- Gold prices fell below $1,400 an ounce in May of 2013. And they've
been between $1,100 and $1,350 ever since. Two years... that's a pretty
long
time for any asset to consolidate. But gold isn't just any asset. Gold
bugs say it's the only reliable currency because its value can't be
debased by
central bank actions like paper money.
Gold detractors like Warren Buffett say gold has no utility and therefore should be valued in the same way companies are.
Companies can grow by selling more product and can earn more in
profit by increasing efficiency. Gold can't do that. Gold is basically
dependent
on the U.S. dollar for its value.
However, gold mining companies can increase revenue by selling more.
And they can earn more profits by increasing efficiency. I can't tell
you
what gold prices are going to do. But gold stocks look pretty good right
now...
Barrick Gold (NYSE: ABX) was a $50 stock in 2011. Today it's around $12. The last time it was below $12 was 1992.
Newmont (NYSE: NEM) broke briefly above $70 back in 2011. It's
around $27 now after briefly dropping below $20 last December. You gotta
go back to
2000 for the last time that happened.
Seems to me it's a good time to own gold mining stocks. The upside
will be explosive when it comes. But instead of buying one particular
miner,
why not buy them all? With the GAMCO Global Gold, Natural Resources
& Income Trust (NYSE: GGN), you can. This closed-end fund run by
Mario
Gabelli's GAMCO holds all the most important gold miners. It's a little
over $7 a share and will pay you nearly 12% a year in monthly dividends.
The
fees are not too bad either, at 1.25%.
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