From Seeking Alpha:
"GGN is a closed-ended equity fund launched by GAMCO Investors, Inc. and managed by Gabelli Funds, LLC. Before we go any further it should be known that the fund is not an investment in physical gold. It is an income investment that happens to be using gold, silver, and natural resource stocks to derive income off the selling of covered calls. If we look a bit further into the fund we find it also invests in companies principally engaged in the exploration, production or distribution of natural resources, such as gas, oil, paper, food and agriculture, forestry products, metals and minerals as well as related transportation companies and equipment manufacturers. The gold component is made up of investments in equity securities of firms operating in gold and natural resources industries including companies in exploration, mining, fabrication, processing, distribution or trading of gold, financing, managing, controlling or operating of companies engaged in gold-related activities."
Share price is $16.88 and it pays a monthly dividend of 14 cents...about 10% annually.
Article's Source:
http://seekingalpha.com/article/286403-how-income-investors-can-prepare-for-the-empire-s-declinebee
Comments
Ted
http://www.quantumonline.com/search.cfm?tickersymbol=GGN-A&sopt=symbol
http://www.cefa.com/FundSelector/FundDetail.fs?ID=99613
Don't like this very expensive CEF.
Ted
From the prospectus:
"HEDGING AND OTHER STRATEGIES
We currently expect to utilize hedging techniques such as interest rate swaps to mitigate potential
interest rate risk on a portion of our Financial Leverage. Such interest rate swaps would principally be
used to protect us against higher costs on our Financial Leverage resulting from increases in both shortterm and long-term interest rates. We anticipate that the majority of our interest rate hedges will be
interest rate swap contracts with financial institutions.
We also may use various hedging and other risk management strategies to seek to manage various risks
including market, credit and tail risks. Such hedging strategies would be utilized to seek to protect the
value of our portfolio, for example, against possible adverse changes in the market value of securities
held in our portfolio. We may execute our hedging and risk management strategy by engaging in a variety
of transactions, including buying or selling options or futures contracts on indexes and entering into total
return swap contracts. See “Risk Factors—Risks Related to Our Investments and Investment
Techniques—Derivatives Risk.”
We may use arbitrage and other strategies to try to generate additional return and protect the downside
risk of the portfolio. As part of such strategies, we may purchase call options or put options and enter into
total return swap contracts. A total return swap is a contract between two parties designed to replicate the
economics of directly owning or shorting a security. We may enter into total return swaps with financial
institutions related to equity investments in certain Master Limited Partnerships and Canadian Income
Trusts (as defined in the SAI).
In addition, we may engage in paired long-short trades to arbitrage pricing disparities in securities held
in our portfolio or sell securities short. Paired trading consists of taking a long position in one security
and concurrently taking a short position in another security within the same or an affiliated issuer.
With a
long position, we purchase a stock outright; whereas with a short position, we would sell a security that
we do not own and must borrow to meet our settlement obligations. We will realize a profit or incur a loss
from a short position depending on whether the value of the underlying stock decreases or increases,
respectively, between the time the stock is sold and when we replace the borrowed security. See “Risk
Factors—Risks Related to Our Investments and Investment Techniques—Short Sales Risk.” We do not
presently intend to short securities in the portfolio, and do not intend in the future, to the extent short sale
transactions occur, to have a net short position that exceeds 30% of our total assets.
To a lesser extent, we currently expect to write call options for the purpose of generating realized gains
or reducing our ownership of certain securities. We typically will only write call options on securities that
we hold in our portfolio (i.e., covered calls). A call option on a security is a contract that gives the holder
of such call option the right to buy the security underlying the call option from the writer of such call
option at a specified price at any time during the term of the option. At the time the call option is sold, the
writer of a call option receives a premium (or call premium) from the buyer of such call option. If we
write a call option on a security, we have the obligation upon exercise of such call option to deliver the
underlying security upon payment of the exercise price. When we write a call option, an amount equal to
the premium received by us will be recorded as a liability and will be subsequently adjusted to the current
fair value of the option written. Premiums received from writing options that expire unexercised are
treated by us as realized gains from investments on the expiration date. If we repurchase a written call
option prior to its exercise, the difference between the premium received and the amount paid to
repurchase the option is treated as a realized gain or realized loss. If a call option is exercised, the
premium is added to the proceeds from the sale of the underlying security in determining whether we
have realized a gain or loss. We, as the writer of the option, bear the market risk of an unfavorable change
in the price of the security underlying the written option.
4"
Thanks Scott, It looks like these hedging strategies are more common than one would like. I am trying to understand the "options" market a little better so thanks for this included explanation of how this fund hedges.
bee
Thanks Ted, I bookmarked both of these sites.
Looks like CEF = Central Fund of Canada which a CEF (Close End Fund) get high marks.
bee