Contrary to gold equities’ long-term trend of outperformance, gold companies have lagged the price of bullion since late April. Early this week, I visited CNBC headquarters and sat down with Squawk Box anchor Becky Quick about one factor I believe will cause gold companies to rebound.
A few years ago, mining companies used their cash flows to acquire and develop resources; today, they are beginning to use cash to pay a dividend. During these volatile times with erratic stock prices, dividends have become popular. With dividend-paying gold companies, investors can participate in the stocks’ appreciation and potentially receive monthly income. I believe this trend will drive the price of gold equities higher.
These companies—particularly those that have a growth in reserves and growth in production—are equally attractive for the Gold and Precious Metals and World Precious Minerals funds.
Watch the video as we discuss not only gold equities, but the price of copper and the opportunity in China.
Read my previous blog about why I think gold stocks will “show their metal” soon.
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.
Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors.
Holdings in the Gold and Precious Metals and World Precious Minerals funds as a percentage of net assets as of 3/31/11: Barrick (Gold and Precious Metals Fund 7.17%, World Precious Minerals Fund 2.82%), Franco-Nevada (Gold and Precious Metals Fund 1.64%, World Precious Minerals Fund 0.14%), Goldcorp (Gold and Precious Metals Fund 7.49%, World Precious Minerals Fund 4.90%), Newmont (Gold and Precious Metals Fund 0.75%), and Starbucks 0.00%.
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