As gold’s price nears all-time highs, several fundamental factors could continue to build support for the precious metal’s price for the remainder of 2022 —and beyond. Gold miners, particularly gold royalty companies, could see benefits from these tailwinds.
In the upcoming webcast, War, Safe Havens, and the Fed: Why Now Could Be Gold’s Time to Shine, Frank Holmes, CEO of U.S. Global Investors, will outline the forces pushing the gold price higher and what could be driving the yellow metal to remain in positive territory, or possibly lose some of its gains. The discussion will also highlight one ETF invested in gold miners and gold royalty names that could allow financial advisors and investors to capitalize on these price moves.
To gain exposure to the rise of gold, investors may focus on a fund strategy that incorporates royalty and streaming companies, which many consider the “smart money” of the space. One such fund is 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 home 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 manufacturing) or passive (owning royalties or production streams) means.
The ETF also includes a 30% tilt to royalty and streaming companies, which can help investors better manage common risks associated with traditional producers, such as building and maintaining mines. 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 simultaneously growing cash flows and dividends.
“We invest in companies with strong balance sheets and attractive portfolios of active mines, among other factors. Companies that rely primarily on debt to finance their business are eliminated from the index, which uses a smart-factor, rules-based model consisting of common stocks listed on well-developed exchanges across the globe. GOAU places special emphasis on North American royalty and streaming companies, which we consider to be the ‘smart money’ of the metals and mining space. The fund is distinct for placing as much as 30 percent of assets in royalty companies,” according to U.S. Global Investors.
Financial advisors who are interested in learning more about the gold markets can register for the Monday, May 23 webcast here.