Harris, in light of your recent commentary about gearing, have you looked at some of the gold/silver royalty companies? Shouldn’t this be the case for them as well as the gold price rises? Have you done any work on RGLD or Franco (or something smaller) in this regard? Thanks!

The royalty companies really should gear. Great point. Their costs are pretty fixed and revenues should increase with metal prices.

I have looked at them and I think they’re really great ways to play gold. However, I think that they tend to be fairly valued in most cases. Therefore, you are really playing b/c you think higher metal prices are coming or that management will continue to make intelligent acquisitions. It’s not a bad bet to make. I just think a lot of that is priced into some of these. I am not familiar enough with any of the larger ones right now to say which are/aren’t cheap. I have owned both SLW and RGLD in the past. I haven’t looked in a while though. In any event, royalty companies are a much safer way to play metals than owning miners. You can avoid a lot of the risks of mining–but you have to pay up for that right.

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