XMFSinchiruna (28.56)

XMFSinchiruna's CAPS Blog

Gold Can Pay Dividends

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May 04, 2010 – Comments (13)

"Of the many recurring myths propagated by those who prefer to disparage gold over sharing in the profit from its continuing multiyear advance -- the claim that gold does not pay dividends -- is among the simplest myths to dispel."

"By thinking of gold solely as a metal bar (reportedly) sitting in a vault somewhere, many of gold's detractors fail to consider the enormous profit potential of the companies that mine the metal. Worse still, any bullish commentary on gold's price moves by precious-metal researchers like myself are routinely misinterpreted as clarion calls for investors to eschew stocks of all kinds and convert all of their capital to bullion. While I do consider some bullion exposure prudent, allocation is always a matter of personal preference. Indeed, my own precious-metals investment strategy is focused intently upon stocks in the mining sector."

"As increasing margins spill over into company coffers in the form of robust cash flow -- which is just now beginning to take shape convincingly here in the tenth year of this secular bull market for gold -- I contend that investors will enjoy a strong trend of increasing dividend yields that will finally lay this unwarranted criticism to rest. If you have forsaken gold as an investment asset because you are more of an income investor, I encourage you to keep a very close eye on the mining sector going forward."

Gold Can Pay Dividends

http://www.fool.com/investing/general/2010/05/03/gold-can-pay-dividends.aspx

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Fool on!

Sinch

13 Comments – Post Your Own

#1) On May 04, 2010 at 9:04 AM, alstry (35.90) wrote:

Sinch,

Do you have any thoughts about governments confiscating gold or taxing it 100%?

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#2) On May 04, 2010 at 9:26 AM, XMFSinchiruna (28.56) wrote:

alstry

Those issues will arise in one form or another, which is why selection of the safest jurisdictions is paramount.

They can't tax it 100%, because then the operators would walk away. They can nationalize operations, but most governments recognize their complete inadequacy and lack of preparedness for operating mines, so a royalty or profit tax (like the 40% tax proposed by Australia this week) are more likely scenarios.

If you're looking for a particular answer :) I will say that I have minimized my exposure to mining operation in the U.S. Despite the conventional wisdom, I believe the extent of U.S. indebtedness renders this an unsafe jurisdiction for gold mining from the perspective of likely versions of the Australian measure to come.

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#3) On May 04, 2010 at 10:10 AM, alstry (35.90) wrote:

Despite our past differences...you and I agree more than disagree....it is just that my online personality is much more disagreeable....and I like it that way;)

In life, it is much better to be a disagreeable shepard.....than an agreeable sheep.

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#4) On May 04, 2010 at 10:13 AM, XMFSinchiruna (28.56) wrote:

Wow.. David Faber just said a mouthful on CNBC. I wonder if he understands the ironic poignancy of his own words.

Referring to the European crisis, he characterized investor concerns as (and I'm paraphrasing here): "people are now beginning to wonder whether to solution to a debt crisis is by not taking on more debt".

Well, it's only been a year since I made that plea here.

When I was handed the megaphone while protesting the TARP vote on the capitol lawn in Washington DC back in late 2008, I led the crowd in a chant of "You can't cure debt with debt!".

I'm glad to see that the world is finally beginning to realize this simple truism.

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#5) On May 04, 2010 at 10:19 AM, outoffocus (24.49) wrote:

So let me get this straight. A CNBC analyst actually made a comment that used common sense and logic? Well its not enough to get me to start watching CNBS but its a start.

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#6) On May 04, 2010 at 10:22 AM, workfor (< 20) wrote:

Sinch,

What happened to you last post on "two steps ahead". Why was it taken down?

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#7) On May 04, 2010 at 10:27 AM, silverminer (37.43) wrote:

workfor

It's still there for me ... try again. Thanks for your insightful comment there!

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#8) On May 04, 2010 at 10:27 AM, leohaas (93.17) wrote:

Of course gold mining can pay dividends! I am long AEM, AUY, and VGZ at the time of writing and although their yields at this time aren't impressive, I'll gladly pocket them. And I sincerely hope they will increase over time.

But when people argue that gold itself doesn't pay dividend, they are right. There is no arguing with the facts.

That does not mean that gold is a bad investment. Gold holds value over the long time, unlike anything else. So people who are lookig for something that holds value should seriously consider gold. The real stuff, that is; not some paper investment that is based on gold...

Good to hear that alstry is still with us: who else would do the fearmongering here on CAPS?

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#9) On May 04, 2010 at 10:41 AM, outoffocus (24.49) wrote:

I will say that I have minimized my exposure to mining operation in the U.S. Despite the conventional wisdom, I believe the extent of U.S. indebtedness renders this an unsafe jurisdiction for gold mining from the perspective of likely versions of the Australian measure to come.

Does this mean I should consider dropping Southern Copper? Though their mines are mostly in S. America, they are based in the US.

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#10) On May 04, 2010 at 1:24 PM, silverminer (37.43) wrote: