Gold and silver streaming companies are not on investor’s radars at the moment. For this reason, they deserve a closer look.
But what are gold and silver streaming companies?
Simply put, a streaming company provides funding to a mining company in exchange for either:
- Partial ownership of the mine, or
- An agreement to buy a percentage of the gold (or silver) produced by the mine, or
- A combination of the above.
More importantly, streamers can invest in a mine without the operational risk. In addition, any agreement usually involves buying gold at a discounted price. Now who doesn’t like the sound of that?
For example, Sandstorm Gold Royalties has agreements which receive 3% of the net smelter return in exchange for an upfront payment. In this case, 3% of all production after costs goes directly to Sandstorm. No further obligations are required.
Another streaming company worth mentioning is Wheaton Precious Metals. This company pioneered the streaming business model. Not surprisingly, the CEO of Sandstorm got his start at Wheaton.
Avoid High Risk Gold Stocks
Traditional gold stocks carry high risk. Gold mining is an expensive business. All to often junior gold stocks payout their capital as salaries. Very little exploration gets completed. Management enriches themselves at the expense of shareholders. Steer clear of these companies.
Top 3 Gold Streaming and Royalty Companies
Below is a list of the top gold and silver streaming companies trading on global markets.
- Sandstorm Gold Royalties (NYSE: sand)
- Wheaton Precious Metals (NYSE: wpm)
- Royal Gold Inc. (NYSE: rgld)
- Franco-Nevada Corp. (NYSE: fnv)
Sandstorm makes the top of the list. Why? Well, it all comes down to risk.
Sandstorm offers the biggest upside potential compared to the other companies. From a risk/reward perspective, based on the amount of risk involved I want the biggest return. That’s Sandstorm!
However, Wheaton Precious Metals, Royal Gold and Franco-Nevada are all fantastic companies. Furthermore, their management teams are the best in the industry.
When it comes time for you to invest in gold stocks, consider streaming companies to reduce your risk.
If you are new to investing in gold stocks, this post will help you understand the risk.
