Due to the hassles involved in dealing with tangible solid gold, interest has grown in the option to invest in gold funds. The investment in gold funds has however been slow to gain attraction as many people are not familiar with the way these funds work. Buying gold online has been the furthest most are willing to push their risk limit and the concept of having gold funds maybe a little sophisticated. The concept behind gold funds is not that complicated however and is easy to catch on with a little interest and concentration.
So what are gold funds? These are kinds of securities backed up by real gold in bank vaults around the world. For a certain amount, you get to own part of this gold. There are two types of gold funds;
· Mutual funds- this is whereby a pooling of money from several investors is done in order to invest in gold. Much like the funds offered by insurance and other financial institutions to invest in real estate. The investor will own units in the fund according to the money contributed, which means a portion of the gold the fund owns. The managers of the fund invest on behalf of the investors and can lead to the fund either making a profit or loss depending on how they trade. The profit or loss made in dealing the gold is shared in accordance to the unit one owns in the fund. This option is better for small time investors who may not have the financial clout to engage in buying gold in large quantities.
· Exchange Traded Funds- this fund differs from the mutual fund first in that it involves individual investors. The trading on this fund is done on ‘spot’ meaning it involves current gold prices. The investor opens an account and funds it to do day to day transactions. When buying gold, funds are transferred from his account to the seller’s and a certificate issued detailing the transaction details; prices, weight, fineness etc this saves the investor the hassles of storing and shipping the gold. The gold is backed in real bullion stored in the dealer’s bank vault.
Each of the fund has its advantages and disadvantages. The mutual fund has the investor less exposed but with less flexibility in managing his investment. He cannot take advantage when gold prices to make a killing leaving it to the fund managers to decide when to invest in gold. The exchange traded funds are good for the big-moneyed investor, but more risky. The investor is however able to make decisions much quicker and take advantage of favorable prices. The internet also enables him to buy gold online and monitor trends, making his business faster.
When looking to invest in gold, the first step would advisedly be to talk with your financial advisor. He can make the necessary analysis and forecasts in the gold industry and make recommendations on when to invest and when to pull out and make a tidy profit.



Refined Investments is the author of this article on Invest in Gold. Find more information, about Buying Gold here