What is “The ‘British Columbia Gold Bank’ Now Open to American Investors?”

Sleuthing out Ian Wyatt's "Why I'm Selling Gold" teaser for a "BC Gold Bank"

“One unique type of gold investment (that most Americans have never heard of) based in British Columbia has outperformed every asset class in existence – rising twice as fast as gold.

“The average investor in this gold secret made over 80% a year for 20 straight years – even after gold crashed last year.

“But some investors had the chance to make 3,000%+ gains…

“I call this investment the ‘British Columbia Gold Bank’ because it’s a super-safe way to invest in gold.”

That’s the intro from Ian Wyatt for the latest teaser pitch seeking subscribers to his $100K Portfolio newsletter, one of the many newsletters that cropped up over the past few years which runs a “real money” portfolio of the editor or publisher’s actual cash in the market.

Wyatt has been sparking interest among readers with emails that have subject lines hinting at why he’s selling gold — and he says he wants to sell gold and buy this particular “British Columbia Gold Bank.” So that’s getting attention because gold has fallen so hard and so fast, and investors are wondering just what to do with this asset that had seemed — for more than a decade now — like it could only go up.

And he implies a high level of safety for this investment, which also makes Gumshoe readers see green — here’s how he puts it:

“CNBC recently called this investment ‘a banker for gold miners.’

“As I’ll explain, gold banks have all of the upside of gold – with none of the downside – and the potential for much faster gains.”

None of the downside? That’s a big claim. So what’s he talking about?

Well, it’s a Canadian investment — he tells us all about how Vancouver is the “Wall Street of Commodities”, which is more or less true … that British Columbian City is home of what used to be the Vancouver Stock Exchange and is now the Venture Exchange (though I think it’s actually headquartered in Calgary now, the Venture is the combination of the Alberta and Vancouver exchanges), but it’s certainly a hotbed of junior mining and energy financing in Canada, which itself is the land where most mining startups get their sea legs. Vancouver is the silicon valley for venture investments, IPOs, and backdoor deals in the natural resources industries.

Here’s more from the ad:

“Thousands of small exploration companies vie for limited access to capital – many of them go bust.

“These small companies are the lottery tickets of the investment world.

“And they all need funding.

“That’s where the British Columbia Gold banks come in.

“They provide funding to the BEST possible precious metal startups – the explorers and developers with a track record of success, the best property, the best reserves, etc.

“In exchange, these ‘Gold Banks’ receive a portion of the future production and proceeds of any gold mined during the entire lifespan of the company.

“And the best resource analysts in the world all work in Vancouver – for one little-known gold bank…”

And then Wyatt lets the cat out of the bag a wee bit — telling us what probably most Gumshoe readers already know, that these “BC Gold Banks” are really just precious metals streaming and royalty companies. He even gives the examples of a couple companies that most investors are familiar with, the silver streamer Silver Wheaton (SLW) and the big gold royalty company Royal Gold (RGLD) … but he has another fish in mind:

“You can’t buy past performance.

“Royal Gold just isn’t going to grow another 2000-fold anytime soon. That would make it a $3 trillion market cap company. It would be bigger than the top 5 biggest companies in the Dow put together. It’s just not going to happen.

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“Silver Wheaton isn’t likely to grow another 20 fold in the next three years either. That would make it a $140 billion company – bigger than BP (NYSE: BP).

“So if you want to achieve a similar result in your portfolio, you have to find the next Royal Gold and the next Silver Wheaton.

“Such a company already exists – and if you buy it today, you give yourself a great chance at repeating the performance of its forebears.

“This company is only about 4 years old and it is already off to a better start than Royal Gold in its first 4 years.

“That’s because this other ‘gold bank’ already has 10 gold streams producing with more coming online early in 2014 yet it has a total market cap under $600 million.

“And amazingly – they’ve put together deals with their 10 gold streaming clients to ensure they get access to any gold they mine for an average of $400 an ounce…”

OK, so that clears it up pretty well — we don’t even have to take the tarps off of the ol’ Thinkolator to tell you that Ian Wyatt is buying and teasing Sandstorm Gold (SAND in NY, SSL in Toronto)

Which I own as well, and have written about many times here — it’s been teased by other newsletters, and I’ve bought and sold the stock and the warrants a few times since the company was founded, but it is still a substantial position for me and my favorite gold equity investment.

But it sure ain’t a stock that gives you upside with “none of the downside” — those of us who have held the stock for a few years can certainly attest to the upside, but we’ve also felt the downside when gold prices fall.

All of the royalty stocks and streaming stocks, large and small, have fallen very, very hard with the collapse in gold prices — they provide some leverage to the price of gold as it rises, and also the downside of leverage as they fall harder than the gold price when gold declines. I’ve been a bit surprised, actually, to see that the royalty companies have not done much better than the average large mining stocks during this latest collapse in the price of gold — they’re better companies, with less downside than the miners in a normal operating environment, but they either got too expensive when people ran to them (they rose to trade at a marked premium to the big miners in terms