Gyroscopic Investing

Deep in the PP mutual fund prospectus it states that, due to Federal law, the fund can make only a 10% profit in selling gold each year.  It says this law will affect it's buying and selling strategies. 

The prospectus also states that this law applies when shares are redeemed.  Redemption of shares may be paid all or in part in physcial gold or gold coins to avoid going over the 10% profit ceiling.  If at some point gold drops dramatically, and there are mass redemptions from people who bought the fund for all the wrong reasons, I wonder how they will like getting paid in gold?  I also wonder what this does to the fund's tax efficiency if there are big redemptions.

I wouldn't worry about any of that stuff.

If the fund were required to do a distribution that partly consisted of precious metals, they provide the option of liquidating it for you and sending the proceeds.

I think there are probably lots of people who would like to receive a partial distribution in the form of gold and silver.

I imagine that if the fund did see large redemptions, it would probably result in more taxable income coming out of the fund, but I don't think it would be a disaster.

Do you own due diligence, of course.

MediumTex wrote: I think there are probably lots of people who would like to receive a partial distribution in the form of gold and silver.

I would love that.