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A Gold Mining ETF with A Twist

from Seeking Alpha December 14, 2020

Andrew Hecht, author of the Hecht Commodity Report, discusses the benefits of royalty and streaming companies in a post on Seeking Alpha.

“Mining stocks carry idiosyncratic risks of management and specific producing properties. However, products that hold a portfolio of mining shares diversify the idiosyncratic risk… In a highly capital-intensive business, gold royalty companies have very low expenses. They specialize in using their expertise to identify and finance only the best prospects when it comes to gold prospectors and producers.”

A Gold Mining ETF with A Twist

Royalty companies serve as specialized financiers that provide upfront capital to help fund producers’ exploration and production projects. In return, they receive royalties on whatever is produced or rights to a “stream.” This is different from traditional mining companies.

Speaking about the U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU), Hecht says GOAU’s “twist is that it has a substantial percentage of its net assets invested in mining stocks that use a royalty model.” The top three holdings in GOAU as of September 30, 2020, representing 30% of the portfolio, are all royalty companies: Franco-Nevada, Wheaton Precious Metals and Royal Gold.

For investors seeking exposure to these unique companies in the gold mining space, GOAU could be an option to explore. Click here to learn more about GOAU!

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