Gold Mutual Funds-do we really need this?

A great philosopher once commented that when a truth is discovered it lasts but an instant before people start using it for their own purposes and making it untrue. This may be a bit weighty but it seems to fit the use of derivatives and exchange traded funds allegedly meant to track the price of gold, the gold mutual funds.

The point of investing in physical gold is that nations, their economies, and their currencies are uncertain things. We see this today in the worst recession since the Great Depression of the 1930's. With all the manipulation that takes place in politics and, often, in the financial markets, investors buy physical gold for its security. Investors buy certified rare gold coins because there will never be any more of them and as these treasures become family heirlooms they become even scarcer and more valuable.

Derivatives in the form of futures, options, and the like have their place in the greater scheme of things and, when properly used, tend to provide a needed liquidity to markets. However, it was the extreme leveraging of investments in derivatives that helped contribute to the recent stock market crash. The loss of hard earned savings as markets crash is what makes investors wary of keeping all that they own in "paper".

Investing in a gold mutual fund based upon gold derivatives seems to fly in the face of why investors seek the security of physical gold to balance the inherent risk in stocks, real estate, and the like. For many tired of the steady devaluation of paper assets and currency, gold mutual funds feel like contamination compared to the .9999 fineness purity of a Johnson Matthey gold bar or a Canadian Maple Leaf gold bullion coin.

For more insights into investing in gold bullion and certified gold coins contact one of our gold experts at 1-800-300-0715 or read the information listed below.