If you’re one of the many investors looking to gold these days, you’ll like today’s recommendation, from Joseph Shaefer’s The Investor’s Edge. Sandstorm Gold Ltd. (SAND) is a unique kind of gold company: it makes up-front payments to mining companies in need of capital, and in return Sandstorm has the right to buy a percentage of the mine’s lifetime production at a set price. Note that SAND was just listed on the NYSE on August 20, so some information services may not have the most current details on the stock.
“We are purchasing, as of the close today, 2,000 shares of Sandstorm Gold Ltd. (SAND, $10) in the Growth and Value Portfolio. SAND is a gold royalty firm in the manner of Royal Gold and Franco Nevada, albeit considerably smaller. At a time when I believe gold is likely to rise over the coming year, Sandstorm is raising capital to nail down contracts to fund miners it believes have the potential to provide a very strong return to Sandstorm, which takes its ‘payback’ in gold at below-market prices.
“The market panicked when SAND decided to raise capital, fearing that it meant they are desperate for money. My analysis indicates that is not the case. The company is well managed by alumni of Silver Wheaton, another, larger, precious metals royalty firm. We are taking advantage of the decline from 10.82 to 9.63, as I write this, to initiate our positions in a company I believe is in the right sector at the right time with the right approach.”
- Joseph L. Shaefer, The Investor’s Edge, August 23, 2012