/biz/ - Business & Finance

>>55097181
They are much less risky to hold than mining companies. Miners (especially the shitco juniors) are exposed to a million risks. One of these risks being cost inflation which ended up being a punch in the gut for many mining companies in the past two years. AISC and CAPEX creep has been devastating to some miners! Roylaty companies only take the revenue off the top -- their gross is essentially their net. Royalty companies are much more stable and diversified so they move less both ways, that's true.

But consider also the bigger picture that they do relatively well in a down cycle when miners get absolutely shafted. When the sector gets into liquidation (and it does from time to time because the sector is very cyclical), big royalty companies with their fuckoff balance sheets and no costs can swoop in and buy new royalties at hilarious prices. This is exactly what companies like FNV and OR have done, and they're now just sitting back and enjoying the free ride. That's what makes these companies preferable as a long term or even perpetual hold. The track record does not lie.
>>55097207
it's all relative to cash flow, but also I did mention that it's a bit of a speculation. I think o&g are going to go up from here so I'm long. I could be wrong, but in the case that ends up being the case I'll happily average down. Quality oil and gas companies really are trading at structurally low multiples to FCF. Compare the sector valuations to shit like tech and you'll see a world of difference. As for gold majors, yes they are in fact cheap right now relative to net asset value and are raking in massive cash flows. Even if gold went back to $1,800 the gold majors would be a good buy right here. Gold miners are cheaper than they have been in decades.

>>52999505
You and me,buddy