What are the Different Types of Precious Metals Funds?

A. Leverkuhn

Modern investors have many different choices of precious metals funds to buy into in order to make plays on gold, silver, platinum, palladium, or other precious metals. These types of funds include various setups with specific strategies for gains. They may include funds that are actively managed by brokers or managers, or “passive funds” that represent an index or a more stable, less volatile makeup.

Stack of gold bars.
Stack of gold bars.

Investors can choose precious metals funds by type: some funds will invest in “raw metals” such as gold or silver bullion (gold or silver in its raw form), where others might include stocks based on the numismatic or collectible value of these classic metals. For a totally different kind of precious metals investing, investors can choose precious metals funds based on more innovatively used metals like rhodium, ruthenium or some kinds of “uranium-type” metals. As an alternative, some funds can even can include plays on synthetic metals made in laboratories.

The element rhodium is a popular commodity.
The element rhodium is a popular commodity.

Beyond these choices for precious metals funds, traders and investors can choose different precious metals fund setups. Some of these are exposed to the volatility of raw precious metals values as commodities, while others are “hedged” by offering broader investments in gold, silver or other metals. Some funds will only include fixed value precious metals, while others can be diversified into mining operations and other peripheral precious metals operations.

Finally, investors will want to choose the “format” for their precious metals funds. For example, where “precious metals index funds” represent broader, less volatile choices, some “active metals funds” chase gains more aggressively. Funds called precious metals exchange traded funds (ETFs) and exchange traded notes (ETNs) offer scalable, easily traded options with less long-term commitments, and easy ties to current market prices. Some of these funds even allow traders to “short” precious metals markets for more sophisticated speculative plays on volatility.

In addition to the above, various types of precious metals mutual funds include gold, silver, or other metals, either as a primary focus, or as part of a multi-sector “basket” of stocks and equities. Investors can ask their brokers to involve them in various partnered fund setups or just buy into these funds outright as shareholders. All of these options give traders a multitude of different ways to invest in precious metals commodities, which get a lot of attention as they represent a more “physical” investment than currencies or many varieties of commercial stocks.

Palladium is an investment commodity and may be included in a precious metal fund.
Palladium is an investment commodity and may be included in a precious metal fund.

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