Investing In Gold The Right Way: Adrian Day

Investing in gold the right way with Adrian Day. This video is from the VRIC 2020 panel where Adrian Day talks Gold Mining Royalty Companies.
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Adrian Day is a British-born writer and money manager who has made a name for himself searching out unusual opportunities around the world. He has two books on the subject, including the groundbreaking Investing Without Borders.

Here are some of the problems that Adrian sees in the mining business
* Reserve depletion
* Few Major discoveries
* More money going into the process of looking

Mining is a difficult business and the barriers to entry are getting tougher each year. Turning a profit is one of the biggest problems with most mining companies. Because one of the major issues when running a mining company is that when the price of gold goes up, the price of other resources goes up as well. And this makes the cost of running the mine go up.
And then the local resource currencies go up and the local costs of running a mine goes up. And because energy and labor are the two most significant costs of running a mine, cost can skyrocket quickly.

Many times even when the cost of gold goes up the mining companies margins stay the same.

And the time from discoveries to production has dramatically increased over time as well. This is mostly because more permits and red tape are being asked of the mining companies by the local governments. Airline stocks and gold stocks have lost over 2% of investor capital in the last 50 years, making them one of the worst investments.

Whats the best answer to fix this problem?

Royalty companies pay dividends relative to the gold ETF and have leverage to the gold along with expiration upside (ETFs do not have this). They don’t have constant capital costs, operation costs, or environmental costs. They can also have diversification, with more revenue generating mines and assets in a variety of jurisdictions.

One of the biggest benefits is the high profits. The debts of operating companies is high but this is a necessary factor. Royalty companies don’t need debt. Being a royalty company enables one to operate without debt.

Detractors of royalty companies will say the following disadvantages (streaming company) are reasons not to invest in an royalty company:

* Royalties can burden projects
* Royalty companies have no leverage
* Stock are expensive
* Have no control of the asset

Most of these disadvantages are simply perceived and can actually be major benefits to the royalty companies. Adrian believes that Franco Nevada is one of the best gold mining royalty company to invest in.

If you liked this video, check out some of our other great ones from VRIC 2020:

The Coming 2020 SILVER SHOCK: And The 3 Silver Stocks You Must Own

The Next Black Swan Event: Adam Baratta

Is Canada a Leaky Ship in a Turbulent Sea?

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