Discussing Gold Equities with Squawk Box

Source:

"Dividend-paying gold companies will drive gold equity prices higher."

Contrary to gold equities' long-term trend of outperformance, gold companies have lagged the price of bullion since late April. Early this week, I visited CNBC headquarters and sat down with Squawk Box Anchor Becky Quick about one factor I believe will cause gold companies to rebound.

A few years ago, mining companies used their cash flows to acquire and develop resources; today, they are beginning to use cash to pay a dividend. During these volatile times with erratic stock prices, dividends have become popular. With dividend-paying gold companies, investors can participate in the stocks' appreciation and potentially receive monthly income. I believe this trend will drive the price of gold equities higher.

Gold, Investing, Frank Holmes

These companies—particularly those that have a growth in reserves and production—are equally attractive for the Gold and Precious Metals and World Precious Minerals Funds.

Watch the video as we discuss not only gold equities, but also the price of copper and the opportunity in China.

Read my previous blog about why I think gold stocks will "show their metal" soon.

Please consider carefully a fund's investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

Gold, precious metals and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors.

Holdings in the Gold and Precious Metals and World Precious Minerals Funds as a percentage of net assets as of 3/31/11: Barrick (Gold and Precious Metals Fund 7.17%, World Precious Minerals Fund 2.82%), Franco-Nevada (Gold and Precious Metals Fund 1.64%, World Precious Minerals Fund 0.14%), Goldcorp (Gold and Precious Metals Fund 7.49%, World Precious Minerals Fund 4.90%), Newmont (Gold and Precious Metals Fund 0.75%) and Starbucks 0.00%.

The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The NASDAQ Composite Index is a capitalization-weighted index of all NASDAQ National Market and Small Cap Index stocks. WTI is the abbreviation for West Texas Intermediate. The COMEX is a commodity exchange in New York City formed by the merger of four past exchanges—the exchange trades futures in sugar, coffee, petroleum, metals and financial instruments. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The NASDAQ Composite Index is a capitalization-weighted index of all NASDAQ National Market and Small Cap Index stocks. The Russell 2000 Index is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000. The Russell 3000 Index consists of the 3,000 largest U.S. companies as determined by total market capitalization. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. WTI is the abbreviation for West Texas Intermediate.

Frank Holmes
CEO and CIO
U.S. Global Investors

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