Gold just jumped 3% to hit a new all-time high of $2,135 per ounce. That bested the previous record high of $2,072 back in August 2020. More important, in my opinion, is the support or floor price this move suggests for gold. I’m keeping a close eye on GAMCO Global Gold, Natural Resources & Income Trust (GGN) as a result, says Kelly Green, editor of Dividend Digest.
Here’s a chart of gold for the past four years.
We’ve seen gold pass $2,000 several times, but each time it has failed to hold above that price. Over the past year, $1,800 has acted as support and stopped gold from sliding lower. Now, let’s see if gold can stay above $2,000. I’m not 100% convinced gold will be able to stay at those levels…but I do think that support will move up towards $1,950.
I know, why are we talking about gold when I’m a dividends specialist? Stocks and gold have historically had an inverse relationship—when one rises the other falls, and vice versa. Now, both are steadily chugging towards new highs. Last Friday, the S&P 500 hit a 2023 high of 4,608.91—just 188 points shy of its all-time high.
Investors own gold as an inflation hedge or for asset diversification. It’s also considered the ultimate store of value, which isn’t useful to us as we are trying to put extra income in our pocket.
But it’s easy to feel left out as you watch gold soar higher. So while I’m not 100% convinced it’s time to buy GGN, I feel it’s worth taking a look.
GGN is a closed-ended mutual fund managed by Gabelli Funds. It invests 80% of its assets in equities and uses a covered call strategy. But, as its name suggests, this is not a pure gold play. There are other resource companies included as well.
GGN’s top holdings include Exxon (XOM) and Chevron (CVX), gold royalty company Franco-Nevada (FNV), and miners Newmont (NEM), and Freeport-McMoRan (FCX). You can see there’s some oil exposure in the fund.
The dividend has been declining since 2012 and is now just $0.03 per share paid monthly. However, shares were recently just $3.68, handing investors a 9.7% yield. One of the reasons I don’t like funds is because they hold a basket of stocks. I also don’t like to see two oil companies and a big chunk of cash in the top holdings. But, 9.7% isn’t nothing. If you have FOMO as gold continues to soar higher, GGN is an option.
Recommended Action: Consider GGN.
