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Recent gold prices are indicating bullishness that could push the yellow metal to a record high in the months ahead. In fact, speaking historically, the last time prices of the yellow metal were this high was in 2011, when it touched $1,921. Given the prominent factors playing the markets right now, one may expect gold prices to stick to the road north.
On Jul 20, spot gold rose 0.4% to reach $1,815.34 per ounce, having touched a high of $1,820.06 earlier on in the session. U.S. gold futures settled 0.4% higher to reach $1,817.40 per ounce. This is the yellow metal’s highest level since September 2011.
Behind the soaring prices of gold lie a lenient monetary policy, tensions over an economic recovery and of course, the mounting health hazard all over the world — coronavirus.
First, in June, the Federal Reserve decided to keep the benchmark rates unchanged (as decided by the central bank in mid-March) to put the U.S. economy back on track. The rates, which are currently in the range of 0% to 0.25%, are expected to stay at this level for the next two and a half years.
Second, the United States leads globally in the number of coronavirus pandemic deaths and new cases, as states struggle to recover from the public health crisis. Many states have brought back restrictions on public movement to slow the virus’ spread.
While New York reported the least number of hospitalisations of COVID-19 patients in four months and New York City entered a new phase of reopening on Jul 20, Florida reported more than 10,000 new cases for the sixth day in a row. This massive rise in coronavirus cases is clearly spurring demand for the yellow metal.
Finally, indications that countries of the European Union are keen to compromise on a 1.8 trillion-euro ($2 trillion) coronavirus stimulus plan should also support the gold bullion.
3 Best Choices
We have, thus, selected three gold mutual funds with a Zacks Mutual Fund Rank #1 (Strong Buy) and 2 (Buy) that could gain from the turbulent markets. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily the reasons why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Invesco Oppenheimer Gold & Special Minerals Fund Class A (OPGSX - Free Report) aims for capital appreciation. The fund invests the majority of its assets in common stocks of companies that are engaged in mining, processing or dealing in gold or other metals or minerals. The non-diversified fund may also invest in gold bullion, other physical metals and precious metals-related ETFs.
This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
OPGSX has a Zacks Mutual Fund Rank of #1 and an annual expense ratio of 1.17%, which is below the category average of 1.38%. The fund has returned 45.8% over a year. It has a minimum initial investment of $1000.
Franklin Gold and Precious Metals Fund Class A (FKRCX - Free Report) aims for capital growth. The fund normally invests the majority of its assets in securities of gold and precious metals operation companies. The fund may buy securities of gold and precious metals operation companies located globally and in general invest in foreign companies. FKRCX is a non-diversified fund.
This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FKRCX has a Zacks Mutual Fund Rank of #1 and an annual expense ratio of 0.98%, which is below the category average of 1.38%. The product has returned 49.9% over a year. The fund has a minimum initial investment of $1000.
Wells Fargo Precious Metals Fund - Class A (EKWAX - Free Report) aims for long-term capital growth. The fund usually invests at least 80% of its net assets in investments related to precious metals. EKWAX is a non-diversified fund.
This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
EKWAX has a Zacks Mutual Fund Rank of #2 and an annual expense ratio of 1.09%, which is below the category average of 1.38%. The fund has returned 43.3% over a year. It has a minimum initial investment of $1000.
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3 Shining Gold Funds to Buy in a Volatile Market
Recent gold prices are indicating bullishness that could push the yellow metal to a record high in the months ahead. In fact, speaking historically, the last time prices of the yellow metal were this high was in 2011, when it touched $1,921. Given the prominent factors playing the markets right now, one may expect gold prices to stick to the road north.
On Jul 20, spot gold rose 0.4% to reach $1,815.34 per ounce, having touched a high of $1,820.06 earlier on in the session. U.S. gold futures settled 0.4% higher to reach $1,817.40 per ounce. This is the yellow metal’s highest level since September 2011.
Behind the soaring prices of gold lie a lenient monetary policy, tensions over an economic recovery and of course, the mounting health hazard all over the world — coronavirus.
First, in June, the Federal Reserve decided to keep the benchmark rates unchanged (as decided by the central bank in mid-March) to put the U.S. economy back on track. The rates, which are currently in the range of 0% to 0.25%, are expected to stay at this level for the next two and a half years.
Second, the United States leads globally in the number of coronavirus pandemic deaths and new cases, as states struggle to recover from the public health crisis. Many states have brought back restrictions on public movement to slow the virus’ spread.
While New York reported the least number of hospitalisations of COVID-19 patients in four months and New York City entered a new phase of reopening on Jul 20, Florida reported more than 10,000 new cases for the sixth day in a row. This massive rise in coronavirus cases is clearly spurring demand for the yellow metal.
Finally, indications that countries of the European Union are keen to compromise on a 1.8 trillion-euro ($2 trillion) coronavirus stimulus plan should also support the gold bullion.
3 Best Choices
We have, thus, selected three gold mutual funds with a Zacks Mutual Fund Rank #1 (Strong Buy) and 2 (Buy) that could gain from the turbulent markets. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily the reasons why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Invesco Oppenheimer Gold & Special Minerals Fund Class A (OPGSX - Free Report) aims for capital appreciation. The fund invests the majority of its assets in common stocks of companies that are engaged in mining, processing or dealing in gold or other metals or minerals. The non-diversified fund may also invest in gold bullion, other physical metals and precious metals-related ETFs.
This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
OPGSX has a Zacks Mutual Fund Rank of #1 and an annual expense ratio of 1.17%, which is below the category average of 1.38%. The fund has returned 45.8% over a year. It has a minimum initial investment of $1000.
Franklin Gold and Precious Metals Fund Class A (FKRCX - Free Report) aims for capital growth. The fund normally invests the majority of its assets in securities of gold and precious metals operation companies. The fund may buy securities of gold and precious metals operation companies located globally and in general invest in foreign companies. FKRCX is a non-diversified fund.
This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FKRCX has a Zacks Mutual Fund Rank of #1 and an annual expense ratio of 0.98%, which is below the category average of 1.38%. The product has returned 49.9% over a year. The fund has a minimum initial investment of $1000.
Wells Fargo Precious Metals Fund - Class A (EKWAX - Free Report) aims for long-term capital growth. The fund usually invests at least 80% of its net assets in investments related to precious metals. EKWAX is a non-diversified fund.
This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
EKWAX has a Zacks Mutual Fund Rank of #2 and an annual expense ratio of 1.09%, which is below the category average of 1.38%. The fund has returned 43.3% over a year. It has a minimum initial investment of $1000.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>