Dividend expert Tim Plaehn’s #1 investing rule is “if it doesn’t provide income, it’s not worth owning.”
This has kept him from investing in gold for years until he recently discovered a little-known way to get paid from the metal through something he calls “Friday Golden Payments.“
The Teaser
What Tim has discovered is so powerful, it can turn a dormant asset into an income machine.
Income guy Tim Plaehn is the lead dividend investing analyst at newsletter publisher Investor’s Alley where he edits no less than seven income-focused newsletters!
We have previously reviewed his Paycheck ETFs and Daily Dividends teasers.
Historically, going all the way back to the Great Depression in 1929, there have been four types of investments that have gone up, when just about everything else went down.
The first is U.S. Treasury bonds, which have long been the knee-jerk ‘flight to safety’ trade, although things may be a little bit different this time around.
The second and third are land and consumer staples, respectively. Land has been a source of wealth for centuries, dating back to medieval times, when the largest landowners were generally the wealthiest individuals. Meanwhile, consumer staple stocks have outperformed for the simple reason that we still need basic necessities like bread, butter, and toilet paper even during the worst of times.
This brings us to the fourth, gold.
It’s the hardest real asset in the world and if we look around at the current state of things – geopolitical tension, war, a depreciating dollar. The timing of Tim’s trade could be right on the money.
The best part, according to Tim, is that it’s also the easiest way of playing gold. No risky miners, options or taking physical delivery of metal, just one simple trade inside our brokerage account.
So, what exactly is Tim teasing and how does it deliver a $1k payout from 28 times less money than the average dividend stock?
The Pitch
It’s name and ticker are revealed inside a new report called “My #1 Income ETF for the gold rally.”
The report is included in the subscription welcome package for the ETF Income Maximizer newsletter. It costs $49 for the first year (normally $99) and comes with a one-year money-back guarantee.
What in the World is an “Income ETF?”
A bundle of assets.
This is the simplest way to sum up Exchange Traded Funds (ETFs).
Whether it’s stocks, bonds, commodities, or even alternative assets like gold, an ETF’s purpose is to give investors diversified exposure to a particular asset class.
Most are passive, automatically tracking a particular index, but some actively-managed, strategy-based ETFs buck the norm.
The latter is what Tim is teasing here and he calls them a “game changer.”
Over the past five years many investors, both retail and institutional, have woken up to the benefits of owning at least some gold.
For economic reasons cited earlier, both central banks and retail investors have been net buyers of the shiny metal for decades and years, respectively.
Such buying would likely have been even greater if gold came attached with a coupon like government bonds. Gold income ETFs make this possible by employing covered call options strategies to generate weekly income.
Tim mentioned earlier that options weren’t part of the deal, but I guess he only meant that we wouldn’t be the ones selling the puts and calls, which is left up to the ETF manager.
The Future of Income
A decade ago there was a grand total of ten income ETFs managing $1 billion.
Today, such vehicles manage more than $120 billion with BlackRock forecasting an increase to $650 billion in assets under management by 2030.
There are more than ten gold income ETFs alone, indicating that even in a rising rate environment, the demand for a stable asset with a higher than average yield will always be there.
The only question that remains is what specific gold income ETF is Tim teasing?
Revealing Tim Plaehn’s #1 Gold ETF
Gold is breaking out again and we could be collecting real income from it.
This is Tim’s final “go-home” message before once again pitching us his special report.
However, we did get not one, but two tangible clues about the identity of his #1 Gold ETF before his relatively brief presentation ended.
- It trades for just $15 a share
- Delivers up to 46% in annualized, weekly payouts
Given the small universe of U.S. gold & gold-miner income ETFs, we were able to pinpoint Tim’s top play. It’s the YieldMax Gold Miners Option Income Strategy ETF (NYSE ARCA: GDXY).
- GDXY currently trades for around $12 a pop, but it was trading for $15 earlier this year.
- The 46% figure isn’t a set dividend yield, but rather an annualization of recent weekly distributions, which falls in the range of 46%-51% for GDXY.
Make $1,127 Every Month from Gold?
Tap into the gold rally, receive income, kick back and enjoy.
If only it were as easy as Tim makes it out to be, but unfortunately, it’s not.
At least not the income generation part, which is the most important part of all, per Tim.
Income is generated by selling call options against gold futures and equities owned by the fund to a counterparty. The premiums collected from said counterparty are then used to make distributions to investors.
Employing such a strategy means gold upside participation is capped in exchange for immediate premium income.
But that is not all…
Execution impacts returns (income) and it varies across different market environments. For example, if gold goes down, so too will premium income.
So at the end of the day, we end up with capped upside during good times, less income during bad times, and capital depreciation during most times, with the ETF down 30% year-to-date.
If this wasn’t enough, distributions are also treated as a return of capital and thus taxed as income rather than as dividends.
Yes, so-called “Golden Payments” are made every Friday, but as we just showed, these are highly variable and declining over time.
If you’re solely after extra income, I can see why the headline yield would be an attractive proposition. But if preserving and compounding capital, while also getting paid some dividends on the side is more your thing, then far better investments exist for that.
Quick Recap & Conclusion
- Dividend expert Tim Plaehn is teasing a little-known way to get paid from gold through something he calls “Friday Golden Payments.“
- What Tim is actually pitching are Gold income ETFs, which use covered call options strategies to generate weekly income.
- The name and ticker of Tim’s top pick are revealed inside a new report called “My #1 Income ETF for the gold rally.” It’s included in a subscription to the ETF Income Maximizer investment newsletter, which costs $49 for the first year (normally $99).
- Based on the price per share and annualized payout clues, Tim’s #1 Gold ETF is YieldMax Gold Miners Option Income Strategy ETF (NYSE ARCA: GDXY).
- GDXY delivers on weekly income, but leaves us with capped upside during good times, less income during bad times, and capital depreciation during most times.
What has been your experience with income ETFs? Share it in the comments.