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Royal Gold, Inc. (RGLD)

December 14, 2009 Company Profiles, Gold Stocks No Comments

Royal Gold, Inc., is one of the world’s leading precious metals royalty companies. Royal Gold owns and manages royalties on precious metals with the emphasis on gold.  Royalty companies offer all of the upside of gold without the downside of actually mining the metal. The risk is low because the royalty company is not exposed to the high capital costs of the mining business, while still being exposed to the full upside of the rise in the price of the gold.

For those of you new to royalty companies, a royalty is simply the right to receive a percentage of production from a mine. If the price of gold goes up, then the company enjoys that increase on its share of the production. When Royal Gold, or any royalty company for that matter, buys a percentage of the production of a mine by giving an upfront payment, they receive in return a royalty on the percentage that they have purchased without assuming any of the costs of operating the mine.

Royal Gold owns a large portfolio containing producing properties, developing properties, evaluation and exploration properties.

 Royal Gold, Inc. (RGLD)

Because Royal Gold is constantly adding to it’s portfolio of properties in all of the various stages, it is uniquely positioned to benefit from increased production, exploration successes and newly produced reserves.

As you might have guessed by now, the only downside for the company is a decreasing gold price, decreasing production, or management’s inability to pick the right projects to invest in. As long as the companies produce the gold, Royal Gold gets its royalty.

Royal Gold has an experienced management team with with experts in geology, engineering, law and finance and a successful business model that generates strong cash flow and high margins due to its low cost-structure. Royal Gold is perfectly suited for older, lower risk investors who want to invest in gold shares in their IRAs.

Royal Gold pays dividends that have been increasing year over year.  The following dividend chart clearly shows how Royal Gold is moving and growing in the right direction.

Year Annual Dividend, US$ Quarterly Payment Type Payout Dates
2010 $0.36 Quarterly Jan. 15, ’10
2009 $0.32 Quarterly Jan. 16, ’09

Apr. 17, ’09
July 17, ’09
Oct. 16, ’09
2008 $0.28 Quarterly
Jan. 18, ’08
Apr. 18, ’08
Jul. 18, ’08
Oct. 17, ’08
2007 $0.26 Quarterly
Jan. 20, ’07
Apr. 20, ’07
Jul. 20, ’07
Oct. 19, ’07
2006 $0.22 Quarterly
Jan. 20, ’06
Apr. 21, ’06
Jul. 28, ’06
Oct. 20, ’06
2005 $0.20 Quarterly
Jan. 21, ’05
Apr. 22, ’05
Jul. 22, ’05
Oct. 21, ’05
2004 $0.15 Quarterly
Jan. 16, ’04
Apr. 16, ’04
Jul. 16, ’04
Oct. 16, ’04
2003 $0.10 Semiannual
Jan. 17, ’03
Jul. 18, ’03
2002 $0.075 Annual
Jul. 19. ’02
2001 $0.05 Annual
Jul. 20, ’01
2000 $0.05 Annual
Jul. 21, ’00

Royal Gold Is one of my favorite holdings and I am looking to acquire more (at the time of this writing) if the current pullback in the price of gold continues and RGLDs shares hit $50 or below.

RGLD CHART 121009 Royal Gold, Inc. (RGLD)

RGLD Approaches A Buy In Point

The odds of Royal Gold hitting $50 or below are pretty decent during this correction.  We have seen a large run up in the price of gold during this move,  so a correction at this level will build a solid base for gold’s next push to $1,278 per ounce.

As I write this, gold is down $16.00 at $1,113.80.  Ideally we would see the $1,100 level hold and gold move into a sideways consolidation pattern.  If we don’t get the consolidation, then the next support is in $1,078 area, with strong support in the $1,045 area.  My gut keeps telling me that we are one news cycle away from gold popping $75 to $100 to the upside in a single trading session.  Volatility will be the norm in the gold trading pits in the very near future.  Either way it goes, we are in a unique position to acquire more stock in Royal Gold at prices that may fade into the rear view mirror rather quickly.

As always, I recommend that you do your own due diligence before investing in anything.  My comments are my own and I am not responsible for your investing, that is totally up to you.

You can reach Royal Gold at their headquarters and speak to investor relations to start your due diligence.

Royal Gold, Inc.  1660 Wynkoop Street,  Suite 1000  Denver,  Colorado 80202  303-573-1660

In my opinion, Royal Gold offers huge upside potential as this gold bull heats up!  The royalty companies are sitting on a large percentage of the gold that is to be mined in the future and in being  so positioned they are set to bring in more and more per ounce that is produced,  without having to spend one additional dime to bring it online! The rise in the price of gold that is coming will push gold royalty companies to the forefront of stock market earners.

This bull market in gold will have its ups and downs as it moves on.  The dips should be used as buying opportunities to acquire the gold stocks that you want in your core position.  Royal Gold (RGLD) should be high on that list.

Till next time, good luck and good tradinmg!

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