As Gold Prices Surge, Here's How to Use the Precious Metal to Generate Income

Over the past 30 years, stocks have provided the greatest returns of any asset class. But commodities have staged a comeback over the past two years, with gold's outperformance of stocks having been particularly pronounced.

Since the start of 2024, the precious metal has gained 117%, while the S&P 500 has gained 46%.

Ownership of physical metals comes with caveats. It can require insurance, and in the case of gold IRAs, storage in IRS-approved depositories. But perhaps the most notable disincentive to owning actual gold is that, as a tangible asset, it does not produce yield — or income generated by an investment.

However, for investors looking to gain exposure to gold while also generating passive income, there are workarounds.

A precious metals leasing platform that pays dividends in gold

Monetary Metals is a gold yield marketplace that connects investors with qualified businesses in need of precious metals (e.g., jewelers and refiners). In turn, investors can earn yields between 2% and 5% annually on their gold by leasing it to those businesses for inventory management.

Notably, that yield — which currently stands at 4% — is paid in gold.

For those who own 10 ounces of gold or have the U.S. dollar equivalent to 10 ounces of gold, the company provides fee-free storage and offers leases up to 12 months. Longer options are available for accredited investors. As the market maker, Monetary Metals finds borrowers (aka lessees) for the gold, charges them a small spread and, from that fee, pays distributions to investors (aka lessors).

According to Keith Weiner, CEO and founder of Monetary Metals, this approach allows investors to use their yield to accumulate more gold rather than generating dollar income.

"Everything we do is denominated in gold," says Weiner. "If you put 10 ounces into a lease, at the end of the year, you would have 10.4 ounces."

Monetary Metals pays monthly distributions, though the yield can fluctuate based on market conditions.

The platform is not ideal for investors who want easy access to their assets, with contracts stipulating that lessors shouldn't expect liquidity until the end of the 12-month term. But the concept is not unlike crypto staking, in which alternative assets are committed to a lock-up period in exchange for yield paid in the same denomination rather than fiat currency.

However, he points to one big difference: Crypto is extremely volatile and prone to dramatic price crashes, whereas gold is tangible and doesn't usually experience such dramatic price swings.

"We're going through real businesses that have real brick-and-mortar storefronts and real gold inventory, which we're verifying," Weiner says. "We're financing an actual enterprise that is doing something in the real world."

At the end of the term, Weiner says the majority of Monetary Metals' lessees express an interest in renewing. Currently, the company boasts a churn rate of less than 1%, which bodes well for lessors, whose gold remains secure while receiving recurring yield.

"Once they're in, they want to stay in and treat it as an annuity," Weiner says.

Investing in dividend-paying gold mining stocks

The shares of companies involved in the exploration and mining of gold enjoyed outsized gains in 2025. More growth could be on the way: According to Ethan Feller, a stock strategist at Zacks Investment Research, the underlying catalysts responsible for gold's big gains last year remain in place.

"This rally is not being fueled by speculative excess or short-term momentum chasing," Feller wrote on Jan. 14. "Instead, it reflects a series of structural shifts in global markets that have created a durable bid for gold."

Feller points to tailwinds like renewed buying from central banks and institutional investors, alongside ongoing geopolitical risk and global debt concerns, as catalysts for the precious metal.

Specifically, he notes that "even if the gold bull market were to pause, select gold mining stocks continue to offer compelling standalone [opportunities]."

Over the past year, gold miners AngloGold Ashanti and Kinross Gold saw shares appreciate 265% and 225%, respectively, while paying dividends that yield 2.21% and 0.42%, respectively.

According to Feller, many of today's leading miners are focusing on fiscal discipline, which is improving return on capital and operational efficiency while lowering debt. As a result, mining stocks are reducing investors' risk exposure while preserving gold's upside potential.

"Gold mining stocks are not acting like purely cyclical trades but increasingly resemble durable growth equities with embedded optionality to higher gold prices," said Feller.

When purchasing shares of those companies that pay dividends, investors have access to both gold's appreciation and yield.

High-yield covered call ETFs

Last year, the number of U.S.-listed exchange-traded funds, or ETFs, surpassed the number of U.S.-listed stocks. With ETFs' growing popularity, niche products have emerged, including funds that prioritize yield while holding physical gold or gold mining stocks.

These ETFs use covered calls — one of the most common options strategies — to generate income by selling call options against holdings to earn premiums. They then distribute those premiums to investors in the form of dividends.

"The trade-off is you're giving up the upside of the stock portfolio," Jason Kephart, senior principal with Morningstar, said in an interview with the financial services firm.

But for investors who are comfortable with yield in lieu of growth, covered call ETFs that hold physical gold or shares of gold mining companies can produce double-digit yields.

The NEOS Gold High Income ETF, for example, is up 18% over the past year while paying a dividend that currently yields 12.53%.

Covered call ETFs introduce higher risk to investors' portfolios, particularly during market downturns. Additionally, these ETFs are actively managed, meaning they carry higher-than-usual expense ratios. But those fees are largely offset by the funds' enormous yields.

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