This term includes unit trusts, closed-end funds, open-ended investment companies for mutual funds and other units with a somewhat similar structure. They are also referred to as gold orientated funds or collective investment vehicles. Many of these units specialize in dealing with shares in gold mining companies. They operate in various jurisdictions throughout the world. Products of gold oriented funds are highly regulated by governments and financial institutions and thus vary from country to country.
Gold oriented funds normally differ in the way they are structured. While other investors may put funds in gold mining companies’ shares, others actively seek an investment stake in companies that mine other minerals, especially precious metals. Different funds companies opt for diverse approaches including investing in mining and futures equities. A few other funds may opt for a combination of both mining and gold futures equities.
Investing in a gold mining company has potential differences from a direct investment vested in gold bullion. The ability of appreciation for shares of a gold mining company usually depends on several factors including the cost of mining, market expectations on the price of gold in future, chances of discovering additional gold elements among other factors. More often than not, the success of investing in a gold mining company largely depends on the growth potential and future earnings of the company in question.
Gold mining equities have a tendency to being more volatile than the price of gold itself. Other than the risk factors which they are exposed to just like all other investment equities, they are also exposed to additional risks including those of the mining industry and those which are unique to the mining company concerned. These risks may include change in government laws and mining technology. Before investing in gold oriented funds, it is good to seek the opinion of an experienced stockbroker or financial advisor.