Bought several precious metals royalties positions today. | Precious Metals Message Board Posts


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Msg  257907 of 259805  at  7/20/2022 2:13:25 AM  by

BenTen


Re: Bought several precious metals royalties positions today.

Hi Under the Radar - 
 
Thank you for sharing some bottom up ideas.
 
I shared before my selections which are FNV NEM WPM GFI in roughly equal weightings and I also shared a little analysis underlying this in a post that explained why GOLD is missing from the list.
 
 
The methodology of selection was I just went through the top holdings of the biggest gold miners ETF - GDX.  And from the top of the list in GDX holdings I went down until I saw some decent performance of the stock plus dividends over the last five years which covers a period of rising gold prices.  And I settled on the four names above - threw out GOLD - and figured that was enough of an analysis due to my investment thesis.
 
I am really investing based on the gold price - so we might call this a "trade" rather than an investment - and the gold price forecast is based on macro and political issues that I am seeing over the next six months to a year - so the actual selection is not that important to me I just want bigger players so if I am wrong about the macro for a year or two they stay solvent and can bounce back when and if gold does comes back up so that is why I limited it to bigger miners.
 
If I were more confident about the macro forecast I would be investing all in junior miners but I am not that confident.  The reality is that gold can go either way now and I do not have a crystal ball.
 
I am curious about the idea of "royalty" miners which seems to include two of my picks FNV and WPM...and all of those you added which include also RGLD.
 
I suppose that if the royalties are in amounts of gold as in a cut of the mining projects production - not in a dollar value - then if the gold price goes up that royalty stream goes up linearly.
 
Sounds like it can protect on the downside as long as the royalty company is not holding too much debt.  And if one of the royalty streams goes under I assume that there is some sort of a credit contract underlying the stream so out of bankruptcy there is some claim on the mining assets.  Is that generally the way it works?
 
Am wondering about smaller royalty companies and where I can find a list or if anybody has other favorites they might share...
 
I will do some research as well...have a couple of contacts in the industry and will do interviews over the next few weeks...and I will share here anything I discover fwiw...
 
 
 
 
 
 
 
 
 


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