A "Streaming" Fund for Gold Royalties

07/13/2020 5:00 am EST

Focus: COMMODITIES

Tony Sagami

Editor, Weiss Ratings LLC's Weiss Ultimate Portfolio

Wall Street has dramatically chopped its Q2 earnings estimates by an average of 36.6% — just as the stock market has gone up by 20%. Talk about a disconnect! asserts Tony Sagami, editor of Weiss Ultimate Portfolio.

This rally has caused valuations to skyrocket. The forward PE ratio of the S&P 500 is more than 22 times earnings. For perspective, we started the year at 18.2 times earnings.

Think about that — even though the world has been decimated by the novel coronavirus, the stock market is about one-third more expensive than without it.

Plus, more than one third of S&P 500 companies (183) have completely withdrawn their guidance for the rest of 2020. I don’t know about you, but I think flying blind sounds like a great way to crash into a mountain.

July could be a disaster. Not only do I expect a flurry of horrible earnings report, but I also expect consumer spending to nosedive. This comes at the same time as the coronavirus is surging in new parts of the country.

The stock market has been trading like everything is fine, all systems are go and the rumored “V”-shaped recovery is right around the corner. I don’t think so — which is why we are loaded up on precious metals.

I am now recommending U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU), which is a unique precious metals ETF. Instead of investing in traditional gold miners, it instead invests in mining stocks on a royalty basis.

Royalty companies invest a fixed amount into a specific gold or silver mine exchange for the rights to purchase whatever gold and/or silver that is pulled out of the ground at predetermined, below market price.

Royalty companies do not have operational or development costs as a typical a miner does. Its only major risks are an unproductive mine or a drop in the price of gold.

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