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While all that glitters may not be gold, people who invest in this precious metal may find that over the long haul, it shows as strong a return as the stock market, says financial analyst Stephen Leeb.
Leeb, editor of the bimonthly newsletter Personal Finance, is particularly bullish on gold and expects that within the next three to five years, values will increase significantly.
"What drives bullion and gold is inflation. When inflation is low, gold prices are low; when inflation starts to accelerate, gold really starts to take off," explains Leeb, who says it's hard to predict when gold prices will begin to go up. However, he says, inflation rates above 4.5 percent could signal a gold price increase.
Gold can be purchased in bullion, gold mining stocks or in gold mutual funds. Prudent investors should not have more than 10 percent of their portfolios in gold, says Leeb, whose top-rated gold mutual funds are shown below.
"Our preferred buy is gold mining stocks in a gold mutual fund because a good gold mining company can do well even if gold prices don't take off," says Leeb. He also likes well-run mutual funds because the managers are typically traveling around the world looking at mining operations. And that could be just the ticket to striking it rich.
Top-rated gold mutual funds.
Ashanti Gold -- 233-21-772-190
Barrick Gold -- (416) 861-9911
Meridian Gold -- (702) 827-3777
Euro-Nevada -- (416) 480-6480
Delta Gold -- 02-9903-4000
Pioneer Group -- (617) 742-7825
Source: Personal Finance
If you've avoided turning to venture capitalists because you thought they only look at high-tech firms, a finding by The Entrepreneurial Advisory Service of Coopers & Lybrand LLP may make you reconsider.
"We're seeing more venture capital funds that go after low-tech or no-tech businesses, such as manufacturing companies that specialize in certain products," says Sidney R. Andrews, a partner in the Houston office of Coopers & Lybrand. According to Andrews, the increasing number of investors who have significant amounts to spend are leading venture capitalists to seek new, less saturated investment opportunities.
One thing that hasn't changed is investment standards, cautions Andrews. "It all boils down to whether the deal makes sense," he says. "Does it have a concept that applies to a large market share? Will it be difficult for competitors to reproduce? How far ahead of the marketplace is the product? Is there a good management team, and do they know what they're doing?'
To find venture capital funds, Andrews suggests checking Pratt's Guide to Venture Capital (Venture Economics). Also investigate local capital networks, which can be located by calling a nearby university or your state or local economic development department.
Entrepreneurs who want to raise $1 million to $10 million--but find the cost of doing so through traditional securities markets a little rich for their blood--now have another option.
"We view ourselves as an incubator where small businesses can grow with us and then go on to [a larger] exchange," says Nimish Gandhi, president and founder of Niphix, a Peoria, Illinois-based capital market started in 1993 that enables business owners to sell shares directly to investors via an electronic trading system.
Unlike Nasdaq, where Gandhi says it could cost hundreds of thousands of dollars to make an initial public offering (IPO), an entrepreneur can do an IPO for as little as $20,000 on Niphix.
Niphix targets small companies valued at a few million dollars, according to Gandhi. All investors are accredited and range from institutions and venture capital fund managers to wealthy individuals with at least $200,000 in annual salary or a $1 million net worth.
Any business in the United States or Canada can issue an IPO on Niphix. For more information, call the company at (800) 780-6060 or (309) 674-0300 or visit the Web site at http://www. niphix.com
Coopers & Lybrand LLP, fax: (713) 657-8221, firstname.lastname@example.org
Niphix, 331 Fulton St., #903, Peoria, IL 61602-1420, (309) 674-0300
Personal Finance, 1750 Old Meadow Rd., #301, McLean, VA 22102, (800) 832-2330