When searching for the top performer gold mutual funds you mainly find rankings, which were prepared based on the returns of the last 1 year. As if nothing else would matter!
In reality, the following questions are absolutely just:

• Why should you choose the one, which was the top performer in the last 1 year?
• What if the good return of the last 1 year was just the result of a special luck?
• What if the fund showed no good performance before and will not perform in the future either?
• What if another fund will easily outrun it?

Beside the last 1 year return there are some other indexes, which are worth to examine:

• If the average return was high back for a long period of time, that is probably not the matter of luck.
• You make no harm either if you consider the best and the worst performance in a 1 year period of time.

Let's see for example the following gold mutual funds: Central GoldTrust (GTU), Van Eck Intl Investors Gold I (INIIX), Tocqueville Gold (TGLDX), Franklin Gold and Precious Metals Adv (FGADX).
If a table* is prepared from the maximum and minimum return of the 1 year time, some difference immediately shows up.:

	INIIX	FGADX	GTU	TGLDX
Last return	0.88%	-2.5%	32.63%	2.32%
Max. return	95.3%	102.9%	32.63%	115.02%
Min. return	-24.07%	-37.52%	7.43%	-39.54%

Better or worse?

Even the gold mutual funds with similar profile perform differently in the same period. The difference in the performances may be huge. Therefore it is important to make a good selection!
Sticking to the above example, it is useful to analyze in the chart below*, how the rate changed for Central GoldTrust, Van Eck Intl Investors Gold I, Tocqueville Gold, Franklin Gold and Precious Metals Adv compared to each other. (The vertical axis shows the change in percentage against the rate located on the left side.)

Which gold mutual funds would you choose?

• The gold mutual funds, the curve of which is persistently above the other curves is probably a better performer and not only for the last 1 year for example.
• It's useful to prepare a similar figure* comparing the performance of the securities with other indexes. (Dow Jones, S&P500 etc.).

What about the risk?

Risk means that the actual return deviates from the expected return. For a higher return you have to take normally higher risk.
As to how much higher the return will be compensating the higher risk, it differs according to the kind of the investment. Not every investment instrument pays the same return for the same risk.

In the chart below*, on the vertical axis you can see the 1 year average return and on the horizontal axis you can find the standard deviation showing the risk relating the gold mutual funds of the above example.

The wise investor strives to gain the highest possible return for the lowest possible risk. If, for example the yearly return of an investment changes between 11% and 13%, it is much better than an investment where the return changes between 2% and 22%. (The average is 12% in both cases, but the return is more uncertain in the second case.)
The points, where the high return goes with low risk are located around the upper left corner in the above chart. (Obviously, there are differences between the securities.)
The investments with low risk and high return are rare to find.

• When making the selection eg.: from Central GoldTrust, Van Eck Intl Investors Gold I, Tocqueville Gold, Franklin Gold and Precious Metals Adv , the balance between the return and the risk should be aimed.
• Don't take extra risk without extra return.
• When the returns of eg.: two gold mutual funds are about the same, but their risk is considerably different, you should choose the one with lower risk!