THE BIGGEST GOLD MANIA

GOLD MANIATHE BIGGEST

IN HISTORYCASEY’S NEXT 6 GREAT GOLD PLAYS!

BY NICK GIAMBRUNO, CHIEF ANALYST, THE CASEY REPORT

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CASEY’S NEXT 6 GREAT GOLD PLAYSThe Casey Report

Dear Reader,

Exploiting crises has long been the modus operandi and ethos of the many sociopaths that fill governments.

And thanks to a staggering new study, we’ve learned that just 23 firms (mostly banks and Deep State operatives) form one giant Super-Entity that controls around a staggering half of all the money flows on the planet.

That is $183 trillion.

And that’s not a typo. That’s trillion with a “T.”

We call them, “The Covert-23.”

And they’re responsible for the monetary insanity we’ve seen lately…

The financial system is being pushed to brink of collapse... and every time there’s been a crisis of note, the majority of Americans are blindsided and suffer tremendously as a result.

But those with enough foresight to take action can prosper…

I’ll show you where to shift your money to potentially earn massive profits from the coming collapse.

You see, soon, I predict gold will smash its all-time high.

I think $5,000 per ounce is a conservative prediction…

I wouldn’t be surprised of it reached a new record high of $10,000 per ounce by the end of this bull market.

And I’ll give you six specific ways to capture huge gains as money-printing – encouraged by the Covert-23, corrupt governments, and crony insiders – sparks a gold mania in the months ahead.

I don’t want you to be among the masses who are caught unaware as the government bureaucrats use yet another crisis to their advantage... to hard working Americans’ detriment.

Regards,

Nick Giambruno Chief Analyst, The Casey Report

https://www.caseyresearch.com/team/staff/nick-giambruno/

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LIST OF GREAT PLAYSInvestment No. 1….……………………………………………………… Yamana Gold (AUY)

Buy Yamana Gold up to $8 per share.

Investment No. 2………………………………………………………… Royal Gold (RGLD)

Buy Royal Gold up to $160 per share.

Investment No. 3………………………………………… Sprott Physical Gold Trust (PHYS)

Buy Sprott Physical Gold Trust up to $20 per share.

Investment No. 4………………………………………….Wheaton Precious Metals (WPM)

Buy Wheaton Precious Metals up to $50 per share.

Investment No. 5…………………………………………......................Alamos Gold (AGI)

Buy Alamos Gold up to $15 per share.

Investment No. 6 ……………....................................................Kirkland Lake Gold (KL)

Buy Kirkland Lake Gold up to $70 per share.

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GREAT PLAY # 1: YAMANA GOLD (AUY)Owning physical gold is an essential first step for any gold investor. But with premiums soaring and long waits, you hopefully have already bought some physical gold…

In any case, you’ll also want leveraged upside to grow your wealth in the historic bull market that’s now unfolding. For that, we’re turning to companies that produce precious metals…

Yamana Gold is a Canada-based miner with a multimillion-ounce gold reserve. It also has a strong production growth profile from its five gold and silver mines.

Yamana offers the relative safety of an existing, rapidly growing mid-tier producer, but with the upside of a junior production play. I think it’s set to vault out of the medium-sized producers and into the big league.

Let’s drill down into the key factors that make Yamana a terrific way to profit from the ongoing trouble in the markets.

Inside the Company

Yamana’s mines are world-class. They are already producing more than 900,000 ounces of gold equivalent (including 780,000 ounces of gold and 10.6 million ounces of silver) and doing it profitably. And there is much more to come.

Most of its production comes from Canada (33%) and Chile (30%). Operating in these two politically stable and mining-friendly countries is a big plus.

Yamana’s Four Production-Stage Projects:

1. Canadian Malartic (30% of total revenue)

The Canadian Malartic gold mine, one of Canada’s largest gold operations, is located in the Abitibi region of Quebec.

Yamana jointly (50/50) bought this open-pit mine with Agnico Eagle from Osisko Mining back in 2014. As a reminder, open-pit mines typically operate at a much lower cost. That’s because of the type of equipment needed, the lack of need for ventilation, and other factors.

Canadian Malartic produced 284,000 ounces of gold for Yamaha last year. As of December 2020, the company has 2.4 million ounces in reserves at the project.

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2. El Peñón (24% of total revenue)

El Peñón is a 100% Yamana-owned high-grade gold-silver mine, located in the Atacama Desert in Region II of northern Chile.

It’s an underground operation with output averaging 4,200 tonnes per day. The mine produced about 161,000 gold ounces and 4.9 million silver ounces last year. The mine currently has a reserve of 921,000 ounces of gold and 29.2 million ounces of silver.

It’s interesting to note that Yamana has replaced its reserves at El Peñón virtually every single year since production began in 1999.

3. Jacobina (20% of total revenue)

Jacobina is an underground operation in Bahia state in northeastern Brazil.

The project has a complex of underground gold mines and a 6,500 tonnes-per-day processing plant. Between 2014-2019, the mine has gone from producing 75,000 ounces of gold to almost 178,000 ounces. As of December 2020, the project has 2.8 million gold ounces in reserves.

4. Cerro Moro (14% of total revenue)

Cerro Moro is a gold-silver operation located in the Santa Cruz province of Argentina.

The project has several high-grade gold and silver veins, which Yamana mines through a combination of open pit and underground mines.

The company produced about about 67,000 ounces of gold and 5.5 million ounces of silver in 2020. The project currently boasts 431,000 ounces of gold and 23.9 million ounces of silver in reserves.

