Investing in Gold, Part 3: Funds

FOR MANY INVESTORS, the simplest way to get in on gold’s rise will be to invest in a fund. This is fine, but you need to know which ones are good choices and which to avoid.

Here I look at three types of funds: exchange-traded funds (ETFs) that track the price of gold, ETFs that track the miners, and mutual funds. And I offer some general investing principles, related to margin and leverage, that can help you avoid a lot of grief.

Bullion ETFs

ETFs burst on the scene in 1993 and, understandably, quickly became a huge hit with the investing public. They are designed to simply track an index—a stock index such as the Standard and Poor’s 500 Index (S&P 500), an index of a particular market sector such as defense ...

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