As far as individual stocks go in the precious metals mining sector, Franco Nevada Corp. (TSX:FNV) is one of my top picks in this space. In this article, I’m going to highlight why I think investors ought to consider Franco Nevada as one of the best ways to invest in gold today.
Franco Nevada doesn’t mine a single ounce of gold. The company’s business model is actually a royalty model. The company provides up front financing to gold producers for various gold projects around the world. The company receives a royalty on every ounce produced.
With the price of gold rising, production at various mines the company owns royalty streams on is expected to increase. This creates an environment where Franco Nevada may be able to increase its revenue and cash flows due to optionality, with respect to the royalty contracts that are in place.
This optionality also extends to future gold discoveries which may become economical due to the higher price of gold. Various projects that were breakeven at $1,100 U.S. per ounce are now wildly profitable with gold hovering around $2,000 U.S. an ounce. This makes Franco Nevada a great way to gain even higher leverage to gold prices than miners or bouillon can provide.
In my view, this stock is a "must-own" in the gold space. Looking at its stock price chart, one can see this reflected, accordingly.
Invest wisely, my friends.
