Category Archives: Gold Mining Dividends

Gold & Silver Miners Up in 2016, Brexit

gold mining

 

Before I go into gold and silver miners and my own personal investment strategy, I am not advocating anyone to follow my strategy nor to load up on gold mining stocks.

I haven’t made a post since my last buys but I wanted to talk a little bit about my gold and silver mining stocks and the status of my strategy of holding the miners to sell for a hefty profit to fund my dividend portfolio.

I own ABX (Barrick Gold Corp) and GDX (VanEck Vectors Gold Miners ETF) and so far in 2016 both are up significantly. My initial ABX position is up more than 200% and GDX is up almost 100%! I bought 150 shares of ABX @$7.095 back last October 2015. Since then I bought more shares because even at a much higher price now, I still believe that the price of gold is on a new bull run. Currently ABX sits at $22.21 a share. This price could easily double or triple as the world’s central bankers continue to devalue their currencies. Not to mention that back in 2008-2009, the price of gold rallied in a low interest rate environment.

Now there are many talking heads on the mainstream media saying that due to the outcome of Brexit, the Federal Reserve or specifically Janet Yellen would use it as a perfect excuse to cut rates back to zero. Yellen could potentially cut rates into the negative territory! Once that happens I expect physical gold and silver, and miners to significantly rally. Actually, the first person to say that the FED will start cutting rates with QE4 is from Peter Schiff. I heard him back late last year calling that the FED might not even raise interest rates but to cut them. I follow him regularly and listen to his podcast and to me his reasoning makes the most sense from any economist out there.

As of this writing, the 10 year Japanese and German bonds are yielding negative returns. I expect something similar to happen here in the United States. Can you imagine paying the banks to eventually hold your cash? The future plans from banks is to charge you small fees (regardless of having a minimum deposit on a linked savings account) to give you the ability to hold your cash. When we reach that point and I think that we will, people will want to park their cash into safe havens such as physical gold and silver, and miners. Not to mention dividend safe haven stocks. Funny thing happened after the decision of Brexit. Companies such as Clorox and AT&T shot up in just two days. I suspect that many investors sold their risky assets especially in the financial sector and mitigated into these companies. I expect the same to continue in the future months ahead.

I have a few regrets for selling too early. I sold 114 shares of SIL (Global X Silver Miners ETF) @ $16.2579 back in February 2016 for a loss. Currently SIL sits at $45.95 a share! This sell was necessary as I used the funds to buy an engagement ring to propose to my now fiancé! The only regret is that I should have sold another asset. But what is done is done and I should look forward to the future than to dwell in the past. Same goes for my NEM (Newmont Mining Corporation) and GG (Gold Corp) holdings.

My original plan was to be levered up on gold and silver mining stocks for rapid growth so that I can sell it for a hefty profit and to fund my dividend portfolio. So far the plan has come into fruition. I’ve invested a total of $5,232.28 into gold miners and currently it is worth $10,148.81, a +$4,916.54 increase in 7 months! If I had not sold my other miners, I would be up higher than $10,000 in profits. So as of this writing, if I were to sell my miners, I could potentially invest $4900 more into my dividend portfolio. I could add more to my current positions or buy 5 new companies. It sure is tempting to do that right now but I believe that gold is just starting on a bull run. I plan to hang on longer and one day perhaps a couple to a few years from now, I could potentially profit more than $20,000 if ABX and GDX continues its run!

Not only is the plan working but the gold mining stocks have maintained my portfolios balance. I’ve invested about $24,600 into my portfolio but currently it is up to more than $33,500 total! Gold miners outweighed my losses when the rest of my dividend stocks went down from my Initial buy. Many people sell and hold cash in their money market account and wait for a fire sale on dividends when the market plunges but my strategy is to hold gold miners instead. History has shown gold mining stocks to significantly rise in such events and I plan to cash out at that moment and buy up the dividend stocks at a fire sale! That would shave off years of buying dividends.

I truly believe that the gold prices of $1900 an ounce from 2011 is going to look very cheap compared to where it’s headed. If you read the history of Homestake mining (ABX bought Homestake out since December of 2001) during the Great Depression on my site, I think something very similar will occur in our future. If so, we will see gold miners become ten baggers (up 1000%)!

Another nice thing about these mining stocks is that they do pay a dividend. If a depression does hit, the mining companies could potentially surge so much so that their yield could sky rocket as they did in the great depression. The past won’t dictate the future but sometimes history does repeat itself.

Advertisements

Gold Stocks Higher On Fed’s Meeting

This morning with the Fed on hold with their decisions on an interest rate hike, gold mining stocks have pushed much higher. My current holdings of GDX, GG, ABX, and even SIL (Global X Silver Miners ETF) have gained 3.6%+ and as much as 4.6%. There will be days that it will go down but I believe overall it will continue to rally as long as the Fed keeps pushing back the date for a rate hike and now it looks like they’re saying a December hike is at hand. In my opinion, once December comes and goes with the announcement of no interest rate hike, gold mining shares will soar along with the price of physical bullion.

Why I Believe No Rate Hike At All

I honestly believe that the Fed will not be able to raise interest rates anytime soon. Their balance sheet has grown to more than 4 trillion dollars since 2008 and there is no way that we could even afford a .25% rate hike let alone .1% in this environment. We can barely pay the current interest rates of close to zero percent on our national debt as it is. What makes people think that we could pay at any rate? This leads me to be a very strong investor of gold. If you have not read my reasons to why you should have gold in your portfolio for the future, you can find it here.

federal-reserve-balance_sheet

My First Gold Mining Dividend

I recently received my first dividend from GG (Goldcorp Inc) of $1.54 (monthly dividend) and while this doesn’t seem like much, I firmly believe that gold will do extremely well by the time I retire if I continue to reinvest. I am also very bullish on silver as it is viewed as a commodity and money. I will write more about it in the future but for now I’m focusing more on gold.

The price of gold mining stocks have taken a major beating the last couple of years where I find extreme value. Most dividend growth investors over look gold for their portfolios and I had the same inclinations at first but I’m starting to see a different light after receiving my first monthly dividend from GG.

Preserving Portfolio & Wealth

I am by no means a super gold bug (maybe just a little) but I am also a rational investor. In the beginning I wanted to sell my gold mining stocks when the price pushes higher to fuel my portfolio with more dividend companies but I’m realizing that I should make gold mining stocks a permanent allocation to my portfolio for insurance. Sure everyone won’t need gold as to a product manufactured from a consumer staples company but I view gold as money to weather the economic storms. If any volatility comes to the world markets now or in the future, gold is the best place to be as a safe haven.

The world has started dumping the U.S. Dollar. China, the world’s largest holder of U.S. treasuries (1.3 trillion) started to dump it starting back in August of this year. China’s foreign exchanged reserves plunged 94 billion dollars just in the month of August. Also, Russia and other countries have stopped using the dollar for oil trade. No one knows what will happen 5 to even 20 or more years from now but I’d like to be well diversified so that I can to protect my portfolio in the future.

History has shown that by having just 15% of gold mining stocks can protect your portfolio’s nominal value from plunging. Sure we dividend investors always say that we don’t care if our portfolio’s value drop but I tend to disagree. My strategy is to keep my overall portfolio’s value stable while investing in dividend stocks. I strongly believe that when it comes to the investment world, nothing should be ignored and the same should apply to gold.

So maybe give gold mining stocks a chance in your portfolio, especially at these rock bottom discount prices. As the world becomes more uncertain of its financial and economical situations, gold becomes that more attractive.