The best businesses in mining own royalties and streams on the metal or other commodity production. This is the safest way to gain leveraged exposure to a rising metal price without all of the problems of actually running a mine.
As inflation takes off hard assets like gold and silver historically do very well. It is important to establish positions before the inflation sentiment changes for the largest gains possible.
What is the royalty business? These companies provide miners with upfront capital to explorer and build mines. For this commitment the royalty company receives a fixed portion of all future production (even as the mine finds new sources of commodity) in either a royalty or a stream. The royalty company provides capital once and then receives payment for the life of the mine.
Royalty payments are typically in the range of 1% to 5% called net smelter return.
Streaming payments are in the form of a massive discount to buy the gold such as buying at $400 while the gold price is at $1700 providing the royalty company a net profit of $1300 per ounce.
This company has been operating for 40 years owning about 400 royalty and streams diversified all over the world.
They own a combination of producing mines and potential mines so there is plenty of growth ahead for the company even if gold prices stay at current prices. With 51 producing mines, 41 in near production and 224 exploration plays the amount of gold the company will receive in the future is incredible and on all of these properties they do not have to spend another dime.
If you believe higher inflation is the future, FNV is a simple way to protect yourself and provide great upside potential.
Take a look today.
Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.
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