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Public Markets Investor, Opportunistic Buying & Cost-Basis Management
Franco-Nevada's premium valuation is becoming less justified as rivals rise and Franco dilutes its gold exposure with non-gold assets. It has long carried a JPMorgan-like premium in gold royalties. A post the author replies to notes Royal Gold trades at 13x free cash flow and 1.2x NAV, while Franco-Nevada and Wheaton Precious Metals historically trade at 20-26x free cash flow and 2x NAV. x.comÂ
Newmont is basically levered gold with little potential for discovery upside, and it is likely to pay high prices buying other companies. x.comÂ
Newmont fell 10% on the week despite record Q1 free cash flow of $3.1B and a fresh $6B buyback, leaving it at a forward P/E of 9.58 on a $116B market cap. CIBC raised its target to $177 from $112 and Scotiabank to $152 from $114. Cadia is back to 80% capacity, with full normalization expected in Q3 2026. x.com x.comÂ
Franco-Nevada's 8% drop is an overreaction: an agreement to restart First Quantum's mine on these terms is incrementally positive, and the state joint venture is more of a First Quantum issue than a Franco one. The risk is that the state tries to insert itself ahead of Franco's stream. x.com x.comÂ
Gold miners, unlike gold itself, turn a higher gold price into compounding cash returns. On a path to $8,000 gold, margins would widen far beyond today's roughly $2,400 an ounce even if all-in sustaining costs rose a third to $2,650. Free cash flow per share is at a record of about $15.70, roughly tripled since 2024, and the industry is buying back stock rather than mines, a combination never seen before. Relative to the S&P 500, miners have never been cheaper, not in 2008, 2015 or 2020. x.com … Show more
Royal Gold is a strong buy because it owns the landlord's position in gold rather than operating the business. It finances miners in exchange for royalties and streams, collecting cash flow while someone else does the hard work, with no labor costs, equipment or environmental liability, just margins. x.comÂ
Franco-Nevada and Royal Gold fit the case for owning hard assets, because the end game is very likely the dollar, along with the pound, the euro and other major fiat currencies, going much lower. Gold, platinum, silver and copper are the assets to hold against that. x.comÂ
Gold mining stocks are worth owning heavily because the sector is generating extraordinary profits at current metal prices. Per Tavi Costa, gold miners are doing more share buybacks than at any point in history, on a scale never seen before, as a direct result of that profitability. You can't own enough gold stocks in view of what is coming. x.comÂ
Gold Royalty may be significantly mispriced because the value of its mostly non-producing royalty portfolio is ambiguous and hard to value. Only about 8-12 of roughly 254 royalty interests produce, most are fully paid up, and royalties are booked at cost less depletion, below economic value. It trades at about 0.87x book, is debt-free with about $150M of undrawn credit, and management guides to roughly 5x growth in gold-equivalent ounces and revenue through 2030. Copper is about 20%. x.comÂ
Gold miners Agnico Eagle, B2Gold and Newmont are worth buying aggressively because, per Willem Middelkoop (@wmiddelkoop), gold mining shares are dirt cheap again compared with gold. x.comÂ
Gold miners look like most of the damage is done: gold is down over $1,500 from its top and miners about 40%, with sentiment and positioning near capitulation. Gold's Daily Sentiment Index fell to 14% bullish, speculative open interest is below the late-2015 bottom, the miners' bullish percent index hit 0% and gold's RSI is the lowest since October 2023. Gold could still fall on Hormuz, dollar strength and seasonality, but Chinese buying, de-dollarization and miners' cash flows remain. x.comÂ
