The threat of a debt ceiling crisis is accelerating, as I noted. It’s no coincidence that America’s rush toward $31.381 trillion aligns with a global rush among central banks to buy gold.
We pretend that the Treasury Department has any idea what it’s doing.
But we’re spiraling off a cliff… and the debt ceiling debate is heating up.
And what’s worse, the Congressional Budget Office (CBO) projects that we will add another $18 trillion in debt in the next nine years.
This is unsustainable.
And it’s why we need to pay attention to a major financial trend.
Gold demand among central banks (and their holdings) hit a 47-year high at the end of 2022. I expect that the gold rush will only accelerate as debt talks continue.
This is how you focus on the debt ceiling.
By holding about 5% of your investment portfolio in gold.
So what ideas should we explore to purchase gold?
I’ve got three of them for you right now…
How to Buy Gold Option No. 1: Coins Remain Popular
Yes, we’ll talk about equity markets. But there’s always a good reason to have physical gold.
Have a safe. Put it inside the wall. Make your own treasure map and create an adventure for your great-grandchildren in 2071. Just have some physical gold, as it remains a solid investment.
There are multiple ways to buy physical gold. You can own American Eagle coins, which tend to trade at a premium compared to the spot price of gold. These coins are minted in one-ounce, half-ounce, quarter ounce, and tenth-ounce quantities.
You can buy other gold coins minted by governments around the globe, like Australia, England, South Africa, Canada, and Japan.
But I prefer the authorized gold that is linked to Swiss banks. The best bang for the buck and certification is found in Credit Suisse bars.
Each is minted in Switzerland and carries a unique serial number. Bars today trade at a premium of about $80 today, which isn’t surprising given the demand. I personally own these bars and keep them in a safe deposit box a mile from my house.
You should never keep four things in a safe deposit box: Cash, your passport, your will and healthcare directives, and rare or heirloom jewelry.
Gold bullion is the only thing in my deposit box.
How to Buy Gold Option No. 2: Buy the Big Cap Miners
A lot of experts like to recommend junior miners as a way to play higher gold prices. These are VERY speculative companies.
Junior miners are venture capital companies that finance mining operations. While higher prices can fuel speculative gains on these stocks, they are VERY unstable plays.
There are plenty of companies in the mining space with established operations, secure financing, and a big upside. There’s no need to overthink as these stocks do well as gold prices rise, thanks to the large amounts of deposits on their balance sheet.
If you’re looking for names, I prefer mining companies with greater exposure in North America, South America, or Australia, as it reduces geopolitical risk.
Notable names include Newmont Corporation (NEM), Barrick Gold (GOLD), and Franco-Nevada (FNV).
How to Buy Gold Option No. 3: Diversify With an Income Fund
The last way to focus on gold prices is to diversify with a closed-end fund that pays strong income and gives you access to other mining stocks and their long-term upside.
Closed-end funds trade on public exchanges and operate on the whims of sentiment in the market. They may trade at either a discount or premium to the net asset value of the fund.
That brings me to the GAMCO Global Gold, Natural Resources & Income Trust (GGN). The closed end fund currently trades under $4.00, despite the sum of its parts being valued above this level.
GGN gives investors a 9.9% annual distribution and taps into various natural resources and mining giants.
Investors will get access to Newmont Corporation, Franco-Nevada, Barrick Gold, and Rio Tinto (RIO) on the gold mining side. On the energy side, the fund owns Exxon Mobil (XOM), Chevron (CVX), and Shell.
Materials comprise 41.6% of this fund, while oil and gas represent 34% of the portfolio. This is a little riskier than traditional methods, but investors can profit from the combination of the near 10% yield and 6.4% discount to NAV.
To your wealth,
Garrett Baldwin
*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
Market Momentum is Red
It turned negative. And we are hedged over at Tactical Wealth Investor on the downside that this market may deliver. Now is the time to be very conservative and protect your money.
