Gold prices have been on an upward trajectory, driven by macroeconomic uncertainties, central bank demand, and persistent inflationary pressures. While gold itself offers a hedge against market volatility and currency risk, gold mining companies present an additional opportunity by combining exposure to rising gold prices with tangible cash flows and dividends.

However, despite record gold prices, many gold miners remain undervalued compared to historical levels. This discrepancy presents an opportunity for investors, particularly as gold producers are benefiting from margin expansion due to stable extraction costs and increasing revenues. Against this backdrop, income-focused investors can consider a covered call strategy on gold producers, such as the Hamilton Gold Producer YIELD MAXIMIZER™ ETF (AMAX).

AMAX: A High-Yield Approach to Gold Exposure

Since its inception, AMAX has provided investors with a unique way to generate higher tax-efficient yield from leading North American gold producers while still capturing most of the sector’s upside. AMAX employs a covered call strategy on approximately 30% of its holdings, allowing it to generate high monthly income while maintaining ~70% exposure to growth potential.

Key Highlights of AMAX’s First Year

• Current Annualized Yield: 9.52%[1] (monthly distributions)
• Annualized Total Return: 44.44%[2]
• Distribution Growth: $0.1466 → $0.1680 (+14.6%)
• Assets Under Management (AUM): $160 million[3]

Gold producers exhibit some of the highest volatility in the equity market, making them ideal candidates for a covered call strategy. Higher volatility leads to elevated option premiums, allowing AMAX to maximize income while maintaining upside participation.

Gold Miners: An Underappreciated Opportunity

Many gold producers are currently trading at valuation multiples below their historical averages, even as their gross margins remain near historical highs. Central bank gold purchases, geopolitical tensions, and persistent inflation continue to support higher gold prices, which could lead to renewed investor interest in the sector.

Despite the strong performance of gold, investor sentiment toward gold miners has lagged, as reflected in subdued inflows into gold-focused ETFs. This lack of participation suggests that capital flows could return as market participants recognize improving fundamentals. We believe this divergence presents a compelling opportunity for investors seeking exposure to the sector before broader market sentiment shifts.

The Opportunity

For investors looking to capitalize on the secondary effects of strong gold prices while maximizing income, AMAX presents a compelling solution, in our view. AMAX provides equal-weight exposure to 14 leading gold producers, including:

• Agnico Eagle Mines, Newmont, and Barrick Gold – Three of the largest gold mining companies with global operations
• Wheaton Precious Metals and Franco-Nevada – Leading gold streaming and royalty companies that provide exposure to gold without direct mining risks

Key Benefits of AMAX

Gold miners currently offer a mix of value and potential growth, supported by strong fundamentals and rising gold prices. Yet, many remain underappreciated by the market. AMAX provides investors with a way to benefit from these dynamics while generating high monthly income. For those seeking to enhance their exposure to gold producers while maintaining a strong income stream, we believe AMAX stands as a compelling solution, providing:

• Higher Income: Significantly higher yield than traditional gold equity investments
• Diversification: Exposure to top North American gold producers, reducing single-stock and country-specific risk
• Tax Efficiency: Covered call premiums are generally taxed as capital gains
• Dynamic Strategy: A flexible covered call overlay (~30%) to maximize income while maintaining ~70% upside growth potential
• Experienced Management: Managed by a team with 40+ years of combined experience in options-based income strategies

Performance

Ticker	Yield	1M	6M	YTD	1-YR	Since Inception*
AMAX	9.52%	2.52%	12.85%	16.88%	55.35%	44.44%

* Annualized

 

For more commentary, subscribe to our Insights.

____

A word on trading liquidity for ETFs …

Hamilton ETFs are highly liquid ETFs that can be purchased and sold easily. ETFs are as liquid as their underlying holdings and the underlying holdings trade millions of shares each day.

How does that work? When ETF investors are buying (or selling) in the market, they may transact with another ETF investor or a market maker for the ETF. At all times, even if daily volume appears low, there is a market maker – typically a large bank-owned investment dealer – willing to fill the other side of the ETF order (at net asset value plus a spread). The market maker then subscribes to create or redeem units in the ETF from the ETF manager (e.g., Hamilton ETFs), who purchases or sells the underlying holdings for the ETF.

____

Commissions, management fees and expenses all may be associated with investments in exchange traded funds (ETFs) managed by Hamilton ETFs. Please read the prospectus before investing. Indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and does not take into account sales, redemptions, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Only the returns for periods of one year or greater are annualized returns. ETFs are not guaranteed, their values change frequently and past performance may not be repeated.

Certain statements contained in this website may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Hamilton ETFs undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.

____

[1] An estimate of the annualized yield an investor would receive if the most recent distribution remained unchanged for the next 12 months, stated as a percentage of the price per unit on February 28, 2025. The yield calculation excludes any additional year end distributions and does not include reinvested distributions.
[2] As at February 28, 2025 since inception, February 6, 2024.
[3] As at February 28, 2025.