Yamana currently holds reserves of about 13.8 million ounces of gold and 113 million ounces of silver.

Remember, a mineral reserve is the portion of mineral resources that is economically feasible to produce and sell.

Yamana also has 15.7 million ounces of gold and another 49 million ounces of silver in the (lower confidence) resource category.

I think there’s a good chance a lot of these resources will become reserves at a later stage. Yamana’s geologists have done a fantastic job on this front in the past. Plus, the company has cash in the bank.

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Yamana expects to grow production to 1 million ounces next year.

If gold remains in its respective trading range, success on that front alone should trigger a rise in its share price.

I expect that Yamana will reach these targets with relative ease.

One big reason for this is, of course, Yamana’s team.

The company’s management has a successful track record of permitting, developing, and running mines in Canada and other parts of the world.

President and CEO Daniel Racine runs Yamana day-to-day. Former Agnico Eagle insider, Racine was a founding shareholder, director, and CFO of Rio Alto Mining from 2007-2014.

Racine has over 30 years of experience in the mining industry. His team includes engineers that know how to manage Yamana’s operations profitably. Yamana’s founder, Peter Marrone, is Chairman of the Board.

Catalysts

Yamana isn’t a small company that might hand you a 5x gain on great news. It’s a billion-dollar business. That said, this year I could see Yamana getting a push from:

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• Phase 2 optimization at the Jacobina mine. Upon successful completion, this has the potential to take the mine to a production rate of 230,000 ounces per year.

• Feasibility study at Jacobina. The company’s plans for Jacobina need to make economic sense, which the feasibility study (slated for release in 2021) will hopefully demonstrate.

• Continued exploration success at Cerro Moro.

• Delivering on production expectations.

Additional catalysts for these shares could be results from a feasibility study on the MARA project in Argentina. It’s a copper project, so I doubt management will immediately throw money at it even if the numbers look great. But the market may appreciate getting another new angle to this story.

Costs

Yamana’s costs are not the lowest in the industry, but they are relatively small. The company’s all-in sustaining cost (AISC) came in at $1,051 per ounce for 2020. As of this writing, that’s almost $750 per ounce below the current gold price of $1,800. In general, having AISC around $1,000 per gold ounce is the norm for leading miners in the current price environment. Plus, management expects Yamana’s AISC to decline this year, which would make it more profitable.

(As a reminder, AISC is a comprehensive measure of mining expenses, including on- and off-site costs, plus capital required to keep the mine in production.)

This relatively low-cost profile gives Yamana a safety cushion. It’s also more than enough to ensure that significant cash continues to flow into its coffers.

In sum, Yamana is in a decent place cost-wise. It doesn’t need gold to go any higher to be profitable.

Risk

A large portion of gold production happens in places with substantial political risk, like South Africa. So the location of Malartic – Yamana’s flagship mine – is a significant advantage. Canada, and Quebec in particular, is one of the friendliest mining jurisdictions in the world.

The bigger concern for Yamana is Brazil.

But Brazil has recently become a better place to do business, particularly since Jair Bolsonaro became president in 2019. Known for his pro-business stance, Bolsonaro has vowed to transform Brazil into one of the most investment-friendly places in the world.

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Typically, we’d also have misgivings about Argentina as a mining destination. But Yamana knows the country inside and out, having operated there a long time.

Perhaps more importantly, all its key mines are already in operation. So, there’s no real permitting risk.

The most significant risk for Yamana is falling gold prices. But with so much fear in the markets and worldwide money printing, I don’t expect precious metals prices to fall substantially lower from here. As I already explained earlier, the opposite is far more likely. Plus, Yamana’s relatively low AISC helps minimize this risk. I think Yamana would do very well even with gold at $1,500.

Balance Sheet

The downturn in gold prices that followed the 2008-2011 bull market struck Yamana hard. One of the culprits was debt.

As with many of its peers, Yamana’s troubles came from overspending on acquisitions and failing to keep a lid on costs.

In recent years, however, Yamana has focused on reducing debt and costs. It took some drastic steps like selling the Chapada copper mine for a total of $1 billion to meet debt repayments. As a result, the company managed to cut its long-term debt from $2 billion in 2014 to $994 million by 2020.

Today it has one of the healthier balance sheets in the industry – and an upgraded credit rating.

Yamana finished the most recent quarter with over $651 million in the bank. With this much money (while generating positive cash flow) and a low debt-to-equity ratio of 20%, I’m not worried about the company getting through tough times.

Remember, a low debt-to-equity ratio indicates lower risk because debt holders have less of a claim on the company’s assets.

Price and Valuation

Yamana’s shares are down so far in 2021, having traded sideways over the past year. You can see this in the chart below.

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The recent price action also means that these shares are currently trading 80% lower than their all-time high in 2012. In other words, Yamana is looking significantly undervalued.

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Of course, it’s essential to look beyond just the price. But if we look at Yamana’s numbers in relative (not just absolute) terms, they tell the same story: The stock is a bargain.

It’s also useful to look at Yamana’s valuation by comparing its reserves to its market capitalization.

As already mentioned, the company has about 13.8 million gold ounces and 113 million silver ounces in reserves. Even at $1,500 per gold ounce and $20 per silver ounce (well below today’s levels of around $1,800 and $27, respectively), its total reserves would be worth about $23 billion.

Meanwhile, it has a market cap of just $3.9 billion.

