So, you’e a cashflow investor. And you want to be a part of the commodities boom. The problem is that a lot of agriculture and resource stocks don’t pay dividends. Many of them can’t, I imagine, because they’re capital-heavy and need to reinvest all funds into their future projects because the products that make them profits take years to come to market. Also, there are a lot of start-up companies in this resource boom that are trying to take advantage of opportunities with China’s growing economy — companies like Spur Ventures. Such outfits won’t be paying a dividend, if at all, for a long time.

So you might be surprised, once you’re disgruntled enough with low distributions from your metals ETFs, that certain mining stocks do pay dividends - even if the yields can be quite small. Rather than making pennies from the ETF - and paying small management fees to do it - you might be better off just buying the gold and silver companies you like. And the dividends could be higher, too. I’ve done some of the legwork for you. Here’s my list of the

top eleven gold mining stocks that pay dividends:*

Gold Fields Limited (GFI:NYSE) - Price: 11.15 - Yield - 1.5%
Freeport McMoRan Copper & Gold Inc. (FCX: NYSE) - Price: 117.03 - Yield - 1.5%
Rio Tinto PLC (RTP: NYSE) - Price: 479.00 - Yield: 1.4%**
BHP Billiton Ltd (BHP: NYSE) - Price: 83.62 - Yield: 1.39%**
Newmont Mining Corp (NEM: NYSE) - Price: 48.95 - Yield: 0.82%
Yamana Gold Inc. (YRI: TSX) - Price: 14.89 - Yield: 0.80%
Barrick Gold Corporation (ABX: TSX) - Price: 40.96 - Yield: 0.70%
Goldcorp Inc. (G: TSX) - Price: 41.37 - Yield: 0.40%
AngloGold Ashanti Ltd. (AU: NYSE) - Price: 29.96 - Yield: 0.44%
Agnico-Eagle Mines Limited (AEM: TSX) - Price: 66.02 - Yield: 0.30%***
Kinross Gold Corporation (K: TSX) - Price: 19.87 - Yield: 0.20%

*All share prices are approximate, taken as of last Friday’s (June 20th, 2008) close. For simplicity’s sake, I’ve just quickly “ranked” these by their dividend yields. You’ll have your own criteria, of course.
**Runs its own DRIP but has high fees, though, for reinvests and OCPs.
***Agnico-Eagle Mines Ltd. also runs their own DRIP. No fees, but it is, however, less convenient than most DRIPs - they only allow optional cash purchases once a year and they only reinvest their dividends once a year (because they only pay dividends once a year, usually in March. If you don’t mind keeping up with the timing, though, and you can invest a good chunk at a time, the DRIP could still suit you just fine).

There are other large gold companies of course, like Harmony Gold, but they do not pay dividends. You should note that if you’re looking to buy gold and silver stocks directly, now might be a good time - many of them are down considerably from their 52-week highs (even Rio Tinto is currently only trading around 80% of its yearly high!).

What do you think?  Are you invested in gold stocks?  Think they’re not worth it?  I’d love to hear from you in the comments section below.  You also might be interested in reading my posts on silver stocks.  If you liked this article, subscribe to my RSS feed for updates and more articles like it when I cover gold stocks in the future.  Just go to the little orange square tab that you see in the floating sidetab, or beneath my site’s logo.

In a previous post, I said that I thought the best way to invest in precious metals was to go through GoldMoney (read what I had to say about GoldMoney here). However, I realize this choice may not be the best for everyone all the time. There might be some reason that you’d prefer to hold physical gold, for example. So in this post I’ll consider the basic ways to invest in gold and silver for those who live in North America (I’ll look at other parts of the world in a future post). I’ll cover some of the top metals dealers and their basics so you can get purchasing your metals right away.

Located in Canada

Border Gold (Surrey, BC and Blaine, WA) - Been around since 1968, this independent market-maker buys, sells and stores for Canadian and American customers as well as customers overseas. Transactions and records are all kept in Canada. Non-Canadian citizens can arrange for storage in Canada as well. Prices tend to be a bit cheaper than Kitco. The owner, Michael L. Levy, publishes frequent commentary on the gold markets from his website. They’re even open on Saturdays from 9:00-3:30 Pacific ST. They do not accept personal checks or credit cards. Customer service is great: they respond quickly by email.
Current price of Gold Maple Leaf 1oz.: $951.14 (CAD)

1-888-312-2288 ext. 7
info@bordergold.com

Kitco (Montreal, QC and Rouses Point, NY) - Established in 1977, Kitco is much larger and engages in a wider range of metals business than dealers like Border Gold that basically just buy and sell metals. Kitco supplies sheet, wire, grain and Rhodium to jewelry manufacturers as well as refining metals for the dental industry (your gold tooth, maybe). They’re partnered with GoldMoney, too, so you can buy and sell goldgrams from their website if you already have an account with GoldMoney. Kitco also runs a forum where you can discuss all things precious metal, and has a section of their website devoted to live updates on news from the industry. It’s really a one-stop-shop for precious metals. They do not accept personal checks or credit cards as payment.
Current price of Gold Maple Leaf 1oz.: $956.65 (CAD)

1-866-925-4826
no email: use website contact form

Located in the U.S.

