Goldtent TA Paradise

Franco-Nevada Corporation

1. Plunger says:

   July 15, 2020 - 12:45 pm at 12:45 pm

   But the question in my mind is for who? It is already so expensive. Sure its going up, but there is so much more value in others.

   Sure grandma’s retirement fund will eventually come around to the thinking that they have to own it, but us gold guys are going to be much better served owning the down latter
   royalties such as OR, SAND or maybe ELY

   • Patrick says:

     July 15, 2020 - 12:48 pm at 12:48 pm

     Yeah… hard to enter here. If pull back to 1 year ma.. maybe once again. I’ll check out those other royalty plays you mentioned…

   • Karl says:

     July 15, 2020 - 2:11 pm at 2:11 pm

     I think someone earlier in the year was suggesting buying — and holding through all the shaking bumps and dumps — FNV WPM GOLD and NEM. Just buy the 4 and hold them. They certainly will get sold off fast as, for example, flighty generalist money managers get scared and dump shares suddenly, as happened earlier in the year. People who know what they are doing can find better stocks.

     I personally have chunks in FNV and WPM for a perverse reason that may be a result of a misconception. I have gone in to it far too much to go into it in detail, but my accountant ordered me to dump all PFICs (Passive Investment Investment Companies). I have not finished the mission, but have largely accomplished it. I believe (but am not a reliable source) that I and other US persons may safely keep PFICs in retirement accounts, however, and I believe I may hold PFICs for less than 30 days without getting screwed, so I trade them in a non-retirement acct.

     On 1st glance FNV and WPM look like slam dunk PFICs by tax law, and WPM apparently used to say they didn’t know whether they were a PFIC or not. Now like FNV they say they are not (I suspect they have expensive tax lawyers ready to say they are banks and have their investments in keeping with US definitions of banks–also they are so big they have clout. 1 other Canadian royalty companies I contacted stated we think sometimes we are a PFIC part of the year and part of the year we are not–we go in and out of PFIC status. Anyone who knows PFIC law means that if you buy it and hold it it’s a PFIC for you. Another well known smaller Canadian royalty puts states as one of its risks in a recent SEC filing that it may be a PFIC.

     I pay a premium for FNV and WPM so that I am less likely to have to go to tax court and pay lots of atty fees and then have the IRS charge massive interest rates. Instead of paying interest rates I look forward to long term cap gains rates. I believe that the premium is there partially for that reason. I and the big investors in FNV and WPM can pretty much count on them not being considered PFICs by the US Treasury. The others not so much.

     But, honestly (I’m not being sarcastic). Don’t believe me. Ask a foreign tax law expert who knows about mining companies, or at least spend many, many, many hours trying to slog through relevant references. Even regular tax lawyers and accountants hate it.

     • Karl says:

       July 15, 2020 - 2:29 pm at 2:29 pm

       I would have edited better except by coincidence my accountant called so I hit the submit button.

       He confirmed that it’s ok to have PFICs in retirement accounts. (I had gotten that point, informally, from another source previously.) We did not go over any of the other points above, but I think he intends to stand his ground. As they say, do your own due diligence, and don’t blame me.