That means the value of Yamana’s reserves is nearly six timess its market cap. That doesn’t even include all the millions of gold and silver ounces – as well as tonnes of industrial metals – in the resource category.

Bottom line: Yamana’s shares look like a bargain.

I believe the current price action is a clear opportunity for those looking for low-risk leverage to rising gold going forward.

Dividend

Yamana is a dividend payer. Its current yield amounts to about 1.8%.

More than just that, the company has recently become very active in its attempt to boost value for shareholders.

In addition to raising its annual payouts by 25% to 7 cents per share, management has pledged to create a special fund to ensure the sustainability of its dividends.

As Yamana boosts production in 2021 and beyond, I expect its dividend to continue to grow significantly.

Action to Take: BUY Yamana Gold (AUY) up to $8 per share.

The company is a strong buy at current levels. That said, there’s no reason to chase this stock. It isn’t a small exploration company that can double on a great drill hole. There’s no rush here. Take your time and buy on down days for gold.

I expect Yamana could easily double this year. But it wouldn’t surprise me if this trade turned into a much bigger win for us.

Plan on holding shares for at least one to two years.

An Important Note on Controlling Your Risk

Mining stocks are notoriously volatile, which means we won’t use trailing stop losses here.

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If you’re a small investor, we recommend placing no more than $200-$400 in Yamana. If you’re a big investor, you can make that $500-$1,000. It is the best way to control risk without missing out on the incredible upside opportunity.

Ultimately, it’s up to you to determine the exact allocation of our recommendations in your portfolio. As always, please never invest money that you can’t afford to lose, and never borrow money to invest. Losing is always a possibility with all investments.

GREAT PLAY # 2: ROYAL GOLD (RGLD)Royal Gold (RGLD) is one of the go-to names in the precious metals royalty and streaming space. It’s a successful operation that’s been around for a long time.

Royal Gold was founded more than three decades ago. It was an early champion of precious metals investing.

And investors who have held shares in RGLD for several years have made fortunes. Royal Gold shares traded at just three bucks in 1986. At writing, they trade at $104 per share.

What did it take for Royal Gold to become such a success? Just a few employees and an excellent management team. In fact, Royal Gold only has 20 people on staff today.

This is one of the main reasons we like royalty companies so much. And it has to do with the business model itself.

As a royalty company, you have none of the expensive headaches that come from mining. This makes royalty and streaming companies the safest way to be in the mining business.

This whole “mining without mining” business is also hugely profitable. Royalties and “streams” get paid on production, regardless of the profitability of the mines. That means that unless a mine shuts down, the royalty company will get paid.

Even if higher energy costs and higher labor costs cut into the payoff that mining companies receive from rising gold prices, those higher expenses won’t eat into RGLD’s royalties. Its royalty stream will grow proportionately with higher gold prices.

Royal Gold’s only “cost of production” is its office, staff, and cost of capital. No diesel fuel. No mining fleet. No permitting costs.

All this explains why RGLD made money during the 2011-2015 bear market, even when a lot of the miners paying their royalties were not. You can see this in the next chart.

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Not too bad considering gold lost 45% of its value between 2011 and 2015.

This is one of the key factors that makes Royal Gold an obvious target for new money entering our market, looking for low-risk leverage to rising gold going forward.

While RGLD’s fortunes are tied to the price of gold (and you know we think that’s headed higher), the company is poised for solid growth for two other reasons:

• Maturation of projects. In addition to the royalties from production-stage assets, Royal Gold has royalty agreements covering over eight development-stage projects with mineral reserves that are advancing towards production. [A mineral reserve is the portion of mineral resources that is economically feasible to produce and sell.]

These properties are in the process of being turned into producing mines. These mines will add millions more in royalty revenue for RGLD’s shareholders. It makes for a good project pipeline.

• Acquisition of new royalties. Like I said, Royal Gold is in the business of providing financing to miners in return for royalties. And management has hinted at the possibility of snapping more royalties/streams going forward.

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Assets

Royal Gold’s revenue increased 83 times from 2001 to 2020, as you can see in the next chart.

With a few exceptions, Royal Gold grew sales every year during this period.

Currently, Royal Gold has 42 producing royalties, spread across various metals and political ju-risdictions. I like this diversification. This and the royalty business model make for a low-risk op-eration. The low risk versus high potential reward is about as good as it gets in the mining sector.

The company has six main projects that bring in about 70% of revenues. Below are the top four:

• Mount Milligan, Canada, a copper-gold mine operated by Centerra Gold. Mt. Milligan has 4.7 million ounces of gold and nearly 1.8 billion pounds of copper in reserves. A streaming agreement covers 35% of payable gold at $435 per ounce and 18.8% of payable copper at 15% of spot copper price. In 2020, the mine produced a total of 161,855 ounces of gold.

• Pueblo Viejo, Dominican Republic, a gold-silver mine under joint venture between Barrick and Goldcorp. (Goldcorp was acquired by Newmont in April 2019.) Royal Gold has a stream on the Barrick share (60%) for gold output (7.5% on the first 990,000 ounces delivered and 3.75% thereafter) and for silver (75% on the first 50 million ounces of payable silver and 37.5% thereafter).

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Royal Gold is paying 30% of spot on the first 550,000 gold ounces and 60% thereafter. For silver, the arrangement is such that Royal Gold pays 30% of spot until the first 23.1 million ounces are delivered and 60% of spot thereafter. The reserves include 6.2 million ounces of gold. Pueblo Viejo produced a total of 903,000 ounces of gold last year.

