Gold streaming and royalty companies offer better growth and a stronger hedge against cost inflation than gold miners, with more stable margins and lower execution risk, UBS said in a note Wednesday.
The analysts said that during the gold price upcycle last year, miners offered higher operational leverage to metal price upside, while inflationary pressures remained moderate and companies appeared less likely to miss guidance. At the same time, streaming companies like Franco-Nevada (FNV), Wheaton Precious Metals (WPM), and Royal Gold (RGLD) became cheaper relative to their historical valuations, they said.
Looking ahead, gold prices are still expected to remain strong, but not rise as sharply as they did in 2025, the analysts said. Meanwhile, miners may face increasing cost pressures, especially from energy and potential disruptions, which could hurt margins, they added.
"We believe [Franco-Nevada, Wheaton Precious Metals, and Royal Gold] all offer superior near-term and medium-term growth prospects versus most large cap miners," the analysts said.
UBS reiterated its buy ratings on Franco-Nevada with a $310 price target and on Wheaton Precious Metals with a $160 price target, and initiated Royal Gold with a buy rating and a $325 price target.
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