovations emerge that drive the new demand for silver. A thorough understanding of how industrial markets work can help you effectively identify when such changes are likely and adjust your investment portfolio accordingly.
* Innovation that ignores the use of silver – and vice versa. Let's take the photography business for example. Silver used to play an important role in film development, but since the advent of digital cameras, the demand for silver for film development has continued to decline. This undoubtedly had an impact on the silver market, where prices continued to fall.
In the latest news, silver is increasingly used in the design and manufacture of microcircuits, superconductors and batteries, as well as in electrical engineering and electronics.
Platinum Foundation: “new” kids at the gates
Gold and silver have been the dominant force in the market for centuries when it comes to investing in precious metals. Recently, however, interest in platinum has increased significantly. In fact, platinum is often sold at a higher price than gold.
The price of platinum funds is mainly influenced by the following factors:
* Industrial application. Platinum has been found useful in the automotive, jewelry, oil and chemical industries.
* Car sales prices are also determined by the current state of car sales as they play quite an important role in the auto industry.
* Exclusive. Currently only two countries, Russia and South Africa, are considered the main suppliers of platinum. Anything that affects these two countries, of course, also has an impact on platinum prices. Furthermore, if these countries decide to form a cartel to resolve the supply of platinum, they can automatically control the supply and price of platinum.
If this is your first time investing in a precious metals fund, we strongly recommend that you consult an expert. Evaluate your investment portfolio to determine the best way to include precious metals.
For a deeper and broader discussion of this and related subject matter, refer to our eBook How to Buy Gold Online and Safely Store Offshore. Here you can view the eBook.