After breaking above resistance earlier this year, gold has been using the $1,560.00 price level as support and has resisted falling below this level numerous times over the past few months. The commodity is currently lingering around this price, keeping gold investors on their toes.
As I enjoy the occasional closed-end fund (CEF) investment for their diversification and frequent deviations from NAV, The Gabelli Global Gold, Natural Resources & Income Trust (GGN) and ASA Gold and Precious Metals Limited (ASA), two CEFs whose income and capital appreciation strategies focus primarily on gold and related exploration, are also at a relative crossroad, potentially trading at a discount.
The Gabelli Global Gold, Natural Resources & Income Trust holds 89.09% of its portfolio in gold and natural resources related equities. A few of the fund's top holdings include Barrick Gold Corporation (ABX), Goldcorp, Inc. (GG), Newmont Mining Corporation (NEM), Newcrest Mining Limited (NCMGF.PK), and Franco-Nevada Corporation (FNV). The remainder of The Gabelli Global Gold, Natural Resources & Income Trust's current portfolio includes investments in U.S. Treasuries and debt related securities.
The fund is currently trading at a 2.90% premium to NAV and averages, over a 52-week period, a 4.21% premium to NAV. The Gabelli Global Gold, Natural Resources & Income Trust consistently pays a $0.14 per share distribution amount per month, equating to a 12.78% annualized distribution rate.
ASA Gold and Precious Metals Limited, though also invested in gold-related securities focuses its investments primarily on mining equities. Currently, 99.44% of the fund's investments are in gold and platinum mining stocks with its top holdings including Barrick Gold Corporation (ABX), Goldcorp Inc. (GG), Newcrest Mining Limited (NCMGF.PK), Randgold Resources, Ltd. (GOLD), and Anglo American Platinum Ltd.
The fund is currently trading at a 6.63% discount to NAV and averages, over a 52-week period, a 8.27% discount to NAV. ASA Gold and Precious Metals Limited pays a semi-annual distribution to investors, averaging a 1.74% annualized distribution rate, generally a $0.34 per share distribution per year.
Both CEFs are trading in a somewhat similar pattern as gold, showing signs of support in the past few months.
The Gabelli Global Gold, Natural Resources & Income Trust appears to be using the $13.00 price level as strong support and, like gold, has been consolidating just above this level over the past few months. The trust has not traded below this $13.00 support level for more than a few sessions since early, 2009.
ASA Gold and Precious Metals Limited appears to be trading in a similar pattern, using the $21.00 price level as support. Though not an extremely strong support level, the trust bounced off of this price in May this year and is, once again, consolidating near this level.
Admittedly, with its stronger focus on gold, its diversification in debt securities, and its enticing monthly distributions, my confidence lies more with The Gabelli Global Gold, Natural Resources & Income Trust than with ASA Gold and Precious Metals Limited. Both trusts, however, will likely see a significant climb in the coming months if gold does, as many anticipate, bounce off of its $1,560.00 support level and continue its long term uptrend.
Additional disclosure: Sources: kitco.com, finviz.com, cefconnect.com