• Andacollo, Chile, a copper-gold mine operated by Teck Resources. RGLD is entitled to 100% of the first 900,000 ounces of gold, and 50% after that. Royal Gold is paying 15% of the monthly average gold spot price for the month preceding delivery. The mine has 1 million ounces of gold in reserves. In 2020, Andacollo produced a total of 21,600 ounces of gold.

• Wassa, Ghana, a gold mine operated by Golden Star Resources. There are 1.5 million ounces of gold in reserves. The stream conditions cover 10.5% of the first 240,000 ounces produced, after which it’ll decline to 5.5% of payable gold. The mine produced a total of 190,000 ounces of gold in 2020.

The royalty model is one of the best business models in the world. In addition to the benefits we mentioned already, it comes with another great feature – something known as “optionality.”

It’s one of the most important elements of a royalty company. It’s also something conventional valuation models usually overlook.

Let me explain…

Most royalties apply to entire properties. It’s not just mine reserves at the time a decision is made to build a mine that these contracts cover. So the amount to be paid or delivered to the royalty company increases every time the miner discovers more gold, silver, etc. on the property and mines it.

Such royalties are options on all future discoveries. The value of this optionality can never be measured in the present, but it’s real. It’s also what adds windfall potential for royalty companies as uncertain discoveries turn into tangible gold ounces produced.

This is critical. Some mines (particularly in Nevada) are famous for having only a couple years of mine reserves left in them. But every year, they replace what they mine with new discoveries.

And it doesn’t only apply to Nevada. AngloGold Ashanti’s Cerro Vanguardia gold mine in Argentina has been doing this for decades. If you had a royalty on the mine’s reserves as originally planned, your royalty would have expired already. But a royalty that paid on anything discovered on these properties would still be paying and paying and paying.

Finally (and best of all), you typically don’t need to pay anything for this optionality. You buy the royalty based on what you project the mine in question will pay, given what’s already in hand. Anything discovered after the fact is free upside. This is a big part of the Royal Gold success story.

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This means streaming companies like RGLD often have more growth potential than traditional valuation metrics show.

People

Behind any company’s success is its team. But the royalty and streaming model is unique in that regard. The number of people involved in the business is minimal. Royal Gold may have only 20 employees, but their achievements speak for themselves.

It takes a special group of executives to grow revenues nearly 80 times with a headcount as low as this.

The company’s CEO and president, William Heissenbuttel, has over 25 years of experience in the mining industry.

Heissenbuttel’s team includes people who know how to steer Royal Gold through the market’s ups and downs successfully.

Bottom line: With a company this large, and with such a solid track record, we’re willing to go with a winning team that knows how to deliver.

Risk

Royalty Gold has none of the risks associated with miners – like exploration risks, technical risks, and cost overruns. The biggest risks in royalties are the mines not yet built, but that’s not the driver here.

Of course, declining gold and silver prices would be a risk for Royalty Gold. But I don’t expect precious metals prices to fall significantly lower from here.

Royal Gold is also a company that has managed difficult market conditions in the past. It should be able to do that again if necessary.

All in all, it’s hard to think of a precious metals investment with less risk and more upside.

The company’s political risk is diversified through its wide portfolio of streaming agreements. Even if one stream implodes, it wouldn’t be a fatal blow to Royal Gold. And with most of its projects in relatively stable countries, I think its overall political risk is relatively low.

Share Structure, Cash, and Debt

Royal Gold has a tight structure: ~66 million shares. Most of the shares are free trading on good volume.

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The company’s share structure hasn’t changed much since 2012, so we don’t expect any surprises. Unless Royal Gold decides to issue new shares to pay for a new acquisition (which would supposedly add value anyway), the dilution won’t be a problem here.

About 80% of the company’s shares are owned by institutions. This signals that the company is a mature business. Top shareholders include Capital Research and Management Company, The Vanguard Group, and VanEck Associates.

Insiders as a group own another 0.4%, led by Heissenbuttel himself who owns roughly 76,000 shares of Royal Gold. This is a good sign, too. It means the company’s top people have skin in the game.

Insider and institutional shareholders are called “strong hands.” They won’t let market volatility whipsaw them out of their positions.

Royal Gold finished the most recent quarter with over $382 million in the bank.

With this stash of cash and a debt-to-equity ratio of 9%, I’m not worried about the company getting through tough times (should they occur). This also makes RGLD one of the least-leveraged companies in the royalty and streaming space.

Price and Valuation

As you can see in the next chart, the stock is currently on sale compared to last year’s high.

It’s also worth mentioning that Royal Gold currently offers a dividend yield of 1.16%.

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That may not seem like a lot, but management has continued to grow dividend payouts for years. Back in 2001, the dividend was $0.05. After an increase announced in November, the company’s annual dividend is $1.20.

As Royal Gold adds more royalties and streams in the years to come, I expect its dividend to continue to grow.

And remember, RGLD is also a company that sports a solid balance sheet, low risk, and a highly experienced and successful management team.

In sum, Royal Gold still has a lot of upside, making it a great way to get leveraged exposure to the price of gold.

I expect these shares to do very well in this bull market in gold.

And Royal Gold is a low-risk, high-reward way to profit from this.

Action to Take: BUY Royal Gold (RGLD) up to $160 per share.

Remember, don’t invest any money you can’t afford to lose.

