Dividend-News

Dividend Cut For GAMCO Gold?

Published Sun, 24 Apr 2016 15:22:43 -0400 on Seeking Alpha

In my previous article on the Gold Miner's ETF (NYSEARCA: GLD), I received a request to look into GAMCO Global Gold, Natural Resources, and Income Trust (NYSEMKT:GGN):

The first thing to do here is to compare GGN to a benchmark. After all, anyone interested in GGN is likely interested in placing some gold in their portfolio. So a comparison seems reasonable:
GLD up 16.19% YTD GGN Up 38.95% YTD The natural question is, "Why the discrepancy?" The answer comes in one main flavor: diversification. GGN is not a gold miner nor is it a pure-gold stock.
Instead, GGN is an investment company that primarily buys gold miner stocks. Over 50% of its portfolio is dedicated to this one act. The difference in gains/income stems from:
Buying energy stocks Writing covered calls Buying bonds Needless to say, the energy stocks are not the best performing holdings, and the fact that GGN continues to dedicate a large portion of its portfolio could be a significant turnoff for investors. Still, the project manages to outperform GLD. The covered calls certainly help with losses, as they allow for extra income in the beaten-down energy industry.
In a way, GGN is more similar to a basket of gold miners, such as the Gold Miners ETF (NYSEARCA: GDX), which is up 64.68%, year to date. I have mentioned previously that GDX moves faster than GLD, giving it a steeper risk/reward profile than GLD. You can think of GGN as a more specialized... Read more