I had mentioned that I might take a modest position in a Gabelli CEF preferred and I have done so this morning. My buy was very modest in size.
I nibbled on the GAMCO Global Gold Natural Resource 5% perpetual (GGN-B) with a current yield of 6.05% and trading around $20.67–which is the price I paid as well.
Here are my thoughts on this issue. It is rated A2 by Moodys and has a asset coverage ratio of 917% (as of 1/31/2025)–so we have safety covered in spades. The current yield of 6.05% is over my hurdle of 6%—but on top of this IF we get interest rates down somewhat (whatever that means to each of you) this issue has potential for 4% capital gain (or more) in the next year.
I am now leaning toward rates moving lower. Walmart earnings seem to indicate the economy is softening a bit. Employment remains relatively strong, but I am starting to believe we are going to have issues ahead as I am thinking the administration will lower headcounts on the government payrolls and while this in itself may not be a massive number (although there may be cuts in the private sector as well) in combination with some level of savings through spending cuts the economy will slow. For the time being this will be viewed positively by bond investors and will outweigh my never ending concern on the deficit spending (for now).
Now if we get rates moving higher based on the Personal consumption expenditures number which is released next week it will mean I am too early–but this position is small and little damage will be done.
Question for those who own it – are the GGN-B distributions being reported as Qualified Dividend Income? Or something else? I wasn’t able to find any specifics on the website.
HERE’S A LINK WITH THAT INFO:
https://www.gabelli.com/funds/closed_ends/important_tax_info
Awesome! Thanks so much!
Is this the Anxiety Dump page? Asking for a for my id.
I find myself using my loose change to buy Gabelli every once in a while. Oh.. only a 100 dollars in dividends today. Ok.. GDV-K. Whatever.. Not in the mood to hunt for something with only 100 bucks to spend.
Slowly.. it just creeps up in the amount I own and high quality. Sock drawer stuff.
Buying this issue is similar to buying a long term CD or annuity you get a fixed return no matter what the economy does. With the added bonus that you can sell for a profit if the underlying price goes up. But no loss if it goes down you’re still getting the dividend you paid for if you hold. Only loss is maybe you could’ve bought cheaper if you waited but that’s true for any fixed income.
martin g – yes it just ups the yield on a little of my CD money–will nibble more at the right time and price.
MY crystal ball has clouded up and sometimes I think it may have cracked trying to deal with all the scenarios and chaos currently present. Peering through the clouds and the cracked glass causing double vision I see employees, contractors, and probationary personnel in the federal government getting pink slips right and left and cutbacks in the private sector maybe on deck too. Think all the cutbacks in the various private and public (universities, non profits, state and local governments etc.) caused by the loss of federal grant monies. Add in companies cutting headcount due to softening sales / revenue as people lose their jobs. So yes, the labor market may soften and unemployment go up. Add on top of a softening economy a rise in inflation due to all the tariff talk. The last data indicates inflation is rising again. An economy entering recession plus inflation leads to STAGFLATION, which is a scary thing. Lord knows where interest rates go with all this mess. Lets hope my use of a defective crystal ball is skewing what I see! We do not want to go where this may lead too…….
dj–down deep I am really worried about a recession this time—not here yet, but a recession may be more difficult than ever to get turned around this time–lots of moving parts and pieces. The Fed has bought a little room for quantitative easing–but as you note if there is inflation QE may simply stoke the flames of the fire.
The contrarian deep down inside is telling me to batten down the hatches, instinctively as too much optimism out there. So I do that.
However, I am also cautiously optimistic, in fact I am ecstatic to see a problem (gov’t spending) finally getting some real attention (never thought I would see the day, did you?). Agree if we remove employees from non-productive roles (i.e. government) to productive ones we will see a net increase in economic output overall. I think the needle will be threaded by the current administration but might be a bumpy ride. An end to war, end to wasteful spending overall and additional revenues (tariffs) should support lower rates/inflation. Or the adjustment period causes a mild recession, and we get lower rates from that. Or they break something and “fix it” with more printing which is why I also own gold.
Tim …… Lets just hope my crystal ball is so clouded and crack it is totally unreliable. I much prefer to be completely wrong about our direction. I’m spending the week with my Dad in his coastal NC Intracoastal Waterway cottage. We got brushed by the ice storm from the southeastern storm as it blew by North Carolina. Lost power last night and got it restored around lunch. Dad has been filling me in on his efforts to find a good paying job in the period from 1946 to the mid fifties that would support the family. Most interesting. Life so much different then compared to now. We will celebrate Dad’s 106th birthday in about three weeks. Wow ….. . I would not be surprised if we have to prove to Social Security that he’s still alive and kicking with all the publicity stirred by DOGE. Maybe they will stop the monthly checks to anyone that old until they can prove they aren’t dead! Things have changed rapidly!
Dj—106? That is a long life. Keep picking his brain about the ‘olden days’. My dad died very young and immediately I moved across the country for teh next 14 years–never got to have a really good long conversation about the olden days and I sure regret it. Back in the 70’s of course we didn’t have the internet/cell phones etc and I can remember having to have to ration phone time so didn’t even calls mom and dad except on the holidays. You are so lucky to have dad around yet.
Tim,,,,, Amazing the stories I have. Dad has no dementia etc. Many stories about growing up in the Great Depression and WWII that I have heard many times. They never get old and some are pretty funny. Had been in the army for months when Pearl Harbor was bombed and wound up in Patton’s Third Army. Many stories of the Third Army including the Battle of The Bulge and touring Buchenwald Concentration Camp right after it was liberated by the Third Army. He flew Piper Cub like planes as a Forward Artillery Observer. He has had quite the life. Last year the French Government sent a delegation from the Consul Office in Atlanta and awarded him the French Legion of Honor. He comes from a family of long lived folks.
Wow. Those stories and experiences would be so beneficial to current/future generations. Ever considered tastefully recording those conversations with your Dad and posting on youtube for posterity?
Agree with you on this one Tim. Added a little more to my GGN-B holdings following your note. I am now “topped off” on my recessionary rates basket.
Just… in… case
Dan–will add more if things look right in a few weeks or months. I really want that capital gain upside which means I need rates to head lower.
Tim, with this kind of coverage and if you believe gold will give you a little bit of security why not just buy GGN?