Monthly Income and Yield from Gold? Invest in these Canadian Gold Covered Call ETFs

Gold recently surged past $3,200 USD an ounce, and it’s starting to look like a textbook flight-to-safety trade. The U.S. dollar and Treasury yields are slumping, equities are tumbling, and gold just keeps climbing. Goldbugs are finally having their moment.

Still, many investors hesitate to allocate to gold. At the end of the day, it’s just a shiny rock. Aside from its use in jewelry and electronics, gold doesn’t generate any income. Unlike stocks, bonds, or real estate, it just sits there. But that shouldn’t necessarily deter you.

Some ETFs now use covered call strategies to generate monthly income while maintaining exposure to gold prices. These funds aim to close the cash flow gap by writing call options and distributing the premiums earned to investors.

Fair warning, though: these are buy-write strategies, which means the upside is capped. It’s not a free lunch. Think of it more as a way to participate in gold’s returns while setting a recurring limit sell at the strike price. Here’s a look at two Canadian-listed options I like from Global X ETFs and Hamilton ETFs.

Global X Gold Yield ETF (HGY)

Launched in December 2010, HGY has a respectable track record, though its asset base remains modest at just over $107 million. It’s not in any danger of shutting down, but it hasn’t seen the kind of growth some newer yield-focused ETFs have enjoyed.

HGY’s strategy is straightforward: it holds the U.S.-listed SPDR Gold MiniShares Trust ETF (GLDM)—a physically backed gold grantor trust with an active options market—and writes out-of-the-money covered calls on it. Because gold is volatile, these options generate relatively strong premiums.

The fund also hedges currency exposure back to the Canadian dollar, which helps reduce FX risk for Canadian investors. As of April 11, HGY is yielding 5.52% on an annualized basis.

That income comes at a cost, though. With a management expense ratio (MER) of 0.89% and a trading expense ratio (TER) of 0.09%, it’s not cheap. Still, for hands-off investors looking to generate monthly income from gold exposure, it’s a turnkey solution.

Hamilton Gold Producer YIELD MAXIMIZER™ ETF (AMAX)

Gold producers—also known as miners—operate very differently from ETFs that simply hold physical gold. These are businesses with real costs, revenues, and operating leverage, which makes them an amplified and sometimes more volatile way to get exposure to gold prices.

Here’s how a typical gold miner works. First, the company explores and develops a site, either by discovering new deposits or buying existing ones. Then it builds out the infrastructure to extract the gold: digging, processing, refining, and transporting it. This comes with a mix of fixed and variable costs—things like labor, fuel, equipment, and environmental compliance.

The key to understanding their appeal is how their revenue and cost structures interact. While costs tend to be relatively stable in the short term (especially for established producers), revenues fluctuate with the market price of gold.

So, say if gold goes from $1,900 to $2,200 per ounce, the miner’s revenue per ounce rises by about 16%. But since their production costs may stay flat—say $1,200 per ounce—their profit margin per ounce can jump much more dramatically. That’s operational leverage. Small moves in the commodity price can result in much larger swings in earnings and cash flow.

Because miners are publicly traded stocks, they also tend to have robust options markets. And since gold miners are generally more volatile than gold itself, the options they generate offer richer premiums. That’s where AMAX comes in.

AMAX holds 14 of the largest North American gold producers, equally weighted, including familiar names like Barrick, Newmont, and Agnico Eagle. It applies an active covered call strategy, selling at-the-money calls on 30% of the portfolio. That helps maximize the option premium while still leaving 70% of the portfolio uncovered for upside participation.

The result is a sizable 8.58% distribution yield as of April 11. The strategy is gaining traction with investors—AMAX now manages over $201 million in assets, surpassing HGY in size.