Gold, Silver, and Copper Are Rebounding in August. Here's One Stock to Invest in to Own All of Them.

I’ve been writing about gold, silver, and copper for more than a year, as several trends pushed the prices of these metals to new all-time highs earlier this year before they gave back some of those gains in recent months. All three metals have begun to climb again in August, however, and I believe they will move higher in the coming months and years due to those trends.

There are multiple ways to invest in these commodities, including mining company stocks, physical holdings, and exchange-traded funds (ETFs). And I’ve recommended all three at various times.

But now I’m looking at Royal Gold (RGLD +2.63%), which is none of the above. Based in Denver, the company does not operate mines. Instead, it acquires and manages metal streams and royalty interests and has assembled a diversified portfolio of precious-metal assets.

For the uninitiated, a stream is an agreement that gives Royal Gold the right to purchase metals produced from a mine at a pre-set price. And a royalty is the right to a percentage of a mine’s output.

The key benefit of this model, in my opinion, is that it significantly reduces the risks to shareholders from mining, as many operations are located in difficult regions and countries with relatively high political risks, such as war, civil strife, and government expropriation.

The company had a strong second quarter

Royal Gold’s streams and royalties have been robust in recent months, leading to strong second-quarter financial results. Revenue rose 56.5% to $450 million. Earnings were $2.56 a share, 41% higher than a year ago. Both revenue and earnings missed estimates by a hair.

Still, the company had record operating cash flow of $335.2 million, more than double what it was a year ago. In Q2, 76% of Royal Gold’s revenue came from gold, 12% from silver, and 8% from copper.

Finally, what trends do I believe will push the prices of gold, silver, and copper higher?

Copper and silver prices have been surging, in fits and starts, since late 2023 due to growing demand from artificial intelligence (AI) hyperscalers building data centers, coupled with a sluggish pace of new supply. The two metals are critical components for those facilities. If you think the massive build-out of AI infrastructure will continue, as I do, you should expect demand for those two metals to continue expanding.

Gold is a different story. It tends to move due to macroeconomic factors, including inflation, currency movements, and monetary policy.

Weaker U.S. economic data, such as the poor July employment report, suggest the Federal Reserve will wait to hike its target interest rate. That’s good for gold, which can’t compete with interest-producing assets. Also, the U.S. dollar has weakened against other major currencies. That makes gold cheaper for international buyers.

Finally, since the Russian invasion of Ukraine in 2022 and the U.S. response of freezing Russia’s foreign exchange reserves, many central banks around the world have been stocking up on gold to diversify away from the dollar. It’s an ongoing trend that has significantly bolstered gold’s price in recent years.

I see all of those trends continuing for the foreseeable future, sending prices of gold, silver, and copper higher. Royal Gold is a way to invest in all three. The stock is up 31% over just the past month alone.