Gold Fund

If we’re like King Midas and everything we touch turns to gold, we probably don’t have a lot of use for gold funds. But if we’re like the rest of the mere mortals and that turn-to-gold touchy thing isn’t an option for us, then gold funds just might be one of the best ways for us to invest in the gold market.

Gold funds are mutual funds or ETFs that are specifically devoted to the world of gold investing, whether that’s buying and selling gold itself or investing in the companies that mine it. Gold is a popular investment choice because, first of all, it’s pretty and shiny, and second of all, it tends to remain relatively stable even when the markets around it are going bonkers. (There’s a reason so many countries tied their currency to the value of gold for so long.) Maybe it shouldn’t be our primary investment strategy—diversified portfolios are a good thing—but it’s probably not the worst thing we could do with our money.

One thing to note, though: when we buy a gold ETF (“ETF stands for “exchange-traded fund,” btw), we’re not actually buying gold. We’re not even buying a gold note or certificate. We’re buying shares of gold-backed securities. The real gold exists somewhere—it’s not imaginary gold—but we don’t own it. What we do own is the ability to make or lose money as the value of gold rises or falls, and we also own the ability to trade our shares easily, quickly, and without the difficulties that would arise from actually buying and selling physical bars (or portions of bars) of gold.