In the past two years, we've traded GAMCO Global Gold, Natural Resources & Income Trust (GGN) successfully, booking gains of 45% and 38% on two separate occasions. We are doing so again.
Shares of the fund are right back down to where we bought in last year, at the $14 level, while providing us a current dividend yield of 12%.
GGN is trading at an 8.18% premium to net asset value (NAV), nominal by historic measures, and pays monthly.
GGN seeks high current income with capital appreciation through investment in equity securities issued by gold and natural resources industries and through the use of an options strategy -- and currently using about 9.25% leverage to generate this handsome payout.
Top holdings include Newmont Mining, Goldcorp, National-Oilwell Varco, Gold Fields Ltd., Barrick Gold, Randgold Resources Ltd. and Newcrest Mining Ltd., with a total of 117 holding in all. Annual turnover is about 66%.
I think gold prices could easily shoot back up to $1,800 or higher over the next year, which would catapult shares of GGN back up to $18, my one-year price target.
In doing so, we'd book a 28% capital gain and take in 12% in dividends for a total projected return of 40%. That's a very probable scenario given the backdrop of easy money policies that central banks are embracing.
Any threat of monetary inflation is bullish for the gold mining sector, so let's take a position in the Aggressive High-Yield Portfolio. Buy GGN under $15.
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