My wife Elliott and I received the latest prospectus from a gold mutual fund we own through her employer's retirement account: the Oppenheimer Gold & Special Minerals fund (OPGSX).
I'm considering having her re-weight this mutual fund to 100% of her current portfolio in that account.
Because this gold mutual fund is down – big time.
You might remember last week that I talked about looking for the exits for some of your stock holdings. That's because the broad market now trades significantly higher than its 200 day moving average. That's typically a good time to sell.
But our gold mutual fund currently sells significantly UNDER its 200 day moving average:
You can see how buying under the 200 day moving average was generally a pretty good strategy for this fund over the past five year period:
If you believe (as I do) that this gold bull market has plenty of room to run, then it's a great time to buy gold stocks in general. And it's a generally safe time to buy a gold mutual fund or ETF if you don't have the time or inclination to research individual companies.
I've recommended picking up shares of the Market Vectors Gold Miners ETF (NYSE: GDX) in the past.
And GDX holds many of the same companies as the Oppenheimer gold fund, and over the past 3, 5 and 10 year periods, the Oppenheimer actually outperformed GDX. But over the past 1 year period, GDX leads the way:
As I've written many times before – commodity investors have to be contrarian.
For whatever variety of reasons, or non-reasons, the market currently values these basically identical funds differently. We also know that the market currently values both of these gold funds WELL below the performance of gold prices.
If we're contrarians, we have to think differently than the market. Is the market wrong? No. The market is incapable of being wrong or right. But the market is dynamic. It will change. And it's likely to change in our favor if we buy gold stocks now.
Consider picking up shares of either GDX, or OPGXS if you feel the same. I'll chat with my wife about moving more funds into OPGSX and let you know how it goes.
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