Prime Time for Royalties
by Travis Johnson, Stock Gumshoe | June 8, 2012 1:18 am
Friday File look at some passive precious metals stocks
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Source URL: https://www.stockgumshoe.com/2012/06/prime-time-for-royalties/
I have been invested about 80% in PM´s and royalty streams for many years. But this time I am going all cash. The situation is very ugly in Europe, US, China etc. A chrash is looming and PM will not be spared! After the chrash it will be all in.
FYI….
Called investor relations at Sandstorm as I noticed that the symbol had changed back to SNDXF. They didn’t know why and said that was handled by OTC. I questioned at to the expected timing of the US listing and was told that they are targeting this September.
As for the symbol change I then called OTCmarkets and found that the SNDX(D) symbol is where the (D) indicates a stock consolidation and this will then revert back to original symbol after 30 days.
Thanks, I’m slow to adjust 🙂
What about the potential tax problem re the audit by the authorities of SLW. Would you buy here or just hold what you have?
A Canadian
I don’t own shares of SLW personally, though if for some reason there’s a hugely negative result from the audit that would also hit Sandstorm, which uses a similar offshore tax strategy. I haven’t seen any indication that the audit should be particularly feared, but I could, of course, be wrong. Losing some of their tax write offs or avoidance strategies would be a substantial blow, though even with higher tax costs they might be cheaper than the big
Gold royalty cos.
Has the tax audit of SLW been concluded? I’m waiting for those results before getting back into SAndstorm. Thanks
Luis
Dear all,
Zimtu (ZC in TSXV), I think, is also a very smallbut interesting company, with an extremly exceeding business model. They are focused on interests in small exploration companies (Graphite, Gold, REE). Maybe it’s profitable to take a closer look to ther business model.
Kind regards
Martin
Here’s my question– With all the new production coming on-line, what’s that going to do to the price of gold when the additional product hits the market? What will the result be if world production increases 10% or 20% (not sure how realistic that is, just throwing out numbers). Has anyone run those numbers, and what do they show?
There’s also a lot of gold depletion going on, with big mines getting older, so the increases from new production that we’re likely to see may not be as dramatic as an investor might fear — there’s a pretty good graphical representation of changes in production over the years here: http://www.goldsheetlinks.com/production.htm
Gold has really not traded on changes in supply in recent years, it’s been all about demand — particularly emerging market and investor demand — so I’d continue to worry more about demand than about supply if you’re looking at the big picture. My base assumption is that gold will generally keep pace with the cost of living over a long period of time — which, after a pretty sharp rise for a long time, could mean flat or declining prices for a while if there’s no fear/inflation/panic increase in demand. That’s why I like royalty companies that have low fixed costs and just collect their portion of the gold or revenue, they can certainly go down but they can’t lose (much) money.
Travis, do you have any thoughts on Sprott Physical Silver (PSLV)? Does the drop associated with their recent follow-on offering make them attractive at these prices?
I don’t know anything specific about these trusts — currently the premium to net asset value is about 3%, which seems on the high side to me (http://sprottphysicalbullion.com/sprott-physical-silver-trust/net-asset-value/), but I don’t know what it has been historically. Follow on offerings shouldn’t mean anything, since they’re always at least 97% invested in silver bullion, so when deciding on these kinds of “almost direct” ownership options for precious metals the things to consider include the expense ratio (or storage/maintenance fees, if it’s not a fund), tax treatment, and the ability to track the bullion price. Expense ratio seems reasonable and they claim that some US investors might see a tax advantage over owning SLV, but the premium is currently almost as high as the premium you’d pay for buying an actual silver coin.
Thank you, from a loyal Irregular.