Gold, Negative Interest Rates & Dividend Paying Miners

Many years ago when I was first starting out in the work force, my mother always told me to put your money in Canada Savings Bonds. Giving away my age, at the time back in the 1970's I was getting as high as 19% on CSB's and even 90 day GIS's. Of course interest rates on loans and mortages were just as high back then to. I remember hearing about people having mortgages at 22% and even a bit higher. That was a time that was known for high inflation and by 1980 gold had hit an all time high of $800 and some dollars.

Today however we see the opposite. We have gold hitting all time highs but the central banks say there is no inflation so no need to raise interest rates and we see for the first time in history, zero percent or even negative interest rates. This is good for those who wish to borrow money to start a buisness, buy a home etc. but what about the everyday person who wishes to just save a bit money or invest without the risks associated with some many types of investments? There are those who want to invest in something that still has a guarentee of some kind. This is where gold comes into the picture.

higher gold prices

Now gold as a metal investment really only does one thing for the person who invests in it. It preserves capital as it always holds value. Gold on one hand is like insurance that protects your wealth, but on the other hand gives nothing in return for investing in it. It does not pay you a dividend and you can only profit from it when you actually sell it. However year over year gold has returned very healthy percentages compared to a lot of big name stocks or other investments. The big plus with gold is it will never go broke like a business and is not really effected by the day to day drama of the financial world activity we see on the news each day. After all it has been used as money for thousands of years. As you can see by the graph below, gold has given investors anywhere from 10%-15% annual return for the past 15 years. But still in order to benefit from that percentage gain you would need to sell a portion of your investment each year and as time went on your actual investment would diminish.

annual return on gold

The other way of investing in gold is with gold ETF's that will track the price of gold and are supposedly back with actual phyical gold. This is widely disputed by many who say that ETF's like the GLD does not nearly have enough gold to back the actual volume of shares. Then of course there is the shares in mining stocks themselves and now that gold has risen to new heights, a lot of the bigger miners have started to actually give investors a dividend which has not been seen for many years now. Just this past week I noticed that Yamana Gold has increased their dividend 50% to $0.105 as it raised its production guidance for 2020. Below is a short list of gold miners that are now paying dividends.

  • Barrick Gold - Quarterly Dividend/Yield $0.08/1.16%
  • Osisko Gold Royalties - Quarterly Dividend/Yield $0.05/1.22%
  • Kirkland Lake Gold - Quarterly Dividend/Yield $0.13/1.05%
  • Kinross Gold - Biannual Dividend/Yield $0.03/0.70%
  • Franco-Nevada - Quarterly Dividend/Yield $0.26/0.75%
  • Agnico Eagle - Quarterly Dividend/Yield $0.20/1.02%

As gold prices increase we can expect to see miners becoming more profitable and therefore hopefully increasing these dividends to shareholders. Also as the company become more profitable the stock price should increase giving the investor / shareholder a double whammy for their investment.

So if you are one of those who like myself have been searching where best to invest some dollars that will give me a decent rate of return but the added security of gold, these are a few options for you to look at. Good valued miners will either get bigger or get bought out but the end product gold, will always be around.

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