"Brett, how you hanging in there?" My CPA leaned into his computer on our latest Zoom call.
"Well, every time Gavin Newsom talks, my life seems to get a bit worse." (The governor of California had just announced that public and private schools would not open in the fall.)
He cracked up. "That comment reminds me of a column you wrote years ago about (then Fed Chair) Janet Yellen. Something about Yellen yapping and closed-end funds (CEFs) rising?"
"Right. Poor Janet. She sure was level-headed compared to (current Fed Chair) Jay Powell. Every time Powell speaks, gold pops!"
The reason is obvious. Our money supply has soared by $3 trillion since March thanks to Powell's printing press:
The Largest Money Creation Event, Ever
Some have comically called this a great "economic experiment." The federal government collected $3.5 trillion in tax receipts last year. So, we've essentially had a "bonus year" of revenues appear, for free!
Problem is, there is no such thing as a free lunch in finance. Precious metal investors tend to sniff out monetary profligacy first. And boy, the "hard money" crowd has been waiting 49 years for this moment! It was 1971 when Richard Nixon took the dollar off the gold standard for good, while Treasury Secretary John "Typhoon" Connally famously told the world:
"The dollar is our currency, but it's your problem."
While the weak dollar is perhaps not a problem for US-based investors, who will "all become poorer at the same rate," I do think we contrarians can aim higher. That was my goal just five weeks ago when I mentioned my three favorite gold and silver stocks. And wow, did those picks soarâup to 29% in just 35 days!
Gold and Silver Dividend Payers Rocket Higher
The recent "hockey stick" increase in dollars, when measured against a steady supply of gold, means higher gold prices in dollar terms. This is exactly what is unfolding with the yellow metal on the verge of all-time highs. Powell's printer, once again, makes history!
Plus, the three stocks above all mint money when metal prices head higher. Royal Gold, for example, is my kind of companyâit's high on assets and cash flows, and light on the number of humans that work there.
Royal owns royalty rights for gold production. It doesn't actually mine anything. The firm leaves the heavy lifting (actual mining) to its partners, so it collects an impressive $18.4 million dollars per year per employee.
The "per employee" rake at Royal and other top-notch royalty firms like Wheaton Precious Metals (WPM) and Franco-Nevada Corp (FNV) is only going to get better with metals in a raging bull market. Before we fear we're missing out, let's remember that no market travels in a straight line. There will be pullbacks along the way, and with them will come buying opportunities.
Looking for timely dollar-proof buys right now? How about a few that yield as much as 9.7% and provide protection from a dollar that is being devalued.
As individual income investors, we can search the globe for cash flow. And our "Go Anywhere Bond Funds" have the go-ahead from us to buy safe bonds anywhere in the world. This is especially helpful during periods of likely dollar weakness.
Our overseas sweetheart, the Aberdeen Asia-Pacific Income Fund (FAX) shines a bit more when the dollar declines. It buys government debt from countries like Australia, which doesn't own a printing press as "advanced" as ours.
FAX isn't a moonshot play like the metal firms we highlighted earlier, but it is a steady monthly payer that'll fund your retirement portfolio to the tune of 8.4% per year. Its yield is a bit lower than it was five weeks ago because FAX itself has benefited from the beleaguered buck, returning 6.4% (including its monthly dividend) since my inflation piece:
FAX Likes the Weak Buck
I also admire FAX for its excellent track record. Since its inception in 1989, the fund has delivered 671% total returns. It truly is the type of fund that you can buy, bank its monthly dividends and never have to worry about.
And FAX has company. Here are a few more overseas bond funds that pay big yields and provide protection from a falling dollar. Notice that all of these funds are trading at a generous discount to their net asset values (NAVs). This means that when we buy these funds we are banking their bond portfolios for as little as 83 cents on the dollar:
Underappreciated funds like these are the secret to retiring on 10% dividends that are paid monthly. Imagine how sweet it would be to collect $4,000 or more in dividends per monthâevery month!âand also to increase your capital thanks to funds that perfectly play the falling dollar.
Are we OK with becoming poorer at the same rate of our fellow Americans? Of course not. These 10% monthly payers are the secret to retiring comfortably today while we safely grow our capital for tomorrow. If you're interested in my "10% Monthly Payer Portfolio," I'd love to continue the conversation. Click here and I'll share my latest dividend research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.