Gold and Silver Royalty Companies: A Lower-Risk Way to Play Rising Precious Metal Prices

TL;DR: OR Royalties closed 2025 with record revenue of $277.4 million, up from $191.2 million in 2024, ended the year debt-free, and guided to a 97% average cash margin for 2026. That margin number is not a typo, and it is the reason accredited investors building an alternative-investments sleeve should understand royalty and streaming companies before defaulting to a gold ETF or a bar in a vault. These firms do not dig anything out of the ground. They finance the miners who do, in exchange for a cut of what comes out, and that structural difference changes the entire risk profile.

I have spent enough years underwriting deals to know that "lower risk" gets thrown around too loosely in this business. So let me be precise about what I mean here. Royalty and streaming companies are still equities. They still trade down when gold sells off and when the stock market panics broadly. What they do not carry is the thing that actually kills mining investments most often: cost overruns. A mine that budgets $1,200 per ounce in all-in sustaining costs and ends up at $1,700 because of a labor dispute, a diesel price spike, or a tailings dam redesign eats its own equity holders alive. A royalty holder collecting 2% of that same mine's revenue does not care. Their check does not shrink because the operator's costs blew out.

How the model actually works

Two structures dominate this corner of alternative investments, and they are not the same trade, even though the financial press lumps them together constantly.

A royalty is a contractual right to a percentage of a mine's revenue or production, typically a net smelter return (NSR) of 0.5% to 5%, paid for the life of the mine. The royalty company writes a check upfront, often before a shovel goes into the ground, and then collects passively for decades. It has no ongoing payment obligation, no say in how the mine is run, and no exposure to whether the operator's costs come in on budget. If the mine produces, the royalty holder gets paid. If costs blow out, that is the operator's problem alone.

A stream is a purchase agreement. The streaming company pays a large upfront sum for the right to buy a fixed percentage of a mine's future output at a price locked in well below market, sometimes in the range of 15% to 25% of the prevailing spot price, occasionally fixed in flat dollar terms on older contracts. Wheaton Precious Metals' stream on Vale's Salobo mine, for example, has historically priced delivered gold in the neighborhood of a few hundred dollars an ounce, regardless of where spot trades. The streamer then sells that metal at market and pockets the spread. That spread widens every time the metal price rises, which is the entire investment thesis.

Both structures share the same core feature: the operator bears construction risk, cost inflation, labor disputes, and permitting delays. The royalty or streaming company bears none of it. McKinsey's analysis of the sector makes the same point from the financing side: streaming and royalty deals carry no fixed cash obligations for the miner and no debt covenants, which is exactly why the model has quietly compounded for investors through multiple gold bear markets that wrecked operating miners' share prices.

Now, about the metric everyone in this space reports instead of raw ounces: the gold-equivalent ounce, or GEO. Most royalty and streaming portfolios collect a mix of gold, silver, copper, and occasionally other metals, because mines rarely produce just one commodity. A company cannot usefully report "we earned some gold, some silver, and some copper royalties" and expect investors to compare that to a peer with a different metal mix. So the industry converts everything into a single number: take the silver ounces, multiply by the silver price, divide by the gold price, and add the result to actual gold ounces. Do the same for copper and anything else. The sum is the GEO figure companies put in their headlines. OR Royalties earned 80,775 GEOs in 2025 using this method, and Wheaton reported roughly 690,000. It is a revenue-equivalence measure dressed up as a production number, not a physical ounce count, and it moves when relative metal prices move even if nothing physically changes in the ground. Worth remembering when a company reports "GEO growth" during a stretch when silver has outrun gold.

Comparing the players

The sector spans two giants worth tens of billions in market cap and a tier of smaller, faster-growing names. Here is how three look on the numbers that matter most: revenue growth, cash margin, and forward GEO guidance.

Company	Latest Reported Revenue	Cash Margin	2026 GEO Guidance	Debt Position
OR Royalties (TSX/NYSE: OR)	$277.4M (FY2025, vs. $191.2M in FY2024)	~97% (2026 guidance)	80,000–90,000 GEOs	Debt-free, $142.1M cash
Empress Royalty (TSXV: EMPR)	$17.3M (H1 2026, up 166% YoY)	Gross profit up 184% YoY in H1 2026	7,045–7,430 GEOs (at $4,000/oz gold, $70/oz silver)	$21.1M in liquid reserves (cash + metals)
Wheaton Precious Metals (NYSE/TSX: WPM)	Largest pure-play streamer globally	Among highest in the industry	860,000–940,000 GEOs	Investment-grade, low leverage

Sources: OR Royalties FY2025 results release; Empress Royalty Q2/H1 2026 results; Wheaton Precious Metals 2025 Annual Report.

Notice the scale gap. OR Royalties and Empress are mid-cap and small-cap names respectively, still building out their portfolios. Wheaton and Franco-Nevada are the two giants that most institutional allocators mean when they say "royalty exposure," with Franco-Nevada describing itself as the largest and most diversified gold-focused royalty and streaming company globally, holding interests across gold, silver, platinum group metals, and even some energy assets. Both were built by acquiring royalties and streams across dozens to hundreds of mines, which is the diversification that makes the model work at scale. A single mine going into receivership, as happened with OR Royalties' Eagle Gold asset, barely dents a portfolio that size. It would be a much bigger problem for a company with three cornerstone assets.