GREAT PLAY # 3: SPROTT PHYSICAL GOLD TRUST (PHYS)Sprott Physical Gold Trust is a physical gold fund. PHYS was created to invest all of its assets in gold.

The man behind the fund is Eric Sprott, a precious metals guru and self-made billionaire. He founded Sprott Inc. – an early champion of precious metals investing – nearly four decades ago and took the company public in 2008.

Sprott’s company began investing in precious metals in 2000, when he saw tremendous upside for gold. (It was trading around $270 at the time – now it’s around $1,750).

In 2009, the company launched Sprott Physical Gold Trust. The fund gives investors a convenient way to buy actual physical gold without having to worry about storage, or coin premiums.

And, of course, PHYS has a long track record of tracking gold closely.

This all makes PHYS a great way to profit from the ongoing bull market in gold.

Not an ETF!

Sprott Physical Gold Trust is not an exchange-traded fund (ETF). It’s a closed-end fund (CEF). This is actually an advantage.

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As you may know, an ETF’s share price tracks its net asset value (NAV) very closely. That’s not necessarily the case with a CEF. Its share price can respond more strongly to market sentiment.

This means that shares in a gold-based, closed-end fund like PHYS can trade at a discount to NAV, or at a premium.

When the share price of PHYS is greater than its NAV, it’s trading at a premium. When it’s lower, it’s trading at a discount.

How does this happen?

Well, a closed-end fund like PHYS only issues a limited number of shares. When there’s a lot of demand for them, it doesn’t satisfy that demand by “printing” new shares like an open-end fund would. Instead, investors compete for a limited pool of shares and bid up the price.

Bottom line: Because of the way a closed-end fund works, buying one at the right time can hand you significant value.

A Host of Advantages

Sprott Physical Gold Trust is one of many ways to invest in gold. Let’s look at a few advantages it offers:

• The fund holds all its assets in physical gold bullion stored at the Royal Canadian Mint. In other words, PHYS buys physical gold for you (and only you) and holds it in giant safes. The custodian currently holds 2,592,555 ounces of gold in the fund’s name.

• The fund’s physical gold is periodically inspected and audited. So you know it’s there. Contrary to popular belief, this is not how all gold funds work.

• Unlike an ETF, PHYS never loans out its physical precious metals to other institutions.

• PHYS never takes deposit receipts for physical metals, as ETFs often do.

• And as an investor, you can even buy it and hold it in your IRA – or Roth IRA. If you hold it in one of these accounts, your capital gains won’t be taxed.

• You can choose to take delivery of your gold at any time, as long as the amount you want meets Sprott’s minimum redemption requirements. The minimum amount that can be redeemed in physical gold is one 400-ounce London Good Delivery bar.

I can’t stress this last point enough. When you buy PHYS, you own tangible gold that you could have shipped to your house.

Granted, this service is mostly suited to larger investors. But it’s still an important feature that sets PHYS apart from most precious metals ETFs.

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Price

The chart below shows PHYS’s one-year performance. It’s been in a downtrend for the past several months.

At writing, PHYS is still down about 17% from its previous peak. And it has plenty of upside.

PHYS is also currently selling at a discount to NAV. As of writing, the discount is 1.3%.

Remember, we want to buy at a discount or when the premium is low. Here’s a picture of the fund’s premium/discount since 2013.

PHYS’ current discount of 1.3% compares favorably to the average (10-year) premium of 0.3%. If we rolled back the timeline to its inception (which we didn’t to avoid the noise), the average premium would be about 1.3%.

So if history is anything to go by, PHYS is currently trading at a competitive price relative to NAV.

You can see this in the next chart.

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Bottom line: We’re still at an attractive entry point right to ride the long-term gold bull.

Action to Take: BUY shares of the Sprott Physical Gold Trust (PHYS) up to $20.

You should plan on holding for at least one year, possibly longer.

GREAT PLAY #4: WHEATON PRECIOUS METALS (WPM) Back in 2005, gold and silver stocks were on an absolute tear.

A little-known stock called Silver Wheaton – now Wheaton Precious Metals – was one of the biggest success stories to come out of this fantastic bull market.

When Wheaton Precious Metals was founded in 2004, it was worth just $50 million.

A few years later, it was worth billions.

What’s even more impressive is that Wheaton Precious Metals never pulled a single ounce of silver out of the ground.

You see, Wheaton is a “mining company” that doesn’t mine. Really, it isn’t a mining company at all. It’s a streaming company.

Here’s how the business works… Wheaton Precious Metals bankrolls traditional mining companies. Then, those companies develop mining projects with Wheaton’s cash. In exchange, Wheaton gets the right to purchase part of the mine’s output at a predictable, low price.

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It’s an innovative and extremely lucrative business model.

Wheaton Precious Metals doesn’t do the hard work of operating the mine. It’s not responsible for any of its costs or liabilities. And an increase in operating costs doesn’t affect its bottom line.

Instead, it collects a “stream” – or royalty – of the mine’s silver and/or gold production at a predictable, low price, which it can sell for a profit.

Wheaton Precious Metals has a portfolio of these streaming agreements with various miners. This minimizes the company’s risk, while allowing it to capture the upside of rising precious metal prices.

It’s a low-risk, high-reward arrangement.

It’s also one of the best business models you can buy into as an investor.

Doug Casey was one of the first to figure that out. In fact, Doug was one of Silver Wheaton’s earliest investors. He invested in the startup after Ian Telfer – the company’s founder and a legend in the metals market – called him up and pitched him the company.

