With inflation continuing to rise, investors are piling into precious metals and other safe-haven assets.
The most recent report from the Bureau of Labor Statistics released October’s Consumer Price Index (CPI) showed that the U.S.’s CPI increased by 8.5% year-over-year.
That means inflation is at its highest point since 1981.
This helped fuel a significant drop in consumer sentiment. The University of Michigan’s preliminary Consumer Sentiment index tumbled to 65.7 – marking its lowest level in over a decade.
Because of these factors, many investors have grown increasingly concerned about their portfolios and how to protect themselves.
In turn, many have shifted over to safe-haven assets, benefiting precious metal companies and those operating in the gold space.
Franco-Nevada is a gold-focused royalty and streaming company. This means it helps fund mining and exploration projects without being physically involved in the process.
That’s due to the fact that companies working with Franco-Nevada pay it royalties based on an agreed-upon level of mined gold – allowing it to enjoy exposure to the market without having to mine the metal itself.
It also means that it benefits from a gold bull market while avoiding the usual costs associated with exploration, construction, and the operation of mines.
So, given its revenues only depend on gold production rather than a mine’s overall profitability, its business model has allowed it to operate debt-free and grow its existing cash balance. And it could grow even further as investors shift over to inflation hedges.
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