This 6.7% Payer Is Soaring. Here's Why It's A Sell

Money Investing This 6.7% Payer Is Soaring. Here’s Why It’s A Sell By Michael Foster , Contributor. Forbes contributors publish independent expert analyses and insights. Michael writes on high income assets that help people retire early. Follow Author Aug 25, 2026, 08:45am EDT --:-- / --:-- This voice experience is generated by AI. Learn more . This voice experience is generated by AI. Learn more . Summary Despite a 6.7% monthly dividend and strong recent performance, the GAMCO Global Gold, Natural Resources & Income Trust (GGN) is recommended as a sell. While its managers are skilled, the fund's long-term returns significantly lag the S&P 500. GGN invests in commodities like gold and oil, which historically underperform stocks long-term, as stocks represent productive companies. Over 33 years, gold and oil averaged 7.4% and 4.2% annually, versus 10.9% for stocks. GGN's 4.1% annualized return since its 2005 IPO pales against the S&P 500's 11.5%. The article concludes GGN is suitable only for short-term commodity exposure, with current conditions unfavorable for entry. Show More Close-up of a 20-dollar banknote (figuring president Jackson) and a gold bullion getty Today we’re going to look at a closed-end fund (CEF) that seemingly offers everything : A 6.7%-yielding dividend that pays monthly. A solid payout track record: This dividend has been delivered reliably for more than six years. Terrific performance, to the tune of an 8.5% annualized return over the last decade. And yet, this fund is a sell . If you own it, I recommend dumping it immediately. I know that sounds a bit strange, so let me explain why it’s a risky investment, and how other funds like it are, as well. Before I do, though, let me emphasize one thing: The managers of the GAMCO Global Gold, Natural Resources & Income Trust (GGN) are professional, qualified and good at what they do. GAMCO is one of a handful of legendary asset-management firms on Wall Street, and they have a stable of high-quality funds. And GGN itself has performed very well over the last year. GGN 12 Month Total Returns Ycharts A 25.6% return in one year is nothing to sneeze at, and if we go back a decade, we see that the fund has also posted a solid return of around 8.5% per year on average. GGN 10 Year Total Returns Ycharts MORE FOR YOU Then there’s that 6.7% dividend. It’s impressive both because it’s roughly seven times the payout on the typical S&P 500 stock and because of the nature of this fund: With big investments in oil , natural gas and gold , GGN pulls a healthy income stream out of low- (or no-) yielding commodity investments. Moreover, that income stream has held steady for six years, its last cut coming only in the early days of the pandemic, when interest rates (and inflation fears, a major driver of gold prices—more on that in a moment) crashed. So far so good. So why is this fund a sell? To get a hint, take another look at that 10-year chart above: Note how GGN was pretty much delivering flat returns until 2022? If we zoom in on that period, we immediately see the problem: While gold—shown in blue below by the performance of the SPDR Gold Shares ETF (GLD) , was starting to pick up with a pretty decent post-pandemic run, oil—shown by the United States Oil Fund LP (USO) , in orange—was down sharply. (Note that USO and GLD are used here to compare other investable options for tracking these prices with GGN.) GGN Lags Gold Ycharts GGN (in purple) was slightly down as a result, in between the gains in GLD and the steeper losses in USO. That’s pretty much what you’d expect. GGN Lags Long Term Ycharts Then over the last five years, things have actually gotten worse for GGN, with its return trailing both GLD and USO. Which brings us to the real problem with long-term commodity investing: If we take a look at how spot gold and oil prices do against the market in the long run (I’m talking 33 years here), we see that they’re nowhere near stocks in terms of total returns. Stocks Outperform Commodities Ycharts Over the long haul, gold and oil on their own have not done well compared to the S&P 500. This is how it tends to be: In the long term, stocks tend to outperform both gold and oil simply because stocks represent holdings in companies that produce goods and services. That’s inherently more profitable than commodities like oil and gold. Oil, of course, is valuable on its own as an input to the economy. That’s why oil companies and oil-rich countries find ways to produce oil to fill that demand. It’s also why companies outside the oil sector, as well as countries that don’t have large oil reserves, find ways to cut their need for crude. Those pressures more or less even out, with oil growing just 4.2% per year over the last 33 years, versus 10.9% for stocks. Gold is different: Its value has more to do with history and attitudes about inflation and future growth. This is why gold can soar in the short term (especially in periods of volatility), althou