Once we broke support a few months ago in the metals market, I began pointing to much lower levels b...
Who's Who of Gold Miners
08/01/2014 9:00 am EST
Gold is underrepresented in our portfolio; we think it’s a good time to add a gold play, advises Briton Ryle, editor of The Wealth Advisory.
For an investment, we don’t want to simply make the same percentage gains as the move for gold; we want an investment that will make more money as the price of gold rises.
That’s gold miners. They make exponentially more as gold prices rise. And right now, even after a bit of a rally, gold miners are among the cheapest stocks on the markets. And, because we are an income service, we want a dividend.
The question is: which gold miner to select? Well, how about all of them? And we can get a 9.7% dividend to boot. GAMCO Global Gold, Natural Resources & Income Trust (GGN) is a closed-end gold fund run by Mario Gabelli’s Gabelli Funds company.
It’s a leveraged fund, which means it trades derivatives to generate income, which it then distributes as a very nice dividend. Its holdings are a “Who’s Who” of gold miners. Most of the holdings are North American miners, which lowers the geopolitical risk.
This fund trades at a slight premium to its Net Asset Value (NAV). That’s a bit unusual for closed-end funds. They tend to trade at a discount to NAV. But in this case, we don’t mind, mainly because the gold miners are very cheap right now.
Fees run a little higher than we’d like to see at 1.35%. However, this fund traded above $18 when gold was at its highs. If gold can just trade back to the $1,500 level, we’d likely be looking at a 35%-40% profit, and we don’t mind paying 1.35% for that.
You’ll notice this fund has made a strong move from $10 over the last couple of months. We certainly can’t rule out the potential for the stock to retrace some of that move. The nearest recent support level is $10.50.
You may want to consider averaging into this fund, just in case the price moves a bit lower. We rate the GAMCO Global Gold, Natural Resources & Income Trust GGN a strong buy under $11.50 a share.
More from MoneyShow.com:
Related Articles on COMMODITIES
I think exceptional returns for the metals are a slam dunk for long-term investors who take advantag...
The recent weakness in commodities correlates highly with events on the trade front. When the U.S. r...
We’ve heard many reasons why no one should buy gold. The people you speak with about gold eith...