Gamco Global Gold’s Chart Flashes Some Glitz (GGN)

Gamco Global Gold, Natural Resources & Income Trust (GGN) — Formerly the Gabelli Global Gold, Natural Resources & Income Trust, GGN is a closed-end management investment company that invests in companies that primarily operate in the gold and natural resources industries — stocks like Randgold Resources (GOLD), Goldcorp (GG) and Royal Gold (RGLD).

GGN provides a steady dividend return as well as a way to participate in the appreciation of major metals mining stocks. But its goal is to provide steady income, so it focuses on a strategy of writing covered call options on equities in its portfolio. Thus, in a major advance in precious metals, GGN normally will not participate fully in the appreciation of the stocks, but instead provides a much higher level of income, thus offsetting the risk of solely owning gold stocks. (The current dividend yield of GGN is 9.94%.)

GGN has found support at its 50-day moving average now at $10.78, and a support line formed at the March/May tops at $10.61. GGN executed a golden cross in April (a bullish indicator) and successfully tested its 50-day moving average in June, then again in the last five days. MACD is slightly in the bear zone, but in the past this has signaled an undervalued situation. The stock has been under accumulation since June.

GGN’s intermediate price objective is $14 to $15, which it could attain in several months.

ggn chart
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