A Long-Term Investor’s Mindset 🏆
Looking at my portfolio, I am currently up about US$25 overall on my IAU Gold Trust position. The unrealized loss on my shares is larger, but over the past months I have recovered a significant portion of that through consistently selling covered calls. To many investors, seeing a red number may be discouraging, but I see it differently.
I remind myself that an unrealized loss is only temporary unless I decide to sell my shares. As long as I continue to own IAU and believe in the long-term investment thesis for gold, temporary fluctuations are simply part of investing.
Instead of worrying about the daily market price, I focus on generating regular income while patiently waiting.
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Gold Has Been a Store of Value for Thousands of Years 🪙
Unlike many companies that can disappear over time, gold has survived every major financial crisis in history.
Gold has protected wealth through:
* Inflation
* Currency devaluation
* Financial crises
* Banking instability
* Wars
* Geopolitical uncertainty
While stocks represent ownership in companies, gold represents a globally recognized store of value.
That is one reason why I am comfortable continuing to hold IAU even when prices fluctuate.
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Why I Choose IAU Instead of Physical Gold
Buying physical gold comes with several disadvantages.
Physical gold requires:
* Storage
* Insurance
* Security
* Buy and sell spreads
IAU solves these problems.
Advantages include:
* Very low expense ratio
* Highly liquid
* Easy to buy and sell
* Options available
* No storage worries
Most importantly, IAU allows me to generate extra income through covered calls, something physical gold cannot do.
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Covered Calls Turn a Passive Investment into an Income Machine 💰
Many investors simply buy gold and wait.
I prefer to make my shares work for me.
Every time I sell a covered call, someone pays me a premium.
Whether the option expires worthless or gets exercised, I receive the premium upfront.
Instead of relying only on gold prices to increase, I generate cash flow while I wait.
This transforms my investment into one that can potentially produce recurring income.
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Why I Like Selling the $84 Covered Calls
My preferred strategy is selling covered calls around the $84 strike price.
This strike price allows me to collect premium while giving IAU room to fluctuate.
If IAU remains below $84, I keep:
* My shares
* The premium
* The opportunity to sell another covered call
If IAU rises above $84 and my shares are called away, I still sell at a price I had already accepted when writing the option.
This removes emotional decision-making from my investing.
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Collecting 0.5% to 1% Every 10 to 20 Days
One of my favourite parts of this strategy is the premium.
Typically, I target approximately:
* 0.5% premium
* Sometimes 1% premium
over roughly:
* 10 to 20 days
Although every option cycle is different and premiums change with volatility, collecting premiums regularly can help reduce my overall cost basis over time.
For example:
If I collect 0.5% every two weeks consistently, the income can accumulate meaningfully over many months.
Some option cycles pay even higher premiums when implied volatility increases.
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Lowering My Cost Basis Over Time
Every premium collected effectively reduces how much I have invested in the shares.
Imagine purchasing IAU at $86.
After collecting:
* $0.30
* another $0.25
* another $0.40
my effective cost becomes lower.
Over many months, the accumulated premiums can substantially offset periods when the ETF trades below my purchase price.
Rather than focusing solely on market movements, I focus on steadily improving my position through option income.
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Time Is Working for Me ⏳
One advantage option sellers have is that options lose value as expiration approaches due to time decay.
As a covered call seller, this works in my favor.
Every day that passes, assuming other factors remain similar, the option generally loses some time value.
This means I often benefit simply by waiting.
Time becomes an ally rather than an enemy.
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Gold Often Performs Well During Uncertain Times
Markets experience cycles.
Sometimes technology stocks outperform.
Sometimes defensive assets outperform.
Gold often attracts investors during periods of:
* Higher inflation
* Economic uncertainty
* Geopolitical tensions
* Market volatility
While no one knows exactly what markets will do next, holding some exposure to gold can diversify a portfolio because its performance may differ from equities.
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Income Helps Me Stay Patient
Without covered calls, it is easy to become impatient.
Receiving option premiums changes my mindset.
Instead of asking:
“Why hasn’t gold gone up?”
I ask:
“How much premium can I collect this month?”
That small change in thinking helps me stay disciplined.
The regular income provides positive reinforcement while I continue holding the ETF.
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Managing Assignment Risk
Selling covered calls does involve trade-offs.
If IAU rises sharply above my strike price before expiration, my upside is capped because I may have to sell my shares at the strike price.
That means I could miss some gains beyond the strike price.
For me, this is an acceptable trade-off because I choose a strike price where I would already be comfortable selling.
The premium received also provides some compensation for giving up part of the upside.
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Discipline Is More Important Than Prediction
I do not try to predict where gold will be next week.
Instead, I follow a repeatable process:
* Own quality assets.
* Sell covered calls when premiums are attractive.
* Collect income.
* Reduce my cost basis.
* Repeat.
This systematic approach helps remove emotions from investing.
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Temporary Losses Do Not Change My Long-Term View
Looking at my portfolio today, I may be down around US$75 overall, but I remind myself that investing is a marathon rather than a sprint.
My unrealized loss reflects today’s market price, while my realized option premiums show the income I have already earned. Those premiums have helped offset part of the decline in my shares.
As long as I continue to believe in gold’s role as a portfolio diversifier and I can continue generating option income, I am comfortable staying invested.
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Final Thoughts 🌟
My goal with IAU is not to chase quick profits. I view it as a long-term holding that can also generate regular cash flow.
By selling weekly covered calls at the $84 strike and targeting approximately 0.5% to 1% premium over 10 to 20 days when market conditions allow, I aim to earn recurring income while holding an asset that has historically served as a store of value.
This strategy requires patience, discipline, and acceptance that there may be periods where the ETF trades below my purchase price. Premiums are not guaranteed, option income varies with market conditions, and there is always the possibility that shares are called away if the ETF rises above the strike price.
For me, the combination of long-term exposure to gold and a disciplined covered-call strategy provides a practical balance between income generation and capital preservation. Even though my position is temporarily underwater, I believe that consistently collecting premiums while remaining patient gives me a structured approach to investing rather than reacting to short-term market fluctuations.
@TheBeautyofOptions @MillionaireTiger @TigerCoinCenter @TigerStars @Shernice軒嬣 2000 @Pilates @Daily_Discussion
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