Mining Royalty and Streaming Companies: Follow the New Smart Money

Anthony Planas

5 years ago

Story Highlights

After the bear market in metals in 2016, Wall Street ignored the mining sector.
But there’s a new kind of investment filling the void.
Anthony Planas shares one way you can tap into steady income for decades to come.

Big money managers are seeking short-term gains.

Investors crave immediate satisfaction. If money managers can’t deliver, investors will take their cash somewhere else.

The mining sector is feeling the effects of this. Following the bear market in metals that ended in 2016, Wall Street’s money has ignored the sector.

At the Prospectors & Developers Association of Canada (PDAC) convention last March, a panel of investment bankers shared their views of the mining sector.

One banker offered a startling figure. Mining companies sourced 80% of their funding from public equity a decade ago.

Today, they get just 15% from public markets. This gives investors like us the opportunity to invest in a new breed of smart money in the mining space.

Generational Wealth: A New Kind of Investment

Royalty and streaming companies are filling the void left by other investors. They provide cash upfront in exchange for a royalty or a stream on a mine.

A royalty is a simple transaction. The royalty holder gets regular checks based on a percent of the production.

A stream earns the holder the right to buy a percentage of a given metal at a significant discount. These discounts can be in excess of 80%!

Royalty and streamers have to be the smart money because they don’t get paid until the mine reaches production.

A loan needs to be paid back regardless of the outcome. An equity stake can easily be sold off. But royalties and streams only pay out with long-term success.

For investors, this offers the opportunity for generational wealth.

Deals signed today could yield a steady income stream from these companies for decades to come.

At the PDAC, royalty and streamers couldn’t be happier. With such little money flowing into the space, they can secure deals on the very best projects.

Consider the US Global GO Gold and Precious Metal Miners exchange-traded fund (NYSE: GOAU).

This exchange-traded fund (ETF) will give you broad exposure to major companies such as Wheaton Precious Metals Corp., Sandstorm Gold Ltd. and Silvercorp Metals Inc. — to name a few.

See, nearly a third of the ETF’s holdings are royalty and streaming companies. The rest are gold miners that provide more immediate leverage to the price of gold.

This fund is up roughly 20% since I first recommended it back in March. That beats out gold’s return of 12.5% since then.

Stay tuned for coming updates on this sector.

Now, I don’t just follow the mining market — I also keep a close eye on marijuana stocks and trends.

If you missed this week’s marijuana market update, you can catch it in the video below.

Good investing,

Anthony Planas

Internal Analyst, Banyan Hill Publishing

P.S. Check out my YouTube channel and hit the subscribe button. That way, you’ll stay up to speed on the latest marijuana market news.