Royalty companies benefit strongly from high gold price
The strong gold price is good for gold companies and especially for gold royalty companies.
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Many experts believe that the end of the road for the gold price has not yet been reached. Investors are looking for security in these times of crises, uncertainties and geopolitical squabbles. Gold serves as a hedge, as is generally known. And that's where royalty companies score points with their inherent special characteristics. Capital expenditures and operating costs for a mine lie with the mining companies, not the royalty companies. They provide the mining companies with money in return for a share of current or future gold production. Rising wage or energy costs also affect the mining companies, but not to the same extent the royalty companies, which can thus profit from the high gold price.
This is also evident when comparing the gold mining index (GDX) or the gold mining junior index (GDXJ) with the index that tracks the performance of 18 gold royalty companies (Precious Metals R&S index). Another plus for gold companies and royalty companies is, of course, a weak U.S. dollar. Long-term investors always have an eye on gold royalty companies, because they are seen as more calculable than conventional gold companies. The licenses, it should also be noted, are not always dependent on the current gold price. The design of the license and streaming terms is variable.
One royalty company focused on gold and copper in Canada is Osisko Gold Royalties. The year 2022 brought a total of more than 89,000 gold equivalent ounces for the company, a record amount. A good 175 royalty and precious metal off-takes are in Osisko Gold Royalties' portfolio.
Gold Royalty, another company from this sector, can also be pleased about a particularly successful year in 2022. Record annual revenues even exceeded forecasts. Gold Royalty mainly owns net smelter return royalties relating to gold properties in North and South America.
Current corporate information and press releases from Gold Royalty (https://www.resource-capital.ch/en/companies/gold-royalty-corp/ ) and Osisko Gold Royalties (https://www.resource-capital.ch/en/companies/osisko-gold-royalties-ltd/ ).
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