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Bridge over ocean
21 February 2018 Financial Analysts Journal Volume 74, Issue 1

All That’s Gold Does Not Glitter

  1. Gerald R. Jensen, CFA
  2. Robert R. Johnson, CFA
  3. Kenneth M. Washer, CFA

Spurred by economic uncertainty, interest in precious metals has increased dramatically. Investors target precious-metal funds for two primary reasons: (1) to capture an expected appreciation in precious-metal prices and (2) as a form of portfolio insurance. The authors compare the advantages and disadvantages of traditional funds with those of newer types of funds, including bullion, synthetics, and equity. They find tremendous variation in both fund returns and efficacy in serving the two primary investor motivations. Their findings imply that the success of a commodity investment hinges on the type of fund selected.

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