3 Reasons to Like This Unique Gold Stock
Some investors looking for portfolio exposure to precious metals choose to buy physical gold. Others prefer to invest in gold miners. But there's another option that is often overlooked: streaming and royalty companies like Royal Gold (NASDAQ: RGLD). Streamers fill a unique niche in the mining industry, and their business model allows their shareholders to avoid many of the risks inherent to the other two options mentioned above.
Right now, Royal Gold's share price appears to be lagging its main peers, which could make it an interesting investment choice today. Here are three reasons you might want to jump aboard.
Companies like Royal Gold provide cash up front to miners that they use to cover construction costs or reduce their debt. In exchange, the streamers get rights to buy precious metals at reduced rates in the future. It's something of a win-win. Miners get access to the cash they need without having to lever up their balance sheets or sell shares, and streamers lock in low prices for metals they can resell later. This helps streamers maintain strong margins in both good markets and bad, whereas miners' margins can fluctuate quite dramatically.
Source Fool.com
