How to Invest in Gold Royalty Companies
Rick Rule, President of Sprott US Holdings, Inc. and David Cole, President and CEO of EMX Royalty Corp. (NYSE American: EMX) (TSXV:EMX) get into an informative talk with Georgia Tucker of Cambridge House International. Investors want to know how to not waste this metals recovery we are seeing in the current gold bull market. Rule, Cole and Tucker discuss gold history in the market as tied to investor choice, increasingly democratizing market conditions and the potential impacts of the upcoming results of the US Presidential election with a dash of commentary on the ‘real virus’ – spoiler: it’s not COVID... They discuss tangible strategies employed by royalty companies and offer some bonus analysis silver as the ‘poor man’s gold’.
Rick Rule describes how volatility affects investors in the precious metal market. In recalling the dip and recovery in the 1970s when frustrated impatient investors sold out, only to see gold price climb up to $850/oz over a five-year period, rewarding the patient investor and further disappointing the impatient. His message is, “The wind is in gold’s sails; when gold recovers, it really recovers, but it always tests your faith and tests your patience.”
When asked what raised the ceiling on gold to $1800 recently, David Cole flips the question, equating it to asking “How bad can the US dollar get!? Because it’s the antithesis of the US dollar.” Further to US politics, when given a choice between “Trump’s dream, Biden’s dream or gold” – Rule says he would choose gold, because either election result will yield more of the same “steal[ing] from the unborn, who can’t yet vote!”, and that neither election result will affect gold.
Holding the opinion that gold moves first – based on fear – and silver lags with its lower unit prices, Rule continues in his role as a ‘student of the market’, recognizing differences between richer investors who can afford unit prices in gold and poorer investors, who typically tend to preserve or store their purchasing power in silver. Fascinatingly, he makes a speculative note around the potential impact of investors, in South Asia, India, Pakistan, Sri Lanka—some of the poorest 2 billion people in the world— who though still poor, have had “their lot markedly improved” and now “have something to say about silver”.
Georgia Tucker asks if this market is the “real deal”, or a by-product of Covid-19, and Rule replies it has nothing to do with the pandemic but instead, the “worst virus in human history – government!”. He says the gold prices we are seeing now are “a function of the fact that people are beginning to lose faith in the purchasing power of their savings, denominated elsewhere, and the quantitative easing” which he depicts as ‘policy’ that, were it done by anyone but government, would simply be “counterfeiting.” Between Cole and Rule, they discuss the positive positioning of royalty companies and offer a series of considerations for investors.