I wrote an email to a friend to give him a quick primer on how to get exposure to Gold and the precious metals sector. Here it is for the Tasgall audience as well…

If you?re looking to invest in Gold, there are basically 5 different ways:

  • Mutual Funds
  • Gold Stocks (majors, minors, exploration stage)
  • Gold ETF (GLD)
  • Futures – full contracts (100 oz per contract), minis (33 oz per contract)
  • Options on Futures (only on full size contracts)

For mutual funds, I?d recommend either TGLDX or BGEIX. Most others are fine too if you?re limited to a certain mutual fund in your 401k.

Gold stocks have the most volatility and I?d recommend finding someone to give you recommendations and timing if you want to go this route. The biggest are NEM, HMY, ABX, FCX, IAG. You can research individual companies using Yahoo?s Industry List for Gold.

The Gold ETF came out recently and trades under the stock symbol GLD. You can trade it intraday like a stock, put in limit, stop, etc. orders. GLD is supposed to represent 0.1 ounces of gold, so if gold is at $627 today, GLD will be trading near $62.70. There are some weird things that happen because it doesn?t match up exactly, but it?s the closest proxy to gold that is easily tradable and tradable in an IRA.

Futures are wroth much more than a quick email… You can have a lot of fun and get some very leveraged positions if you want. If you?re really interested, I assume you also have the initiative to investigate this yourself. Options on futures are in the same category as futures.


In addition to the GLD ETF for Gold, you can look at the ETF for Silver (SLV), there is an ETF for Oil (USO). I don?t know about any other ETFs for single commodities yet.

If you want commodities in general, you can look at a mutual fund like PCRDX or an ETF like DBC. DBC seems to have outperformed PCRDX for their limited existence, and is the way I?d probably bet for a broad basket of commodities.

With all of this stuff, timing is important. It?s not a buy-and-hold investment like stocks are supposed to be. Buy on dips or when pessimism is high. Don?t try to chase it as it?s making new highs unless you start very small and look to buy more on corrections.