Friday File, part two: A Look at some Goldies

An increased allocation to gold royalty companies for my Real Money Portfolio, including one new royalty stock

I’ve been asked a few questions about the gold stocks in my portfolio, so I thought I’d run through a few of them today and provide whatever updated opinion and assessment I can for you — including a few portfolio adjustments I’ve just made.

And, as an added bonus, I’m adding one new gold stock to my portfolio this week — it’s a small position, and it’s a very illiquid little stock, but it’s the kind of investment that generally holds the most appeal to me in the precious metals sector: A royalty company.

There are currently about a half dozen gold-related stocks in my portfolio — Giant royalty pioneer Franco-Nevada (FNV), midsize royalty upstart Sandstorm Gold (SAND), political football Northern Dynasty Minerals (NAK, NDM.TO), highly promotional “mineral bank” First Mining Finance (FF.V FFMGF), new explorer US Gold Corp (DRAM), and soon-to-be-producing Trek mining (TREK.V, LWLCF), and I also hold call options on just-started-production Pretium Resources (PVG). And you can throw in diversified natural resources royalty company Altius Minerals (ALS.TO, ATUSF), since a measurable chunk of Altius’ revenue (and a bit of their future potential) comes from gold royalties now.

The newest one, added to my portfolio this week, is the little cash-flowing gold royalty company Maverix Metals (MMX.V in Canada, MACIF on the grey sheets OTC in the US).

Altogether, that group without Altius makes up about 7.5% of my individual equity portfolio, following the small increases I made today… with Altius adding roughly 4% more. I’ll let that allocation get bigger organically if and when we have a gold bull market where the prices are rocketing higher, but I’m not likely to put a lot more capital into that sector beyond these levels.

Let me start with the new one: Maverix Metals (MMX.V, MACIF).

Maverix Metals is a small company that hasn’t been around very long — they were basically formed last Summer as a spinout of the royalties held by Pan American Silver (PAAS), mostly because the expectation was that those royalties would be more valuable as a stand-alone asset (since royalty companies get much higher valuations than operating miners, as a general rule).

Over the past six months or so, Maverix added to that initial portfolio with a slug of royalties acquired from Goldfields and from a couple smaller operators, mostly using equity — effectively, that means they were able to ...

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