Why the margins run this high, and what can go wrong

A 97% cash margin sounds almost fictional until you see the cost structure underneath it. OR Royalties' actual cost of sales in 2025 was $9.1 million against $277.4 million in revenue, because the company has no mines to staff, no equipment to maintain, and no exploration budgets to fund. Its overhead is a head office. Compare that to an operating gold miner, where all-in sustaining costs commonly run $1,200 to $1,700 per ounce against a gold price that, as of mid-August 2026, has been trading in the $4,300 to $4,400 range. The miner still makes good money at these prices, but every dollar of cost inflation, every labor contract renegotiation, every diesel price spike comes directly out of that margin. The royalty holder's margin does not move because there is no cost line to inflate in the first place.

That said, I want to push back on the idea that this makes royalty companies risk-free, because it does not.

The first real risk is how these companies fund their own growth. A royalty or streaming company only grows by writing new checks for new deals, and it pays for those checks three ways: cash on hand, debt, or issuing new shares. OR Royalties spent 2025 paying down $94.9 million in credit facility debt to reach its debt-free position, a genuinely strong balance sheet move, but also a reminder that the company was carrying leverage until recently. Smaller names like Empress fund growth more often through share issuance, which dilutes existing holders even as the underlying portfolio grows. Before buying any single name in this space, check whether recent GEO growth came from a bigger portfolio or from a bigger share count.

The second risk is concentration. Despite the diversification pitch, most royalty and streaming companies still depend on a handful of cornerstone assets for the bulk of cash flow. Franco-Nevada's stock took a real hit when its interest in the Cobre Panama mine was suspended following a 2023 Panamanian court ruling, because that single asset had been an outsized contributor. The company's broader portfolio cushioned the blow, but a smaller royalty company with two or three material assets does not have that cushion. Read the portfolio breakdown in any 10-K or annual information form before assuming diversification protects you the way the marketing suggests.

The third risk is the one people forget because the margin story is so clean: commodity price volatility still flows straight through. A royalty is a percentage of somebody else's revenue. If gold falls 20%, the royalty check falls roughly 20% too, because there is no cost line to cut in response. Streaming companies with fixed-dollar delivery prices actually see their margin compress harder on the downside in percentage terms than royalty holders do, because the fixed cost they locked in years ago does not fall with the metal price. The insulation these companies offer is on the cost side, not the price side. Do not confuse the two.

Where this fits in a diversified alts allocation

I think about precious metals exposure in three tiers, and each one earns a different seat in a portfolio.

Physical bullion is the pure hedge. You own the metal, full stop, with no counterparty risk beyond the vault or custodian holding it. It does nothing for you in terms of cash flow or dividends, and storage and insurance carry a real cost, but it is the closest thing to owning gold itself.

A gold ETF like the VanEck Gold Miners ETF (GDX) gives you a basket of miners and, notably, includes royalty names as meaningful positions. Franco-Nevada and Wheaton Precious Metals have each ranked among GDX's top holdings, often in the 5% to 8% weighting range depending on the rebalance. That means an investor already holding GDX has partial royalty exposure baked in without realizing it. It also means buying GDX and then buying Franco-Nevada individually is a partial double-up, worth checking before you assume you are diversifying.

Direct positions in royalty and streaming companies are the third tier, and the one this sector occupies uniquely. You get commodity price leverage without operator cost risk, a cash flow stream that has historically held up better than mining equities through gold bear markets, and in some cases a modest dividend. What you give up is the crash-hedge behavior of physical bullion, since these are still equities that can fall in a broad market selloff even when gold is rising, and you take on single-company risk that a diversified ETF avoids.

My honest take: for an accredited investor already holding some bullion or a broad gold ETF as portfolio insurance, a modest allocation to two or three royalty and streaming names, weighted toward the larger, debt-free operators, is a reasonable way to add convexity to a gold thesis without taking on the operating risk of a junior miner. It is not a replacement for either bullion or an ETF. It is a third, distinct sleeve, and it should be sized like one: a satellite position, not a core holding, given the concentration and dilution risks above.

For more on this, see our coverage of How to Build an Illiquidity Budget Before Committing to Alternative Investments, Watch Investing 101: What Accredited Investors Should Know Before Treating a Rolex as an Asset, and Classic Car Investing: What Accredited Investors Get Wrong About Collector Cars as an Asset Class.

Frequently Asked Questions

What is the difference between a royalty and a streaming company?

A royalty gives the holder a contractual percentage of a mine's revenue or production, usually 0.5% to 5%, with no ongoing payment obligation after the initial deal. A stream is a purchase agreement in which the company pays upfront cash for the right to buy a fixed share of future metal output at a price locked in well below spot, then profits from the spread when it sells that metal at market.

Why do royalty companies report gold-equivalent ounces instead of revenue?

Most royalty and streaming portfolios collect payments tied to several different metals, since mines often produce gold alongside silver, copper, or other byproducts. Gold-equivalent ounces convert all of that mixed-metal revenue into a single comparable unit using price ratios, which lets investors compare production and growth across companies and reporting periods without juggling several commodities at once.

Are royalty and streaming stocks safer than owning shares of a mining company?

They carry less operating risk because the mine operator, not the royalty or streaming company, absorbs cost overruns, labor disputes, and construction delays. They are still equities, however, and remain exposed to falling commodity prices, single-asset concentration in smaller names, and how the company funds its own growth, whether through cash, debt, or dilutive share issuance.

Can retail or accredited investors access this sector through an ETF instead of individual stocks?

Yes. Funds such as the VanEck Gold Miners ETF (GDX) hold major royalty and streaming names like Franco-Nevada and Wheaton Precious Metals among their largest positions alongside operating miners, giving investors partial exposure to the royalty model's economics without having to select individual companies.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.