Falling less, rising less
So while miners were in a funk, Royal Gold was taking advantage of their precarious position to increase its production. That helps explain why the downturn wasn't as painful for Royal Gold as it was for miners like Barrick. Despite the headwind of falling precious-metals prices, there were real positives taking shape at Royal Gold, and investors noticed.
However, this also helps explain why, so far this year, Royal Gold looks like a precious-metals laggard. It simply didn't fall as hard, so it really doesn't have as much ground to make up. What you shouldn't read into this disparity is that there's trouble at Royal Gold or that Royal Gold is a mispriced buying opportunity. Neither would be true.
So would you be better off with a miner? The answer depends more on you than on Royal Gold or Barrick. For example, if you're looking for a way to play often volatile precious-metals moves, than a miner would be best. However, if you're looking for a precious-metals investment that you can own over the long term, Royal Gold is probably the better call. To put that into a different perspective, Royal Gold has increased its dividend annually for the past 15 years. Barrick's distribution has varied with the company's financial performance. In other words, the dividend has been heading lower for a few years.
Consistency or excitement -- it's really your call. But don't make the mistake of thinking Royal Gold is your typical gold-mining stock. It isn't, and you need to understand that or you may make the wrong move now that gold is rallying again.
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The article The Worst Mistake Royal Gold, Inc. Investors Can Make Right Now originally appeared on Fool.com.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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