What Are Precious Metals Mutual Funds?

You’ve probably done your investor homework on Gold IRAs, but did you know there are alternative ways to invest in precious metals? 

Precious metals mutual funds are investment vehicles that pool funds from multiple investors at once. These mutual funds then purchase a diversified portfolio that includes actual precious metals or companies that work in the industry. Unlike other methods of buying physical metals, mutual funds provide exposure to the metals market via a managed approach. This differs from a self-directed IRA, which gives you control of what you purchase. 

Let’s explore the basics of precious metals mutual funds. We’ll discuss why they make sense for some investors and when a different method—like precious metals IRAs—might be more attractive. 

Precious Metals Mutual Funds Benefits

While physical gold investment is still a popular method, precious metals mutual funds do offer benefits that appeal to seasoned and novice investors alike. The funds provide a practical avenue to investment diversity. They can also provide liquidity and accessibility to the precious metals market. 


One primary advantage of precious metals mutual funds is the opportunity they afford investors to diversify their holdings. By pooling resources to invest in various precious metals and related companies, these funds arguably spread out risk more effectively than investing in a single asset. 


Precious metals mutual funds often provide higher liquidity than physical ownership of those same metals. Investors can typically buy or sell their fund shares quickly—often within a single trading day—allowing for easy entry and exit from positions. 

This liquidity is especially helpful during stressful market periods or when an investor needs quick access to cash. Contrast that with the process of selling physical metals, which often involves extra roadblocks like the need to verify the authenticity of the metal and significant transaction fees. 


Precious metals mutual funds lower the barrier to entry for investors who want to enter the market. Buying physical gold, silver, platinum, or palladium can require significant capital. Putting smaller amounts in mutual funds makes it more feasible for a broader range of investors to include metals in their portfolios. 

Buying physical precious metals also involves paying additional fees for storage and insurance. Mutual funds don’t have this same drawback because there’s no physical ownership of gold or silver coins. Finally, mutual funds offer the expertise of fund managers who can help navigate the precious metals market. This can be a value-add for investors who lack the time or experience to manage these investments directly. 

What’s the Difference Between a Precious Metals Mutual Fund and a Precious Metals IRA?

Precious metals mutual funds and Gold IRAs are both popular options that provide a hedge against inflation and economic volatility. But there are some critical differences between the two that investors need to understand before making a purchase: 

  • Physical ownership: In a precious metals IRA, investors own the literal physical metals and store them in a secure depository. With precious metals mutual funds, the investors own shares in the fund itself versus the actual physical metal. 
  • Liquidity and trading: Precious metals mutual funds offer greater liquidity because, like stocks, you can buy and sell the shares within a trading day. Buying and selling physical metals in precious metals IRAs may involve more time and steps because of storage needs and the potential for appraisal. 
  • Tax treatment and regulations: A significant difference between mutual funds and IRAs is in tax regulations and treatments. Precious metals IRAs are subject to IRS rules regarding retirement accounts. These rules include contributions, distributions, and required minimum distributions (RMDs). The regulations treat mutual funds more like traditional investments with capital gains and losses. 
  • Costs and fees: Each investment vehicle’s overall costs can vary. Precious metals IRAs may have higher fees related to the purchase, storage, and insurance of physical metals. Mutual funds may have associated management fees and other operational costs, but they don’t require paying for physical storage or insurance. 

A grasp of these key differences can help you choose the option that best suits your investment strategies, financial goals, and preference for physical versus paper assets. 

Want to Invest in a Gold IRA?

Precious metals mutual funds and Gold IRAs provide exposure to the precious metals market, but knowing which one makes the most sense for your investment needs can be a major question. Gold IRAs provide the peace of mind of physical metals ownership through coins, bars, and bullion. 

To learn more about how precious metals can help diversify your investment portfolio, download Advantage Gold’s free Gold IRA guide. This guide covers the basics of self-directed precious metals IRAs and how to roll over your existing retirement assets. If you already know a Gold IRA makes sense for your investment goals, apply to open your account today

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