Global economic and geopolitical concerns could continue to fuel market volatility, and some investors are seeking ways to mitigate the swings and better manage risks. Historically gold has exhibited a low correlation to the stock market and is often perceived as a safe haven asset.
In the upcoming webcast, Markets Got You Spooked? Consider Gold for Stability, Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investors, will outline the benefits of investing in gold, highlighting a fund strategy that incorporates royalty and streaming companies, which many consider to be the “smart money” of the space.
“Royalty companies can help investors manage many common risks associated with traditional producers. Because they’re not directly responsible for building and maintaining mines and other costly infrastructure, huge operating expenses can be avoided. They also hold highly diversified portfolios of mines and other assets, which helps mitigate concentration risk in the event that one of the properties stops producing. As a result, royalty companies have enjoyed a much lower breakeven cost than traditional miners,” according to U.S. Global.
To access this group of gold producers, investors can look to the U.S. Global GO GOLD and Precious Metal Miners ETF (NYSEArca: GOAU). The U.S. Global GO GOLD and Precious Metal Miners ETF is a smart beta offering that tracks a specialized or rules-based index to help hone in on quality players in the gold mining space. The underlying U.S. Global GO GOLD and Precious Metal Miners Index uses quantitative analysis designed to capture the performance of companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means.
The ETF also includes a 30% tilt to royalty and streaming companies, which could help investors better manage common risks associated with traditional producers, such as building and maintaining mines, among others. The lower risk may also diminish risk since royalty companies have historically rewarded investors by increasing dividends at a faster pace than the broader equity market.
According to U.S. Global, royalty companies are a superior way to target the gold mining segment. Royalty companies are not responsible for costly infrastructure so huge operating expenses can be avoided. These companies hold highly diversified portfolios of mines and other assets to mitigate concentration. Additionally, they generate some of the highest revenue per employee of all public companies while growing cash flows and dividends.
Financial advisors who are interested in learning more about investing in gold can register for the Thursday, October 31 webcast here.