How to Use Gold Investments to Generate Yield

Gold has been a standout performer in the investment world in recent years, outperforming stocks and providing investors with significant returns. While owning physical gold comes with its own set of challenges, such as the need for insurance and storage in approved depositories, there are ways for investors to gain exposure to gold while also generating passive income.

One such option is Monetary Metals, a precious metals leasing platform that allows investors to earn yields between 2% and 5% annually by leasing their gold to qualified businesses in need of precious metals. The yield, currently at 4%, is paid in gold, allowing investors to accumulate more gold over time rather than generating traditional income in dollars.

Monetary Metals offers fee-free storage for investors who own 10 ounces of gold or the equivalent in US dollars, with lease options available for up to 12 months. Longer lease options are available for accredited investors. The platform acts as the market maker, finding borrowers for the gold and paying distributions to investors from the fees charged to borrowers.

According to Keith Weiner, CEO and founder of Monetary Metals, this approach allows investors to grow their gold holdings while earning a yield. Monthly distributions are paid out to investors, though the yield may fluctuate based on market conditions. While the platform may not be ideal for investors looking for easy access to their assets, as liquidity may not be available until the end of the lease term, it offers a unique opportunity to earn passive income in gold.

Weiner compares the concept of leasing gold through Monetary Metals to crypto staking, where assets are locked up in exchange for yield paid in the same denomination. However, he notes that gold is less volatile than cryptocurrencies and less prone to dramatic price swings.

Overall, Monetary Metals provides investors with a way to earn passive income in gold while supporting real businesses in need of precious metals. At the end of the lease term, most lessees express an interest in renewing, highlighting the value of the platform for both investors and businesses alike. Investing in gold has long been considered a safe haven for investors looking to diversify their portfolios and protect their wealth. With the recent surge in gold prices, many investors are turning to dividend-paying gold mining stocks and high-yield covered call ETFs to capitalize on the precious metal’s potential for growth and income.

One company that has caught the attention of investors is boasting a churn rate of less than 1%, which is a promising sign for lessors. This means that investors who choose to invest in gold through this company can rest assured that their gold remains secure while also receiving recurring yield. As CEO Weiner puts it, “Once they’re in, they want to stay in and treat it as an annuity.”

On the other hand, investing in dividend-paying gold mining stocks has also become increasingly popular. According to stock strategist Ethan Feller, the underlying catalysts responsible for gold’s recent gains remain in place. Factors such as renewed buying from central banks, ongoing geopolitical risk, and global debt concerns continue to support the precious metal’s upward trajectory. Companies like AngloGold Ashanti and Kinross Gold have seen their shares appreciate significantly while also offering attractive dividend yields.

For investors looking for a more diversified approach to investing in gold, high-yield covered call ETFs are a popular option. These ETFs use covered calls to generate income by selling call options against their holdings and distributing the premiums as dividends to investors. While this strategy may limit the upside potential of the underlying assets, it can provide investors with double-digit yields. ETFs like the NEOS Gold High Income ETF have delivered impressive returns while offering high dividend yields.

It’s important to note that covered call ETFs introduce higher risk to investors’ portfolios, especially during market downturns. Additionally, these ETFs are actively managed and may have higher expense ratios. However, the potential for significant yields can often outweigh these drawbacks for income-focused investors.

Overall, investing in gold through dividend-paying mining stocks and high-yield covered call ETFs can provide investors with a unique opportunity to benefit from the precious metal’s price appreciation while also generating income. With the current market conditions and ongoing global uncertainties, these investment options may offer a compelling way to diversify and protect your portfolio.