Securities Lawyers Blog
The law offices of Gana Weinstein LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments. One gold fund in particular that appears to have taken outsized risks that is now suffering massive losses is the Van Eck Intl Investors Gold Fund (INIVX) (the Van Eck Gold Fund). According to public records, over the past 5 years the fund has declined by an astonishing 77% while the Dow Jones industrial average has increased by over 50%.
There are several forces that have led to the decline of the Van Eck Gold Fund. The Van Eck Gold Fund invests primarily in gold related mining companies. One source of decline is the fall in the value of gold. However, in addition to the decline in gold is the fact that, according to MorningStar reseach, the Van Eck Gold Fund invested heavily in small to mid sized miners. Due to the downturn, small and mid sized miners would likely be less financially stable to withstand changes in the price of gold.
Before recommending investments in oil and gas and commodities related investments, brokers and advisors must ensure that the investment is appropriate for the investor and conduct due diligence on the company in order to understand the risks and prospects of the company. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. However, brokers who sell oil and gas and commodities products are obligated to understand the risks of these investments and convey them to clients.