Special Report

Gold Royalties: The Smart Investor’s Guide to Gold Mining Profits

Once again, new rules regarding the dollar are about to be proclaimed.

We’re expecting a new mandate that will start a radical shift away from cash – and toward an all-electronic money supply. When it happens, there is no doubt that you’ll want to own gold. Its price will soar.

From Nixon’s big shock in 1971 to gold’s peak just nine years later, gold’s price jumped 820%.

Another shock to the dollar – especially the kind we’re expecting – could lead to even larger gains.

It could change the balance of economic and political power in this nation… and totally upend the finances of those who aren’t prepared.

Having some gold in your portfolio will be essential. Here’s the best way to play the coming surge in gold.

How to Play the Next “Nixon Shock”

Here’s what happened when Richard Nixon removed the dollar’s link to gold.

Known as the “Nixon Shock,” this ushered in the pure “fiat money” phase of American currency.

Instability reigned. And the American people lost purchasing power with each new dollar the fiscally liberated government printed.

Nixon’s move almost immediately kicked off a massive wave of inflation that soared into the 1980s.

Imagine what will happen with the “Biden Shock,” when President Biden issues a mandate that initiates the removal of physical dollars from our monetary system…

Gold will skyrocket!

Just as it did after Nixon’s declaration. But much more. Today’s high inflation economy will act as additional rocket fuel for the price of gold.

At the very least, we urge you to own some gold-oriented investments as an insurance policy.

The insurance angle is clear. When the dollar falters in a big way from an announcement of this magnitude, historical correlations won’t matter. It will be a new world.

That’s why it’s so important to own some gold now, before this next shock hits.

And we have a perfect way for you to do it.

Streaming Profits Into Your Portfolio   

What if there were a way to own gold at not just a discount to its spot price but a HUGE discount? 

As you are likely aware, gold is currently selling for nearly $2,500 per ounce, nearing its peak during the Nixon Shock, in fact. 

What if you could buy gold today for just $500 per ounce… or even $400 per ounce? 

You can. And it’s the perfect way to ensure that you have the best possible shot at outsize gains when this new mandate is announced. 

We’re talking about gold royalty companies. 

To explain how this simple yet little-known concept works, let us introduce you to Sandstorm Gold (SAND). It’s a gold royalty company (also referred to as a gold streaming company). 

In the mining business, streaming is a term for when a company (like Sandstorm) makes an agreement with a mining company to purchase all or part of its production at a predetermined discounted price. 

In return, royalty companies provide upfront financing for mining companies looking for capital to pay for their mining operational costs. 

The beauty of a gold royalty company is it doesn’t own any mines… It doesn’t have a bunch of expensive, heavy equipment… And it has just a few employees. 

But what it offers is huge potential. 

A royalty company offers its investors a shot at the huge upside in today’s gold market… with very little downside. 

Here’s how it works… 

Some of This for a Whole Lot of That

Gold mining, as you know, takes a lot of exploration… and luck.

There are hundreds of companies right now digging holes and examining core samples for signs of hidden gold. Most of these companies have no intention of ever mining for gold. They just want to find it, stake a claim and get paid by the miners who want to access that claim.

Most often, these explorers are paid via royalty streams. For their exploration work, they might get 2% or 3% of a given mine’s future gold sales. Or they may get access to 10% or 20% of the gold mined at a big discount to the spot price.

Either way, they make money as the mine makes money. But it can take years for these companies to recoup their costs. That’s where Sandstorm comes in. It buys the royalties, gives the explorer a big check (at a discount to the future value, of course) and takes over the royalty stream.

This gives the explorer a big payday and gives Sandstorm and its shareholders a steady stream of long-term income.

A Gold Bank

The company also works directly with miners. It acts almost like a bank that deals solely in gold. In this case, the company makes a loan to the mine and, again, either receives a percentage of the company’s gold sales or has the right to buy a chunk of its output at a big discount. 

As an example of how this works, we can look at a deal Sandstorm made in 2021 with a small mining company called Vatukoula Gold Mines. 

Through it, Sandstorm wrote a $30 million check to Vatukoula Gold Mines. In exchange, the company gets to purchase 25,920 ounces of gold from the mine over the span of six years. Sandstorm will buy the gold at 20% of its spot price. As of this writing, that’s roughly $500 per ounce. 

Let’s do some math on that. At that price, the company will pay roughly $13 million for nearly 26,000 ounces of gold. If the spot price simply remains around $2,500 per ounce, the company can turn around and immediately sell that gold for $65 million. Subtracting the $13 million it paid, that’s a gross profit of about $52 million. 

This would mean the company will get back its $30 million investment… plus another $22 million – earning about 73% on its money in just six years. 

But it doesn’t stop there. After those six years, Sandstorm will get between 2.55% and 2.9% of all the gold pulled from the mine during its life. And as there are at least half a million more ounces to pull from the ground, the payout could last decades. 

Gold royalty companies will make dozens, if not hundreds, of deals like this. The result is a large portfolio of moneymaking mining companies paying a constant stream of royalties to the host company. 

For instance, Sandstorm has just over 230 deals currently in its portfolio. With most of them, it gets 1% to 5% of a mine’s production at no cost. It simply sells the gold at the spot price and pockets the revenue. 

Add it all up, and, well, it’s quite a gold mine. 

All the Reward… Less Risk

What are the risks of owning what is essentially a bank that deals only in gold?

We’ll answer that question by looking at the risks of a typical gold mine. For the juniors, the risk is high. They not only have to find gold – and lots of it – but also have to find the cash flow to fund them until they find it.

It’s typically not a lack of gold that puts these firms in front of a bankruptcy judge… It’s the lack of cash flow to get them to the gold. (That’s why they like to work with companies like Sandstorm.)

For larger miners, the risks are similar but not as exaggerated. For them, it’s the price of gold that matters the most. They need to get the stuff from the ground with costs that are lower than the price of the metal. It’s why their share prices rise and fall with the price of gold.

But royalty companies like Sandstorm are different. They offer much lower risk. After all, as long as a miner is pulling gold from the ground, the company gets paid. It may not always get paid back as fast as it would like, but the chances of not getting paid back are small.

And with a gold royalty company’s well-diversified portfolio (again, these companies generally have hundreds of contracts), the risk is quite low that a default from even a handful of miners would cause serious harm.

Even better, because many of these royalty deals are structured like the Sandstorm and Vatukoula deal that we mentioned, margins tend to remain fat, no matter the price of gold. In the case of Vatukoula, you’ll remember, Sandstorm pays 20% of the spot price for its gold – no matter whether gold is $2,300 per ounce or $200 per ounce.

It means royalty companies like Sandstorm offer us lower risk… with just as much – if not more – upside as owning a miner.

Take advantage of this opportunity and be prepared to profit as the coming shock to the nation and the economy jolts the price of gold higher. Gold streaming investments will be huge winners when our monetary system goes all digital.

Take a good look at Sandstorm and add it to your portfolio if you like what you see as much as we do.