This Soaring Gold Play Is Starting To Wobble. Here's The Smarter Buy

Core Viewpoint - The ASA Gold & Precious Metals Fund (ASA) has significantly outperformed other closed-end funds (CEFs) in 2025, with a remarkable increase of 172%, primarily due to the rising gold prices. However, it is not recommended as a buy due to its low yield and historical underperformance compared to both the S&P 500 and gold prices [4][5][6]. Performance Analysis - ASA's performance in 2025 is exceptional, but it is an outlier as no other CEF subsector has exceeded a 15% increase [4]. - Over the last two decades, ASA has underperformed the S&P 500 on a total-NAV-return basis, indicating that its portfolio performance has lagged behind broader market indices [5]. - Investors who purchased ASA 20 years ago would have faced significant losses during certain periods, particularly in the 2010s, highlighting its volatility and risk [6]. Income Generation - ASA yields only 0.1%, which is substantially lower than the average yield of over 8.3% for other CEFs, making it unattractive for income-focused investors [4][7]. - In contrast, other CEFs, such as the PIMCO Corporate & Income Opportunity Fund (PTY), offer higher yields and have maintained strong dividends since inception [9]. Alternative Investment Options - Several high-yield stock CEFs, including the Adams Diversified Equity Fund (ADX) and Liberty All-Star Equity Fund (USA), have outperformed ASA in terms of long-term returns and income generation [8][10]. - These alternative funds provide a "mini-portfolio" yielding an average of 10%, significantly higher than ASA's yield, and have shown better historical performance [10]. Investor Caution - The current success of ASA may lead to a recency bias among investors, potentially resulting in poor long-term investment decisions if historical performance is ignored [11][12]. - Investors should be wary of the lack of income from ASA while waiting for potential future gains, as its long-term trend suggests a likelihood of underperformance [12].