Everybody knows that royalty and streaming companies are the things to own in bad gold markets. The business model means that they are not responsible for costs, so while revenue on a “same-store” basis declines with the price of gold, their profits do not shrink anywhere near as much as for mining companies.
The stocks correspondingly do well, outperforming the mining companies by wide margins.
From its peak in April 2011 to its low in January 2016, the XAU index fell by 83%. During the same time, the largest royalty company, Franco-Nevada, appreciated by 19.8%. Wheaton was up 33% and Royal over 6%. Case closed.
Continue reading “The Big Myth About Royalty Companies”
