BOSTON (TheStreet) -- Gold funds surged an average of 38% this year, about 2 ½ times the pace of the benchmark S&P 500 Index, as the precious metal reached a record.
Gold is a popular investment in times of economic and political uncertainty. Since many countries in the developed world are running huge deficits and printing money, and there is a long-running war in the Middle East and the threat of one in Korea, gold has extended a rally that bodes well for the sector in 2011, analysts say.
Investing in mutual funds that buy gold-company stocks is a way to reduce risk in the highly volatile sector. Problem is, only a handful of funds produce relatively consistent returns. Also, the price of gold itself is up 19% this year, half that of the average precious-metals fund, which mostly hold gold-related stocks instead of the commodity itself.
Gold traded around $1,383 an ounce this week after hitting a record $1,432.50 on Dec. 7. In July 1997, gold sold for $319 an ounce, its lowest price since December 1985.Morningstar analysts are using a long-term gold-price assumption of $1,366 per ounce in their gold-stock analysis models, which corresponds to Comex gold futures contracts, a widely accepted barometer of gold prices. Four funds with excellent long-term records and their holdings follow, as well as a new mutual fund that's the top performer this year.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV