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The Best Income Idea in the Market Today

By Jeff Clark
Tuesday, February 16, 2010

If you're looking to get income from your investments, then you have to own precious metal stocks.
 
No, they don't pay interest on your money. And no, they don't issue huge dividends. But the option premiums on gold stocks are so enormous, a covered call strategy using gold stocks generates some of the highest returns you'll get from any investment.
 
Best of all, it's low risk. As long as you get the timing right.
 
And right now is the best time in a year to buy into the precious metal sector.
 
My subscribers have done pretty well with the gold stocks I've recommended in Advanced Income. All six of the gold recommendations have been profitable – ranging from a 15% return on Market Vectors Gold Miners Fund in three months to a monster 110% six-month return on Hecla Mining.
 
But we haven't owned any gold stocks since our Silver Wheaton shares were called away for a 35% gain last September. The timing just hasn't been right.
 
You see, gold stocks are a volatile bunch. They make large moves in a short timeframe. And those big, short-term moves create large option premiums.
 
Over time, however, gold stocks really don't go anywhere.
 
Think about this... Newmont Mining (NEM), one of the largest of the gold stocks and the one most investors think about when they think of gold, ended 2003 at about $45 per share. By the end of 2004, it was still $45. Newmont was $45 per share at the ends of 2005 and 2006 as well.
 
What about 2007? You guessed it – $45. Sellers took hold of Newmont in 2008, however, and managed to push the stock down to $40 per share by yearend. But the buyers fought back in 2009. On Friday, the stock closed right around $45.
 
Of course, NEM hasn't traded in a straight line for the entire six-year period. It has been significantly higher and lower, and the shares have been fraught with volatility. A chart of NEM has more squiggles than Dick Cheney's EKG.
 
When all is said and done, however, the stock is in the same place it was six years ago. Long-term investors have nothing to show for their labor.
 
Covered call sellers, on the other hand, could have generated consistently high rates of return by selling calls against their shares. The trick, of course, is to get the timing right.
 
For reasons I explained a couple weeks ago, right now is the best time in a year to buy gold stocks. It's an even better time to generate income on the shares by selling covered calls. My latest Advanced Income recommendation pays an 8% immediate return, offers the potential for a 20% return in the next four months, and protects against an unexpected decline in the share price.
 
It's the best income-producing idea in the market today.
 
To find out how you can generate income from your precious metal investments, click here.
 
Best regards and good trading,
 
Jeff Clark




In The Daily Crux
Market Notes
Global shippers UPS and FedEx fall near three-month lows.
 
Restaurants rally... Chipotle, PF Chang's, Cheesecake Factory, and Panera make fresh highs.
 
AT&T slides... telecom giant hits six-month low, down 10% since January 1.
 
Earnings today... Abercrombie & Fitch, Kraft, Merck, Waste Management, Whole Foods.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%

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