Monex Precious Metals (Newport Beach, CA) - Founded in 1967, Monex buys and sells gold, silver, platinum and palladium (as do Kitco and Border Gold too). Sells Vienna Philharmonics as well as 90% and 40% silver coin bags. Monex will also give you a loan for up to 80% of your purchase through the Monex Credit Company! Metals purchased are registered in your legal name, and not held through Monex, so your investment won’t depend on Monex or any other corporation’s financial condition. They take payments in bank wire and personal or bank checks (sent overnight delivery). Their trading hours run from 5:30am to 4:30pm Pacific ST. Monex also offers several free subscriptions, reports and commentary on the markets from their website.
Current price of Gold Maple Leaf 1oz.: $923.90 (USD)

1-800-444-8317
info@monex.com

Apmex (Edmond, OK) - American Precious Metals Exchange is a more recently established and growing online dealer that buys and sells much more than the standard menu of gold, silver, platinum and palladium, although it has all the standard selections from the U.S. and Canadian mints there as well. Apmex also sells antique and rare coins, old stock certificates, civil war tokens and other tokens and medals. They do not offer pooled accounts. Minimum order is $50.00 per transaction, regardless of the purchase, and there are discounts on orders above $25,000. Cancellation of orders costs $35.00. To place an order, you must first open a free account with Apmex which will allow you to track your order. Aside from fees for shipping and insurance, there are no additional or hidden fees or commissions: the price you see is the price you get. Payments must be sent within 24 hours and received within 5 business days of the transaction, and credit card info is required in order to lock in the order price. In addition to the usual forms of payment (bank wire, bank checks, etc.) they will also accept credit card payments!
Current price of Gold Maple Leaf 1oz.: $921.55 (USD)

1-800-375-9006 (M-F, 7:30-4 Central ST)
(405) 330-4222 (local number)
info@apmex.com

California Numismatic Investments (Inglewood, CA) - Since 1956, their Los Angeles store has been a famous coin and bullion exchange. CNI does not use commissioned salespeople, so you don’t have to worry about feeling pressured into buying. You can order your gold by phone too. They take payments by bank wire (fastest), cashier’s checks, money orders - and they even take personal checks (held for 3 weeks). Orders require a signature before delivery and are packaged so as to not reveal what the shipment is. They’re also partnered with the Delaware Depository Service Company (in Wilmington) so that you can store your gold off-premises if you wish (this option for larger investments only).
Current price of US American Eagle 1oz.: $927.00 (USD)

1-800-225-7531
info@golddealer.com

Do you use any other dealer, not listed here, that you would recommend to others? Comments, tips or feedback on your experience with any of these dealers that you’d like to share?

Investing in gold, silver and other metals by buying them directly through dealers like these has the advantage that it allows you to partake in the commodity sector without having to research and worry about the intricate details of commodity trading and futures. And like real estate, there is something comforting about owning tangible assets - your ounce of gold isn’t going to go bankrupt, and although its “price” might seem to go up and down on the markets (themselves denominated in fiat currencies), your ounce doesn’t slowly erode away on you. There is a finite amount of gold in the world. When you have a piece of it, you have a store of real value. In a future post I’ll look more closely at the options for storing your metals.

A few people I have talked to have been wondering about how they can invest in gold. Well, as Jim Rogers once said - once your local newspaper starts talking about how the dog next door just got started in commodites, then it’s probably time to get out. I’ve read more than a few stories from people just waiting for the commodity bubble to “burst.” I’m not really in that camp. Based on my understanding, there isn’t much of a commodity bubble, and there can’t be, almost by definition. Commodities are real, tangible assets. You can’t actually fake the amount of rice or gold in production around the world. Your creative accounting team might be able to sketch up the numbers here and there, but when supply meets (or doesn’t meet) demand, it’s pretty straightforward. This is why I think it’s always a good time to be in commodities. I’m not a market-timer, I just invest for the long run and for current cashflow. I don’t really mind if gold goes up and down over the month, and I don’t pay much attention to it.

A Bank of Virtual Gold

My recommendation for would-be gold and silver investors is pretty simple. Use Goldmoney. Since 2001, they’ve been the leader in the new “digital gold” industry. The best way to describe their service is to think of them as an online bank that deals only in metals. They keep the real, physical metals in their secured vaults (unlike regular banks, which rarely are required to even keep 10% of their supposed holdings on hand), and you log into your online account where you see the electronic totals of the gold and silver you own. And you actually do own specific physical pieces of that gold and silver. It’s not an abstract “pooled” account where everybody’s gold could be anybody else’s. If there were a run on GoldMoney, they’d be able to give everyone their exact bars of gold right away. Your bank can’t even do that.

Located in Jersey, in the Channel Islands (UK), Goldmoney allows you to purchase gold, silver, platinum and palladium in several major currencies. It’s free to open an account. You can purchase in Canadian dollars, then later sell back into US dollars. Or Euros. Or pounds. Or Swiss francs. On top of this, you can even pay for certain goods and services with your gold. They have a list of their affiliates on the site.

Goldmoney is not only extremely secure (quarterly audits and insurance), but they also own several patents for their innovations. Bubble or not, Goldmoney continues to grow at an impressive rate and is going to be here for quite a while. What I most like about the site itself is to read the bi-weekly updates of James Turk, the founder. It’s basically a little blog on the price of gold around the world. Turk is a famous gold-bug. But don’t let such names get in the way of perceiving the great value that a service like this has to offer. I’ll probably say more about Turk and Goldmoney in a future post, but for now, you should really check out the rest of the details yourself. And of course, you’re always welcome to contact me about it too if you’d like more of a personal testimonial.

What do you think? Have you used GoldMoney or a similar service? I’d love to hear about it.