Gold stocks have proven to be resilient in volatile markets, especially during times of economic uncertainty. However, investing in traditional mining stocks can be complicated due to the inherent volatility of the mining sector.
To navigate this complexity, many investors are turning to streaming and royalty companies, which offer a more stable approach. These companies purchase miners" output or acquire rights to royalties from mining operations.
UBS analyst Daniel Major has identified two gold stocks within the streaming and royalty sector that have significant upside potential. These stocks are trading at discounts compared to historical valuations aligned with current gold prices.
One of these companies is Franco-Nevada, based in Toronto, which has a diverse portfolio and significant investments in the Americas.
The other company is Wheaton Precious Metals, headquartered in Vancouver, which has a strong growth profile and a robust portfolio of operating mines.
Both companies have been performing well, despite some challenges they have faced. Major remains optimistic about their future and projects a positive outlook for their stock prices.
The streaming and royalty model has gained popularity among investors as it allows them to benefit from the upside of gold prices while minimizing the operational risks associated with traditional mining companies.