Diversification

[firehawkocean]

If I want to invest in precious metals, but do not want to physically hold them, which EFT or Mutual Fund would be best for me?

Would Vanguard Precious Metals and Mining Fund (VGPMX) be appropriate?

[violet80907]

From the description of VGPMX:
The investment seeks long-term capital appreciation The fund invests at least 80 of its assets in the stocks of foreign and U S companies principally engaged in the exploration mining development fabrication processing marketing or distribution of metals or minerals

Which begs the question: are you wanting to invest in the (price) of the metals themselves, OR in the equities of mining companies? These are two different investments; the former reflects the commodity price of metal(s), while the latter reflects the outlook and operation of mining companies.

Here are more commodity investment options:

IPATH DOW JONES-UBS PRECIOUS METALS SUBINDEX TOTAL RETURN ETN (JJP)
ETFS WHITE METALS BASKET TRUST (WITE)
POWERSHARES DB PRECIOUS METALS FUND (DBP)
RBS ROGERS ENHANCED PRECIOUS METALS ETN (RGRP)

ETFS ASIAN GOLD TRUST (AGOL)
ETFS PHYSICAL PALLADIUM SHARES (PALL)
ETFS PHYSICAL PLATINUM SHARES (PPLT)
ETFS PHYSICAL PRECIOUS METAL BASKET SHARES (GLTR)
ETFS PHYSICAL SILVER SHARES (SIVR)
ETFS PHYSICAL SWISS GOLD SHARES (SGOL)
IPATH DOW JONES-UBS PLATINUM SUBINDEX TOTAL RETURN ETN (PGM)
IPATH PURE BETA PRECIOUS METALS ETN (BLNG)
ISHARES GOLD TRUST (IAU)
ISHARES SILVER TRUST (SLV)
POWERSHARES DB GOLD FUND (DGL)
POWERSHARES DB SILVER FUND (DBS)
RBS GOLD TRENDPILOT ETNS (TBAR)
SPDR GOLD SHARES (GLD)
SPROTT PHYSICAL GOLD TRUST UNIT (PHYS)
SPROTT PHYSICAL SILVER TR TR UNIT (PSLV)
UBS E-TRACS LONG PLATINUM UBS BLOOMBERG CMCI PLATINUM TOTAL RETURN ETN (PTM)
UBS E-TRACS UBS BLOOMBERG CMCI GOLD TR ETN (UBG)
UBS E-TRACS UBS BLOOMBERG CMCI SILVER TR ETN (USV)

[thesimplemoneyblog]

Which begs the question: are you wanting to invest in the (price) of the metals themselves, OR in the equities of mining companies? These are two different investments; the former reflects the commodity price of metal(s), while the latter reflects the outlook and operation of mining companies.

I think this is an important distinction. What are you looking to purchase it for? As a diversifier for an already invested portfolio or for other reasons?

An ETF over a mutual fund could be a good option given that you can better control the tax implications of an ETF as compared to a mutual fund plus they typically have lower ongoing fees if you plan to own it for a long time. As far as the best ETF for you, it would depend on where your account is located as different custodians can have different ETFs available that are attractive given their transaction costs (or lack thereof) and liquidity. Note that a lack of liquidity can end up being a significant 'implicit cost' of owning an ETF.