In yesterday’s Daily, we showed you a simple exercise to strengthen your portfolio against volatility in the stock market.

We called it the “barbell portfolio.”

On one side, you load your portfolio with 50% stocks. On the other side, you balance it with 50% gold.

Over the last 20 years, the barbell portfolio outperformed holding stocks or gold individually… with much less volatility.

In a simple barbell portfolio, you could load the gold side with a combination of bullion and an index fund like the SPDR Gold Shares ETF (GLD).

On the stock side of your barbell, you could weight it with the SPDR S&P 500 ETF (SPY) or a mutual fund.

Now, you could get your required 50/50 mix just by doing that.

But we promised to show you a better way to increase barbell portfolio returns.

You just need to replace the two sides of the barbell with “heftier” weights…

Boosting Your Gold Load

Let’s start with gold…

Instead of loading your barbell with a combination of bullion and GLD, replace that with gold royalty companies.

A royalty company helps finance mines and processing plants. In exchange, the royalty companies get a percentage of sales or a percentage of metals from the mine.

Royalty companies can increase in value even if the price of gold goes down. Gold miners don’t.

You only want to own miners when you think the price of gold is going up. Right now, it’s okay to own gold mining stocks. But most miners are bad long-term investments.

Royalty companies are better over the long term because they can spread risk in a way that mining companies can’t.

Most miners (especially junior miners) have only one or two mines. If one of those doesn’t pan out, the miner goes under.

But a royalty company can finance 10, 20, or more projects at one time. This diversification helps royalty companies earn profits more consistently.

In the past 20 years, royalty companies have outperformed gold.

In fact, just swapping out gold for royalty companies in our barbell portfolio doubled our returns.

The drawdowns in this portfolio are a little steeper than those in a physical gold portfolio. But a bit more volatility is a worthwhile trade-off to double your returns.

There aren’t many royalty companies out there… We found only 10 that we can invest in. Here are the five biggest:

  • Franco-Nevada (FNV)
  • Silver Wheaton (SLW)
  • Royal Gold (RGLD)
  • Osisko Gold Royalties (OR.TO)
  • Sandstorm Gold (SAND).

Now, let’s turn to stocks…

Boosting Your Stock Load

In a simple barbell portfolio, you could own SPY or a mutual fund. But just like the gold side, we can increase the returns on the stock side, too.

All you have to do is substitute SPY or a mutual fund with the Daily Elite 25.

If you combine our Elite 25 with royalty companies, you can really juice your returns. Just look at the results over the past 20 years:

After 20 years, an initial $10,000 investment would have grown to about $340,000. That’s eight times more than investing in just the S&P 500 and gold.

Now, we can’t guarantee these results will happen in the future. But the best indicator of whether a strategy will work in the future is whether it has worked in the past.

Our barbell strategy dominates the buy-and-hold strategy Wall Street force-feeds investors.

It’s also a safer way to invest. More on that tomorrow…


Nick Rokke, CFA
Analyst, The Palm Beach Daily


Speculators are holding up oil prices…

Right now, money managers have their largest position ever in oil. They are long over 1 billion barrels.

Funds have propped up the price of oil as much as possible. When this trade unwinds, oil prices will get crushed.

Nick Rokke

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From John M.: I just love what you all are doing at the Daily. I read your Elite 25 and wanted to know if you could recommend which company would be the best to invest in?

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