Tuesday, April 14, 2009

The Dow Jones US Precious Metals Index

The Dow Jones US Precious Metals Index
The Dow Jones Precious Metals Index is a composite index that reflects the performance of the stocks of companies involved exploration and mining of precious metals. The designation of "precious metals" refers to gold, silver, and the platinum group metals (which include platinum, palladium, rhodium, osmium, iridium, and ruthenium). The index does not track the physical metals themselves, only company stocks.

The companies in the index are required to be US-listed stocks or ADRs (American Depository Receipts). The companies also face scrutiny to decide if they are too small or too illiquid. The companies must also be listed in the Gold Mining Subsector
or the Platinum & Precious Metals Subsector of the ICB (Industry Classification Benchmark).

You can't invest directly in the index unless you have a lot of money and time to invest in all the stocks that comprise it. But you can invest in a index mutual fund or ETF/ETN that mirrors the performance of the index itself. One fund that tracks the Dow Jones Precious Metals Index but is leveraged at 150%, is the ProFunds Precious Metals UltraSector ProFund (PMPIX).

If any of you readers are familiar with other funds that track the Dow Jones US Precious Metals Index, please post the name of the fund in a comment and I will add them to the body of this entry. Thanks!

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