BC Business
Gold is hitting new highs following the Trump assassination attempt and the precious metals streaming company is going along for the ride
The stock: The political uncertainty that culminated in an assassin’s bullet grazing the ear of the U.S. Republican presidential nominee last weekend had one big beneficiary: gold. Already testing new highs with both leading candidates deemed unfit for office by large numbers of voters, the precious metal soared skyward above US$2,470 an ounce on Tuesday (July 16). Investors clearly see it as a hedge against chaos, likely to hold its value should the U.S. dollar head south. One way to gain gold exposure without some of the downsides is with a royalty streaming stock like Sandstorm Gold (TSX:SSL; NYSE:SAND).
The drivers: Here’s the thinking. Buy gold itself right now and you know you’re buying high. Then it just sits there, not generating any income. Invest in a mining company and you face all kinds of operational risks. But by buying shares in Vancouver-based Sandstorm, a kind of specialized merchant bank that helps fund other companies’ mine developments in return for a share—or “stream”—of the output, you spread your holdings across hundreds of projects in dozens of countries and benefit from any further increases in the price of the commodity. (CIBC analyst Anita Soni wrote last week, before the assassination attempt, that a Donald Trump presidency “could cause a parabolic shift in the gold price in 2025.”) Plus, you receive a dividend; the yield may be just 1 percent, but it beats almost all the alternatives in this space.
Performance-wise, SSL has pretty much tracked the gold price year to date, with a 21.9-percent increase. In the first quarter of 2024, the company reported a US$3.9-million loss, equivalent to one cent per share, on revenues of US$42.8 million. The company’s portfolio of 233 streaming contracts (41 of them currently in production) is 76 percent weighted to gold and 13 percent to copper.
Sandstorm stock closed at $8.03 Tuesday (July 16) on the Toronto Stock Exchange.
Word on the street: Last week CIBC raised its price target on Sandstorm Gold to $9.50 from $9 while keeping a “Neutral” rating on the shares.
Coming and going: Teck Resources (TSX:TECK.A) closed the US$7.3-billion sale of its coal operations to Swiss-based Glencore PLC on July 11, becoming a pure-play metals miner weighted mainly to copper and other minerals associated with the energy transition. Glencore, meanwhile, is committed to maintain a Vancouver headquarters for Elk Valley Resources, as the southeast B.C. coking coal mines are collectively known, for 10 years, under the terms of federal regulatory approval obtained last week.