Reading Michael's commentary about gold (again!) in yesterday's PROFIT CONFIDENTIAL got me thinking about the options an investor has in today's gold market.

Bullion's out of reach for everyone but the wealthiest of investors, and jewelry's not your best bet for long-term growth. Gold stocks are great--but for the more conservative segment of your portfolio or for your retirement savings, there's another opportunity to consider:

The Gold Mutual Fund.

A lot of people love mutual funds. They love the inherent diversification that comes with the investment, and they love the passive nature of funds--put your money in, wait a few years, then cash in the profits.

For people who want to get in on the play of today's red-hot gold market without doing the extensive due diligence that comes with small-cap stock investing, today's generation of resource-based funds might be something to consider.

Of course, mutual funds are really only as good as the people who run them, so you have to do a bit of homework; but, generally speaking, investing in a resource-based mutual fund is a good way to get your feet wet in this trend.

Gold mutual funds carry with them slightly more risk than the average mutual fund, as they focus on a narrower segment of the market and therefore cannot diversify to the same extent. Also important to note is the fact that currency issues (in mining areas) and precious metal price fluctuations can ultimately impact the profitability of such an investment.

Even still, there is money to be made with these funds. For example, in 2003, when gold prices rose to a seven-year high, the average precious metal mutual fund rose an extraordinary 60%! With gold prices currently at a 16-year high, you can only imagine what this could mean for these funds in 2005 and 2006.

If no-load funds suit your fancy, take a look at Vanguard Precious Metals and Mining Fund and American Century Global Gold Fund.

If you're interested in diversification in the booming gold sector, it certainly can't hurt to take a look at what precious metals mutual funds have to offer in today's market.