Fund investors have a knack for bad timing. TheStreet.com notes "Money Pours Into Precious Metals Funds":
Investors continued to pour into precious metals in March, adding a hefty $1.2 billion into the mutual funds and exchange-traded funds that concentrate on the specialty sector.
That brought the total flow of cash into the subsector for the first quarter to $3.6 billion as investors sought safe-haven assets amid the ongoing credit crisis."
Recently gold was about where it was when it started the year, but this doesn't mean investors are flat for '08. According to Lipper, these flows into gold funds were skewed to March. Gold ran up into quadrupole digits from January through early March only to fall back sharply. If much of the money went in during March, this money is at a loss for the year.
As a group over the last few years fund investors have made money in precious metals funds. Most funds in this category have sizable net unrealized gains on the books. But gold funds were unpopular years ago, and have grown in popularity as the shinny metal rose in price (and the positive coverage rose as well). It won't take a fall to the old prices to wipe out all the gains made in gold funds - even a dip to $500 per ounce could do the job given how much money has piled in during the last two years.
The volatility and hot money flows are some of the reasons why we have a hard time stomaching gold's increasingly popular "safe-haven" moniker. Anything that can fall 15% in a few weeks shouldn't qualify.
Gold Funds Attract Gobs Of Money, Promptly Fall
Fund investors have a knack for bad timing. TheStreet.com notes "Money Pours Into Precious Metals Funds":
Investors continued to pour into precious metals in March, adding a hefty $1.2 billion into the mutual funds and exchange-traded funds that concentrate on the specialty sector.
That brought the total flow of cash into the subsector for the first quarter to $3.6 billion as investors sought safe-haven assets amid the ongoing credit crisis."
Recently gold was about where it was when it started the year, but this doesn't mean investors are flat for '08. According to Lipper, these flows into gold funds were skewed to March. Gold ran up into quadrupole digits from January through early March only to fall back sharply. If much of the money went in during March, this money is at a loss for the year.
As a group over the last few years fund investors have made money in precious metals funds. Most funds in this category have sizable net unrealized gains on the books. But gold funds were unpopular years ago, and have grown in popularity as the shinny metal rose in price (and the positive coverage rose as well). It won't take a fall to the old prices to wipe out all the gains made in gold funds - even a dip to $500 per ounce could do the job given how much money has piled in during the last two years.
The volatility and hot money flows are some of the reasons why we have a hard time stomaching gold's increasingly popular "safe-haven" moniker. Anything that can fall 15% in a few weeks shouldn't qualify.
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