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The Definitive Guide to a Gold Mutual Fund

Investing in the precious metals industry can be achieved through a variety of means. For investors who are risk-averse, exploring gold mutual funds may prove to be an interesting option. It is a great way to diversify their portfolio, primarily during these uncertain times. 

What is a Gold Mutual Fund?

As the name suggests, a gold mutual fund is a way to invest in precious metals in a convenient manner. It does not require an active knowledge of the gold market, although having some basic knowledge is always better. A gold mutual fund is designed to take the guesswork out of the investment angle, and provide users with peace of mind first and foremost,

To be more precise, a gold mutual fund invests in gold reserves, either directly or indirectly. These investments can span any type of company active in the world of precious metals. Whether it is a gold refinery stock, or a gold producer stock, they are all found under the gold mutual fund banner,  In some cases, they may even diversify through junior gold mining stocks, albeit that is rather rare. .

Why Choose This Option? 

At its core, gold is a long-term investment first and foremost.. A gold mutual fund, on the other hand, is open-ended. This is made possible thanks to the units provided by the gold ETF. Underpinning assets are held in physical form, and their value is linked to the market value of bullion at all times. 

Many investors opt for a mutual fund because it hedges against economic uncertainty. The year 2020 is a year with plenty of financial uncertainty, increasing demand for investments such as a gold investment fund. It is not recommended to put one’s entire portfolio into mutual funds, but up to 20% can be allocated without any concern. 

Additionally, the gold mutual fund has a chance of appreciating in value more quickly. To be more precise, it can outperform the market price of physical gold with relative ease. This creates more revenue for investors, without forcing them to actively diversify their investments further. The longer one commits to a gold mutual fund, the better the potential returns will be if the fund performs properly. Keeping this in mind, it can still be liquidated at any moment, as there is always a market for it.

Another core reason for investing in a gold mutual fund is the flexibility of investments. Whether one has a lot of money to burn, or just  a moderate amount, investing in such a fund is always possible. It is more convenient compared to dealing with gold investments directly.

What About Taxes?

As is usually the case, there are taxation concerns to take into account. A gold mutual fund can be taxed similarly to jewelry or other gold investments. The rules and regulations will differ greatly from region to region. At its core, the tenor of the overall investment will also heavily affect any taxes levied by the proper instances. 

Longer tenors will classify potential returns as a long-term investment. In most countries, this will ensure there is an extra tax to be paid accordingly. Capital gain from long-term investments can be tax exempted, although it is always best to check with local instances before assuming that this is the case. 


Investing in a gold mutual fund is always a valid option for both big and small investors. The flexibility it provides, as well as the peace of mind, cannot be ignored. Moreover, it is far more approachable compared to investing in gold directly. Some may even argue a mutual fund is safer, albeit that is a matter of personal opinion. 

For those actively seeking a diversification of their portfolio, this makes for a great option. A gold mutual fund will often return a positive return, as it seems influenced far less frequently by the gold price momentum. Conducting one’s own research remains advised before making any commitments.

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