Doug’s readers made a fortune off Silver Wheaton, too. When he recommended the stock in February 2005, his thesis was simple: Silver Wheaton was going to “become the next ‘go-to’ vehicle for silver.”

Here’s what Doug wrote in 2005:

Although it is still in its early days, Silver Wheaton has all the ingredients of a winner and will be a must-own company for institutional investors looking to ride the silver wave…

I have no doubt there will be times that the price of Silver Wheaton shares will hit the moon.

Doug was spot-on. It soared more than 500% in under three years.

Less than a year later, lightning struck again. This time, Silver Wheaton surged from under $5 to more than $45 in just over two years. Today, I think we have another solid chance of realizing huge returns from Wheaton Precious Metals.

The Best Way to Make Money in Mining

Streaming companies are the safest way to be in the mining business. That’s because they don’t have the expensive headaches that come from actually mining.

They don’t have to worry about flat tires on haul trucks, negotiating with union employees, or dealing with overzealous environmentalists.

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Remember, Wheaton Precious Metals doesn’t own, operate, or explore for any gold or silver. So it’s largely insulated from the risks of operating mines.

This doesn’t completely shield it from fluctuations in the gold and silver markets, but it does help. It also means the company can load up on quality assets at bargain prices as more mining companies find themselves in need of cash during the ongoing slump in metals prices.

This is why the “mining without mining” business is so profitable. And despite some competition, Wheaton is the world’s largest player in the space.

Like other commodity markets, the gold and silver markets are highly cyclical. They go through regular booms and busts.

When precious metals boom again and new investors look to cash in, many will turn to the biggest, safest, and most profitable precious metals company they can find. That means Wheaton Precious Metals will be first on their radar.

Wheaton has the largest attributable silver mine reserves in the industry. It has 543 million ounces of silver and 11.4 million ounces of gold in reserves. And it expects to produce between 22–24 million silver ounces and between 370,000 and 400,000 gold ounces in 2021.

All of this production is coming from 24 different mines and seven development projects in about a dozen countries around the world. This helps diversify the company’s political risk.

Even so, 96% of the production happens in relatively safe jurisdictions in the Americas.

Now, I’ve already told you that the streaming model is one of the best business models in the world. But it comes with another big plus, especially for a company like Wheaton.

When analysts calculate the value of a mining stock, they often base it on the company’s mining reserves or estimated production. But these models overlook one of the most important elements of a streaming company, something known as “optionality.”

When companies like Wheaton negotiate streaming deals, they often include land surrounding the main asset or mine. So as producers continue to dig around on their properties, any additional silver and gold they find is automatically added to the streaming company’s account. But it doesn’t have to pay a penny more for it.

This means streaming companies often have more growth potential than traditional valuation metrics show.

There’s no way to know how much additional gold and silver Wheaton’s streaming partners will find. But there’s almost certainly more than they currently know about – likely, a lot more.

All of this free upside will continue to grow the company.

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Why We Like Wheaton Precious Metals

Wheaton is the go-to precious metals streaming company for a few key reasons:

Predictable, low costs. Virtually all of Wheaton’s costs are determined in advance. So it can survive and thrive in volatile environments that drive other companies out of business.

Staying power. Wheaton’s reserves include over 11 million ounces of gold and more than half a billion ounces of silver. These reserves will ensure that the company reaches its goal to increase its production from 750,000 gold equivalent ounces in 2021 to an average of 830,000 between this year and 2030.

No exploration costs or risks. Wheaton doesn’t do the hard work of exploring. But its streaming agreements let it enjoy a great deal of the upside of successful exploration.

Pays dividends. Most precious metals miners don’t pay dividends, even when they are making money. Wheaton pays a 1.3% dividend.

A Look Inside the Company

Wheaton Precious Metals packs a lot of value…

It reported earnings of $95 million in Q1 2020. Attributable production of gold and silver was higher than expected at 94,707 ounces and 6.7 million ounces, respectively. This reflects well on the company’s operations.

The company has maintained a healthy gross margin of 74%.

For Wheaton, gold continues to make up about half of its average production. This is good news. Higher leverage to the price of gold will continue to boost its revenue and cash flows. This bodes well for stronger shareholder returns.

Its quarterly results illustrate this point, with sales exceeding the pre-pandemic levels. Sales growth came on the back of high production volumes and higher precious metals prices. It is no surprise, then, that Wheaton delivered $150 million to the bottom line. On a per-share basis, the company reported earnings of $0.34, up an impressive 97% from the same quarter of 2019.

What’s even more important, though, is that the company’s business model and operational quality have been tested over and over again, in both good and bad times.

The additional streams Wheaton has added have set the stage for more growth. And that’s exactly what we expect in 2021.

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Share Price

Despite having not dodged the coronavirus-induced sell-off in the broader market in early 2020, Wheaton’s shares were up 38% last year.

So far this year, they are down about 15%.

This is a buying opportunity.

I expect the company’s share price to rise significantly higher as inflation ticks up and precious metals boom.

Risks

Falling gold and silver prices are the main risk to Wheaton Precious Metals. But with so much fear in the markets and worldwide money-printing running rampant, I don’t expect precious metals prices to fall substantially lower from here. On the contrary, a rise is far more likely. However, if they do, Wheaton has managed difficult market conditions in the past. It should be able to again if necessary.

