Bullish on bullion

It's the beginning of the new year, but will that mean good news for your investments? By all accounts, 2009 is not going to be very bright. With one exception. Gold. The metal has managed to retain its sheen even through the darkest of times. So it's a smart move to invest in companies that mine gold, isn't it? After all, it would be like investing in the mother lode.

Mutual fund houses thought so and launched gold equity funds to invest in companies involved in gold mining and allied activities. These funds were launched because of the popularity of gold exchange traded funds (ETFs), which invest in gold bullion. Sadly, the results have not been the same. Take the DSP Black Rock's World Gold fund, which was launched in August 2007. In the past one year, it has delivered a negative return of 22% compared with a positive return of 25% by the Gold ETF.