In our August SMI cover article, we provided a primer on when and why to own gold. That article explained why we believe a tactical approach to owning gold is best for most people, and how our Dynamic Asset Allocation (DAA) strategy provides a disciplined framework for making those otherwise emotionally-charged buy/sell decisions.

While that article briefly discussed the pros and cons of owning physical gold (bars and/or coins) vs. “paper gold” (like the ETF our DAA strategy uses—GLD), one aspect of gold ownership we didn’t address is how to evaluate mutual funds and ETFs that own the stocks of gold-mining companies. As we were reminded at the end of August when DAA called for a change in our gold holdings, this is an issue for investors who may be trying to implement DAA within a 401(k) or similar plan that provides limited investment options.