Aside from that, no “mining” company can have a portfolio this large without some political risk. But Wheaton’s political risk is diversified through its wide portfolio of streaming agreements.

Even if one stream implodes, it wouldn’t be a fatal blow to Wheaton. And with most of its projects in relatively stable countries, I think its overall political risk is relatively low.

The Wheaton Precious Metals team has demonstrated excellence in everything that matters. They know how to pick the right projects, control costs, and deliver value to shareholders. I expect more of the same ahead.

It’s hard to think of a precious metals investment with less risk and more upside.

The Trade

Wheaton Precious Metals is a low-risk, high-reward way to profit from higher precious metals prices.

Action to Take: BUY Wheaton Precious Metals (WPM) up to $50 per share.

Plan on holding shares for at least a year or longer as the political trends that guarantee inflation play out.

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GREAT PLAY # 5: ALAMOS GOLD (AGI) Alamos Gold (AGI) is an intermediate gold producer with three mines in North America: the Young-Davidson and Island Gold mines in northern Ontario, and the Mulatos mine in Mexico. Significant growth ahead and low-cost production profile are both important reasons to like Alamos.

The company posted revenues of $227 million, up 22% from $186 million last year. Full-year sales were also 10% higher than in 2019.

At $58 million, adjusted earnings in Q4 topped market expectations by a wide margin. In part, that’s because of successfully achieving lower costs from its mines. Adjusted net earnings also increased 81% compared to the same period of 2019.

All in all, this was a strong finish to the year. Despite a challenging environment with COVID-19, 2020 was a good year for Alamos. Besides meeting annual production (and cost) guidance, the miner executed on several important catalysts. Most notably, this included the completion of the lower mine expansion at Young-Davidson and the quick production ramp-up that followed it. Incidentally, the mine drove Alamos’ significant free cash flow growth in the second half of 2020.

Best of all, robust free cash flow of $58 million in the quarter led the company to announce a 25% increase in its annual dividend to $0.10. At the current price, this translates into a 1.4% dividend yield.

Alamos targets 470–510 thousand ounces of gold output in 2021. At the midpoint, this is 15% higher than in 2020.

The company increased its Proven and Probable reserves by 8% in 2020, to 1.3 million ounces. Its combined reserve and resource base is 27% higher than it was in 2019.

On top of that, Alamos is set to spend $50 million on exploration this year. This is two times higher than in 2020.

Value-adding news on the exploration front from the project could provide a tailwind for its shares this year and beyond.

In terms of specific near-term catalysts, Alamos may also get a push in 2021 from:

• Expanded exploration programs and resource updates at Young-Davidson, Mulatos, and Lynn Lake.

• Lower mine expansion at Young-Davidson. Upon successful completion, this should take the mine to a production rate of 197,500 ounces in 2021 (versus 188,000 ounces produced in 2019).

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• Meeting the projected production growth in 2021.

• Expansion at the Island Gold mine. Phase 2 expansion took mining rates to 1,200 tonnes per day (tpd) last year. The Phase 3 expansion study focuses on expanding mining rates beyond the current 1,200 tonnes per day (tpd). It should reach 2,000 tpd by 2025.

There’s also another reason I expect better gains from Alamos down the line, though.

Back in December 2020, the company proposed buying and canceling up to 10% of its outstanding shares.

Now, we’re generally not wild about share buybacks. There’s almost always something better a company could do with the money.

But the message here is unmistakable: management thinks Alamos’ shares are undervalued, and we agree. This is good for shareholders, too. And 10% is not peanuts either. Reducing the float by this much will notably increase earnings and cash flow per share even if both profitability metrics stay the same.

Meanwhile, Alamos’ share price is down 7% since I first recommended it. That leaves plenty of room for another surge.

Bottom line: Alamos remains a terrific way to profit from rising gold prices, and I’m confident that it will thrive in the months ahead.

Action to Take: BUY shares of Alamos Gold (AGI) up to $15.

GREAT PLAY # 6: KIRKLAND LAKE GOLD (KL) Kirkland Lake Gold is a gold producer operating mines in Canada and Australia.

Kirkland got off to a great start before falling victim to the coronavirus-induced selloff in the broader market in March 2020.

None of this took anything away from Kirkland, however.

More than just that, with the production profile significantly expanded (following a recent acquisition of a major producing asset), Kirkland has now become more compelling than it has ever been.

Properties

Three flagship operations support Kirkland’s production profile – the Fosterville Mine, located in Victoria, Australia, the Macassa Mine, and Detour Lake Mine, both found in Northern Ontario, Canada. Below is a more detailed look at each of them:

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• Fosterville. The mine has 1.8 million ounces of reserves, averaging an incredible 15.4 g/t (grams per tonne) gold. This makes it one of the highest-grade gold mines in the world. For context, the World Gold Council considers an underground mine with a grade of 8–10 g/t as high quality. Fosterville generated over $1.1 billion in revenue in 2020.

• Macassa. One of Canada’s highest-grade gold mines, Macassa boasts 2.3 million ounces in mineral reserves, at 20.1 g/t gold. Macassa generated over $326 million in revenue in 2020.

• Detour Lake. The mine is Kirkland’s latest acquisition. Valued at $3.7 billion, this was a transformative deal for the company. It was also what put Kirkland on our radar again. The deal marked Kirkland’s transition into a major gold miner. With a whopping 13.8 million ounces of gold reserves, Detour Lake produced 537,566 gold ounces between January 31 and December 31 2020. But because the acquisition was going to raise Kirkland’s overall costs, many investors weren’t impressed. Many still aren’t, but they are mistaken. Keep in mind that we’re only in the first stages of what I think will be the biggest gold bull market in history. The acquisition of Detour Lake puts Kirkland in a unique position to profit from that.

