How To Use Gold Planting To Produce Yields
Over the past 30 years, stocks have provided the greatest returns of any asset class. But the commodity has made a comeback in the past two years, as gold’s much-heralded performance in stocks has been heralded.
Since the start of 2024, the precious metal has gained 117%, while the S&P 500 has gained 46%.
Ownership of virtual instruments comes with caveats. It may require insurance, and in the case of gold IRAs, storage in IRS-approved storage facilities. But perhaps the most glaring disincentive to owning real gold is that, as a tangible asset, it doesn’t produce yield – or income from investments.
However, for investors looking to gain exposure to gold while generating income, there are workarounds.
A precious metals leasing platform that pays dividends in gold
Monetary Metals is a gold mining marketplace that brings together investors and professional businesses that need precious metals (eg, jewelers and refiners). In turn, investors can earn between 2% and 5% per year on their gold by leasing it to those businesses for inventory management.
Notably, that yield – currently standing at 4% – is paid in gold.
For those who have 10 ounces of gold or have the US dollar equivalent of 10 ounces of gold, the company offers free storage and offers lease agreements of up to 12 months. Long options are available to accredited investors. As a market maker, Monetary Metals finds borrowers (renters) of gold, charges them a small spread and, from that amount, pays distributions to investors (renters).
According to Keith Weiner, CEO and founder of Monetary Metals, this approach allows investors to use their yields to accumulate more gold rather than generate dollar income.
“Everything we do is tied to gold,” Weiner said. “If you put 10 ounces into the lease, at the end of the year, you’ll have 10.4 ounces.”
Monetary Metals pays a monthly distribution, although the yield can fluctuate depending on market conditions.
The platform is not ideal for investors who want easy access to their property, and contracts stipulate that tenants should not expect money until the end of the 12-month term. But this concept is not the same as crypto staking, where some assets are committed to a closing time in exchange for a yield paid in the same denomination as fiat currency.
However, he points out a major difference: Crypto is extremely volatile and prone to dramatic price crashes, while gold is volatile and rarely experiences dramatic price swings.
“We go through real businesses with real brick-and-mortar stores and real gold inventory, which we guarantee,” Weiner said. “We’re funding a business that’s doing something in the real world.”
At the end of the term, Weiner says most of the Monetary Metals tenants expressed interest in renewal. Currently, the company boasts a yield rate of less than 1%, which bodes well for investors, whose gold remains secure while earning a steady yield.
“Once they’re in, they want to stay and treat you like money,” Weiner said.
Investing in dividend paying gold mining stocks
Shares of companies involved in gold exploration and mining are set to gain more than that in 2025. More growth could continue: According to Ethan Feller, stock strategist at Zacks Investment Research, the fundamental catalysts responsible for gold’s big gains last year are still in place.
“This rally is not motivated by speculative exaggeration or the pursuit of short-term momentum,” Feller wrote on Jan. 14. “Instead, he points to a series of structural changes in world markets that have created a strong bid for gold.”
Feller points to headwinds such as repurchasing from central banks and institutional investors, as well as continued sovereign risk and global debt concerns, as drivers for the precious metal.
Specifically, he notes that “even if the gold bull market were to stop, the choice of gold mines continues to offer compelling independence. [opportunities].”
Over the past year, gold miners AngloGold Ashanti and Kinross Gold have seen shares rise 265% and 225%, respectively, while paying dividends of 2.21% and 0.42%, respectively.
According to Feller, many of today’s leading miners are focused on streamlining capital, improving capital return and efficiency while reducing debt. As a result, mining stocks reduce investors’ risk exposure while maintaining the upside potential of gold.
“Gold mining is not just a commodity but it is increasingly synonymous with long-term growth and an option focused on high gold prices,” Feller said.
When buying shares of those companies that pay dividends, investors have access to both gold appreciation and yield.
High yield call ETF
Last year, the number of US-listed exchange-traded funds, or ETFs, exceeded the number of US-listed stocks. With the growing popularity of ETFs, niche products have emerged, including funds that prioritize yield while holding physical gold or gold mining shares.
These ETFs use covered calls – one of the most common options strategies – to make money by selling call options against puts for premiums. They then distribute those premiums to investors in the form of dividends.
“The odds are you’re leaving the stock low,” said Jason Kephart, chief executive at Morningstar, in an interview with the financial firm.
But for investors who are comfortable with yield rather than growth, hedged ETFs that hold physical gold or shares of gold mining companies can generate double-digit yields.
The NEOS Gold High Income ETF, for example, has risen 18% in the past year while paying dividends and currently pays 12.53%.
ETF covered calls present significant risk to investors’ portfolios, especially during market downturns. Additionally, these ETFs are actively managed, which means they carry higher expense ratios than usual. But those costs are greatly reduced by high yield stocks.
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