Gold That Pays You Back

If "gold just sits there" is the old rule, these two newcomers have bolted a cash-spitting options machine onto the shiny rock. Meet NEOS Gold High Income ETF (IAUI) and KURV Gold Enhanced Income ETF (KGLD), ETFs that pair gold exposure with option overlays designed to generate monthly income.

This addition to the Dividend Dynamo portfolio introduces a sophisticated approach to precious metals exposure, transforming gold's notorious "dead money" problem into a source of monthly income while maintaining diversification benefits. Unlike traditional gold holdings or complex derivatives, both IAUI and KGLD use exchange-traded options overlays to monetize volatility, making them accessible for income investors seeking non-correlated asset exposure with cash flow.

Why Gold Income ETFs in Dividend Dynamo?

Gold income strategies serve multiple purposes in our diversified income portfolio:

• Non-Correlation Benefits: Gold historically moves independently of stocks and bonds, providing true portfolio diversification during market stress—Ray Dalio's All Weather allocates 7.5% to commodities for this reason.

• Income from Non-Income Assets: Both funds generate monthly distributions from an asset class that traditionally pays nothing, with IAUI focusing on high current income and KGLD targeting total return enhancement.

• Inflation Hedge with Cash Flow: Unlike physical gold, these funds provide potential inflation protection while generating monthly income, addressing the opportunity cost of holding precious metals.

• Volatility Monetization: Gold's price swings become income through systematic options strategies, particularly effective during periods of elevated precious metals volatility.

• Portfolio Completion: Unlike our equity-focused covered call funds (GPIX/SPYI) and credit strategies (PFFA/PBDC), these provide commodity exposure with income characteristics.

Why Gold (And Why Not)

Gold has legitimate portfolio appeal: Ray Dalio's All Weather strategy allocates 7.5% to commodities (primarily gold), banking on its inverse correlation to stocks and bonds during crisis periods. It's the ultimate "oh sh*t" asset, historically holding value when currencies wobble, inflation spikes, or geopolitical tensions flare. The case for gold is compelling: portfolio diversification, hedge against monetary debasement, and a store of value spanning millennia.

But here's the rub: gold generates zero cash flow. While your dividend stocks pay quarterly and your bonds throw off coupon payments, gold just... sits there, looking shiny. For income-focused investors, this creates a dilemma …you want the diversification benefits but hate the opportunity cost of dead money.

Enter these two option-overlay funds, trying to have their gold cake and eat it too.

What They Are (In One Breath)

IAUI (NEOS): Seeks high monthly income while maintaining exposure to gold via gold ETPs. It gets gold exposure synthetically (long calls + short puts) and then writes additional calls (50–100% notional) to generate income. Gold ETP holdings are primarily in a Cayman subsidiary (up to 25% of assets), with U.S. Treasuries used as collateral. Expense ratio: 0.78%; distributed monthly. As of the latest disclosure, most payouts have been return of capital (ROC).

KGLD (KURV): Aims to maximize total return, and explicitly to exceed gold's price return, while generating income through option strategies on gold-related ETPs/ETNs. It can build synthetic long exposure (buy calls/sell puts), write covered calls, and (here's where it gets spicy) write uncovered calls when the manager sees a volatility edge. Collateral can include broader fixed income and preferreds; it also uses a Cayman sub (up to 25%). Expense ratio: 1.00%; monthly distributions.

Bonus flavor: KURV says it generally uses European-style options (this means they are only exercised at expiration), which can make overlay timing more precise; IAUI emphasizes a rules-based, monthly call program.

Why Hold a Gold Income Overlay at All?

Gold can diversify equity and rate risk, but it famously doesn't pay you (unless you count the satisfaction of staring at it). Option overlays monetize gold's volatility into a monthly cash stream, helpful for income investors who still want a non-equity diversifier.

Just know the deal: writing calls caps upside if gold rips; synthetic long exposure (long call/short put) keeps you in the downside lane if gold slides. No free lunches in finance, folks.

How the Strategies Really Differ

Where Each Could Fit

IAUI: For investors who want gold + a rules-driven income engine, with defined overlay parameters and simpler collateral. It's "gold with a paycheck," but expect upside caps in strong rallies. Think of it as a responsible choice.

KGLD: For those comfortable with a more active, higher-octane play that seeks to beat gold using a wider menu of option tactics (including uncovered positions), backed by broader income assets. This is for the "go big or go home" crowd.

Bottom Line

Both funds try to solve gold's "no income" problem, but they take different approaches. IAUI keeps it methodical and income-centric; KGLD goes on offense to beat bullion.

Pick your flavor: steady paycheck with guardrails, or a bolder overlay that can cut both ways (emphasis on can).

What are we doing in our family portfolio? We have added small positions in both and will increase these with time. We have some ‘traditional’ gold exposure (which has been valuable in the last couple of years!) and will supplement it with a combination of these two ETFs. Why use both? They employ different strategies, and so we will use both and benefit from each.