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3 Gold Funds to Buy as Coronavirus Tightens Its Grip

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Investors have turned their attention to gold again, especially since the number of new coronavirus cases has shot up sharply over the past few days. Gold, which offers safety in turbulent markets, was primarily driven by the rise in global uncertainty because of the pandemic since its onset this year.

This is precisely what has attracted investors to the yellow metal again, especially as more states report new cases of the disease. Mutual fund investors, who wish to purchase the safe-haven asset to shield themselves from the pandemic’s impact, may find it prudent to do so right now.

Gold Prices Soar

Gold futures for August delivery increased 90 cents on Jun 29, or 0.05%, to settle at $1,781.20 an ounce, after the precious metal witnessed an advance of 1.6% in the week ended Jun 26.

In fact, early last week, the yellow metal touched its highest level since 2012 as the spread of coronavirus gained pace. Gold had hit a high of $1,796.10 on Jun 24, which was the yellow metal’s highest level in almost eight years and close to $1,800.

The rising number of COVID-19 cases in the United States has raised a question about the rate of economic recovery that was anticipated when reopening started in late April.

New COVID-19 Cases Rise Sharply

As of Jun 29, at least 16 states rolled back their plans of reopening their respective economies. After all, the only way to stop the virus from spreading is by practising social distancing measures. Therefore, these states have been asking people to stay away from crowded places and stay at home like before.

In addition, as Jul 4 approaches, authorities are concerned about crowds gathering and celebrating, which could aid further in the spread of the highly infectious disease. Since the economy reopened, most people flocked to public places like bars, pubs, restaurants and various beaches, thus creating more hotspots for infection.

Per the data by Johns Hopkins University, 31 states witnessed a spike in new COVID-19 cases as compared to the previous week. These states comprise Alaska, Arizona, Arkansas, California, North Carolina, Ohio, Pennsylvania, South Carolina and Wisconsin.

In addition, about 15 states such as Hawaii, South Dakota, Tennessee, Virginia, Nebraska, New Jersey and New York are witnessing a steady rise in the number of cases. Only four out of the 50 states witnessed a decline. These were Connecticut, Delaware, Rhode Island and New Hampshire.

3 Gold Funds to Buy

We have, therefore, selected three mutual funds that invest in companies that deal in gold. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy). In addition, the minimum initial investment for these funds is within $5,000.

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 why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Gold Portfolio (FSAGX - Free Report) fund aims for capital appreciation. The fund invests the majority of its assets in companies that have operations in gold or gold-related activities. It invests mostly in common stocks and in certain precious metals. FSAGX is a non-diversified fund.

This Zacks sector – Precious Metal has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSAGX has an annual expense ratio of 0.79%, which is below the category average of 1.38%. It has returned 54.9% over the past year. The fund has no minimum initial investment.

American Century Global Gold Fund A Class (ACGGX - Free Report) aims for total return that is consistent with investment in securities of companies engaged in mining, processing, fabricating or distributing gold or other precious metals globally. The non-diversified fund invests the majority of its assets in these companies.

This Zacks sector – Precious Metal has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

ACGGX has an annual expense ratio of 0.93%, which is below the category average of 1.38%. It has returned 56.7% over the past year. The fund has a minimum initial investment of $2500.

Franklin Gold and Precious Metals Fund Class A (FKRCX - Free Report) aims for capital growth. The fund invests the majority of its assets in securities of gold and precious metals operation companies. The non-diversified fund invests in these companies without much consideration of market capitalization, although it may invest heavily in small- and medium-capitalization companies.

This Zacks sector – Precious Metal has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FKRCX has an annual expense ratio of 0.98%, which is below the category average of 1.38%. It has returned 63.3% over the past year. The fund has a minimum initial investment of $1000.

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