Additionally, Kirkland owns the Holt Complex (Northeastern Ontario) and some properties in the Northern Territory (Australia). The company has three fully owned mines at the complex: Holt mine, Taylor mine, and Holloway mine.

The bottom line is that Kirkland’s mines are world-class. They produced nearly 1.4 million ounces of gold low all-in sustaining cost of $800 per ounce.

Best of all, the recent price action (see our discussion under “Price and Valuation”) suggests the market hasn’t priced this in yet.

People

Kirkland Lake’s CEO, Anthony Makuch, was CEO of Lake Shore Gold before it was taken over by Tahoe Resources. With a $700 million price tag, the Lake Shore-Tahoe deal was one of the biggest Canadian mining deals of 2016. Tahoe paid a substantial premium for Lake Shore’s shares, too.

As CEO, Anthony led Kirkland through a successful merger with Newmarket Gold in 2016 and (more recently) the purchase of the Detour Lake mine.

Vice President of Canadian Operations is Duncan King, with over 30 years of experience in the Canadian mining industry. He worked for Tahoe Resources and FNX Mining and has substantial experience in managing mining operations.

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This team has a successful track record of permitting, developing, and running mines in Canada and other parts of the world. It knows how to operate Kirkland’s flagship mines profitably and make its shareholders happy.

Drivers

Kirkland has come a long way in the last five years. Production soared 1,235% to 1.37 million gold ounces between 2015 and 2020.

The management is now targeting production of 1,300,000–1,400,000 gold ounces for 2021.

Kirkland is already one of the largest gold producers in the world.

That said, resource investors have been wary of any production projections issued by miners amid the ongoing pandemic.

That, coupled with the market’s misplaced disgruntlement over the purchase of Detour Lake, is the reason Kirkland has underperformed in the past year. In 2020, it delivered a -8% return.

Now, it’s true that Detour Lake and Macassa operated at reduced levels for most of 2020 as part of Kirkland’s COVID-19 response. But what seems to have escaped most investors is that both are currently ramping up production.

All this, along with management’s consistent track record of under-promising and over-delivering, tells me that Kirkland could beat its production outlook. If this happens, I’d expect Kirkland to outperform its peers significantly in 2021.

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Costs

Between the years 2015 and 2020, Kirkland has reduced its all-in sustaining costs (AISC) by an impressive 18%.

[As a reminder, AISC is a comprehensive measure of mining expenses, including on- and off-site costs, plus capital required to keep the mine in production.]

But Kirkland still boasts some of the lowest costs in the industry today.

This low-cost profile gives Kirkland a wide safety cushion.

I think Kirkland would do very well even with gold hovering around $1,700 an ounce.

Risk

A significant risk for Kirkland is a repeat of the March 2020 scenario when COVID-19 caught gold producers off guard. Shuttered operations and withdrawn production outlooks caused their share prices to fall off a cliff.

Another risk here might be the Canadian and Aussie dollars appreciating against the US dollar. That’s because Kirkland Lake pays its operating costs in CAD and AUD while earning its income in US dollars.

Share Structure and Cash

Kirkland has around 270 million shares outstanding. All the shares are free trading on good volume.

The share structure is nice and tight. No warrants are a big plus. It means there isn’t a wave of cheap paper coming to hit the market any time soon.

Institutions own as much as 57% of the shares. Top shareholders include VanEck Associates Corporation, T. Rowe Price, Resolute Funds, and The Vanguard Group.

Kirkland’s top people have skin in the game. The company’s CEO and President Anthony Makuch, for instance, owns a $2.2 million stock equivalent.

Kirkland finished the most recent quarter with over $848 million in the bank. With this and the money coming from profits, I’m not worried about the company’s cash situation.

The company has no long-term debt. With a debt-to-equity ratio of just 0.5% (lease obligations being counted as “debt” here), Kirkland is a genuine standout among large precious metals producers.

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Price and Valuation

Kirkland had a substantial run-up after the coronavirus-induced correction in the broader market reversed. It has since become cheaper, which to me looks like a bargain.

Kirkland has impressive growth on tap, a rock-solid balance sheet, a highly experienced and successful management team, and it operates in mining-friendly jurisdictions.

In sum, the current price is a good entry point for those looking for a low-risk way to get leveraged exposure to rising gold prices.

The Trade

Action to Take: BUY Kirkland Lake Gold (KL) up to $70 per share.

I expect Kirkland could double in the months ahead. But it wouldn’t surprise me if this trade turned into a much bigger win for us.

Mining stocks are notoriously volatile.

If you’re a small investor, we recommend placing no more than $200-$400 in Kirkland. If you’re a big investor, you can make that $500-$1,000. It is the best way to control risk without missing out on the incredible upside opportunity.

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It’s up to you to determine the exact allocation of our recommendations in your portfolio.

As always, please never invest money that you can’t afford to lose, and never borrow money to invest. Losing is always a possibility with all investments.

If any of the picks recommended in this Special Report are trading above our buy-up-to prices by the time you read this, please be patient and do not chase higher.

To contact us, call toll free Domestic/International: 1-888-512-2739, Mon-Fri: 9am-7pm ET, or email us here.

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