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.

Disclosure: The authors report no conflicts of interest.

Editor’s Note

This article was externally reviewed using our double-blind peer-review process. When the article was accepted for publication, the authors thanked the reviewers in their acknowledgments. Dirk Baur and Claude Erb, CFA, were the reviewers for this article.

Submitted 31 January 2017

Accepted 14 August 2017 by Stephen J. Brown

Author Information

Gerald R. Jensen, CFA, is professor of finance at the Heider College of Business, Creighton University, Omaha, Nebraska.

Robert R. Johnson, CFA, is president and CEO of the American College of Financial Services, Bryn Mawr, Pennsylvania.

Kenneth M. Washer, CFA, is professor of finance at the Heider College of Business, Creighton University, Omaha, Nebraska.

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