Earn 30% From The One Investment The Media Hates Talking About
The financial news media generally ignore gold and silver. You should not. While stocks now trade flat year-to-date, gold is up 29%, and the yellow metal has gained 45% over the past 12 months.
It seems likely that the gold rally will continue. Foreign central banks are accumulating gold, while Chinese citizens are also increasing their holdings. Citizens of India continuously buy gold.
Currently, gold trades for just under $3,400 per ounce. Last week, analysts from Saxo Bank predicted that gold could reach $4,000 within the next 12 months.
While I recommend to my subscribers that they own some physical gold and silver through OneGold, my newsletters and investment recommendations primarily focus on generating cash income. I am always on the lookout for investments that offer exposure to alternative assets, such as precious metals, and also yield cash dividends. If you are earning dividends, you are consistently generating income.
Here are two gold-focused funds that also offer very attractive dividend yields.
The ETRACS Gold Shares Covered Call ETN (GLDI) from UBS tracks the returns of a notional call options selling strategy on the SPDR Gold Shares ETF (GLD). Exchange-traded notes are debt instruments where the returns track the designated underlying assets. ETNs are popular in Europe, where it is tough to get ETFs approved for trading across the different countries.
GLDI pays dividends monthly, with the ex-dividend around the twentieth of the month and payment on the twenty-fifth. Dividends vary in response to changes in GLD option pricing. With the June dividend announcement, UBS reported an expected current yield of 24.1% for GLDI.
The VanEck Gold Miners ETF (GDX) is an alternative way to gain exposure to precious metals investments. Mining companies offer potential leveraged gains when the prices of gold and silver rise. Here is a quick example: It costs a gold mining company $1,000 to produce an ounce of gold. If gold is at $1,500, the profit margin would be $500. If gold goes up 33% to $2,000, the miner’s profits double (100% gain) to $1,000 per ounce. Year-to-date, GDX is up 57% compared to 29% for gold.
The YieldMax Gold Miners Option Income Strategy ETF (GDXY) employs a covered call option strategy using GDX as the underlying asset. A covered call strategy will cap gains in a rapidly rising market. GDXY is up 35% in total return year to date, capturing most of the GDX gains and outperforming gold. GDXY pays monthly dividends and has a current distribution rate of 30.6%.
With these covered call funds, you will continue to earn dividends, even if gold remains flat for a while or experiences a temporary pullback.
This post originally appeared at Investors Alley.
Category: Commodities, ETFs
