Although onlookers continue to be impressed with the record run on Wall Street, a growing chorus of investors have expressed concerns about the rally’s sustainability. Severe fiscal damage from the pandemic combined with a discouraging January jobs report has people thinking about precious metals.
With Gold Royalty Corp. set to launch its initial public offering (IPO), interest has grown for this mining firm. Gold is a universal store of value with a centuries-long association as “real” money. In times of uncertainty, investors often rush to this proven asset, and this raises the profile of the potential Gold Royalty IPO.
When is the Gold Royalty IPO Date?
GoldMining Inc. (NYSE: GDLG), the parent company to Gold Royalty, just announced that its subsidiary has launched a roadshow for its proposed IPO. This refers to the process where management meets with potential investors, typically major funds and large institutional players. Roadshows serve a dual purpose of sparking excitement for the offering and to ensure that demand is strong enough to justify going public.
Although there is no exact date yet regarding the Gold Royalty IPO, management has demonstrated serious intent, applying for the right to list under the NYSE American exchange as ticker symbol GROY. Additionally, Gold Royalty is offering up to 6 million shares under the IPO at a price of $5 per share.
While GROY is a departure from the recent technology-centric public market debuts, shares represent a viable alternative to the wild bullishness we’ve seen in the equities sector.
Gold Royalty Financial History
GoldMining announced Gold Royalty’s creation on June 24, 2020, so it doesn’t yet have a fleshed out financial history. However, the parent company has a track record of acquiring key mining projects near the bottom of the gold bull-bear cycle, delivering substantial value for shareholders.
Furthermore, GLDG was among the more exciting gold-related investments of 2020. It returned stakeholders a profit of over 196%, so it’s possible GROY stock can deliver similar returns in the years ahead.
Structured as a royalty company, Gold Royalty features a significant advantage over traditional gold miners and gold-exploration firms. Rather than incur direct exposure to the underlying asset and a particular project’s success, royalty firms instead provide much-needed capital for mining and exploration enterprises. In return, they receive a portion of the project revenue as contractually stipulated.
As a side note, streaming companies operate under a similar business model. The difference is that streaming firms obtain some allocation of the physical metals.
Historically, royalty and streaming firms have generated impressive returns for shareholders while mitigating some of the direct mining sector’s downside risks. For instance, in March 2020, the Global X Gold Explorers ETF (NYSEARCA: GOEX) severely underperformed major royalty/streaming firms like Royal Gold (NASDAQ: RGLD), Franco-Nevada Corp (NYSE: FNV) and Wheaton Precious Metals (NYSE: WPM).
In a way, royalty firms offer the best of both worlds – exposure to a relevant asset and some downside protection. Not surprisingly, many investors are eager to participate in the Gold Royalty IPO.
Gold Royalty Potential
With any IPO, you run the risk of overstating actual demand for the target entity. However, many analysts and experts have strong confidence in the case for gold-related investments and for good reason – fear of economic instability.
As the U.S. Bureau of Labor Statistics reported, non-farm payroll employment changed little at only 49,000 jobs added in January 2021, reflecting “the impact of the coronavirus (COVID-19) pandemic and efforts to contain it.” This report suggests that we have a longer road to recovery ahead of us, which cynically bolsters the bullish case for the Gold Royalty IPO.
Several retail investors inarguably want the proven safety of gold assets in their portfolio, but physical gold ownership presents security and convenience challenges. On the other hand, it’s much harder to steal shares of a publicly-traded company, and the royalty business model gives on-the-fence investors confidence.
It’s also important to realize that the federal government’s monetary policy incentivizes people to move out of cash and into almost any other asset. As benchmark interest rates fell to ridiculous lows, affluent individuals bought up real estate. Unfortunately, not everyone can afford such a costly investment.
But that’s the beauty of gold. At under $1,800 per troy ounce at time of writing, almost anyone can participate in whole or fractional physical gold ownership. And with the GROY stock IPO, you could secure equity in a promising gold royalty business.
How to Buy Gold Royalty IPO (GROY) Stock
For many retail investors, after they learn how to buy stocks, their attention turns toward the riskier (though potentially more rewarding) elements of the market. And with so many high-profile IPOs generating headlines, it’s natural investors want in on these ground floor investments.
Here’s the bottom line with IPOs – they represent a perfect balance between pros and cons.
Yes, the initial offering price of an IPO is often far lower than the market price once the stock becomes available to the general public. However, to participate in the action, you must be well-connected and have a sizable account balance. Otherwise, the underwriters responsible for managing the IPO process have bigger fish to fry.
While this sounds rather cold, keep in mind that once you’re invited to participate in an IPO, the expectation is that you participate in all IPOs – the good, bad and ugly. Being picky can see you lose your privileged status.
Step-by-Step Guide:
- Pick a brokerage.
Before you take your 1st step with the upcoming Gold Royalty IPO, you must choose a broker. With so many platforms providing competition, many incentives to join – such as commission-free trading – are standard across the board.
The decision about brokerages comes down to your investing style and anticipated growth in the subject. If you prefer simplicity over anything, then mobile trading apps may work best. However, if you anticipate trading for a living, you’ll want access to the most robust platform available. - Decide how many shares you want.
Once you figure out how much money you wish to invest in a particular stock, you must perform a dollar-to-share conversion. This is because the stock market transacts based on shares to buy (or sell), not on dollar value.
To perform this conversion, take the dollar amount you wish to invest and divide this figure by the market price of the target stock. For traditional brokerages, you are only able to purchase whole shares, not fractional shares. However, some brokers offer fractional share ownership. - Choose your order type.
What makes the stock market different from any other market is primarily the constantly fluctuating prices, so you must specify how you wish to acquire your target shares through order types.
Below are the key concepts to know:
• Bid: The bid is the maximum price a buyer is willing to pay for a stock. This is always lower than the ask.
• Ask: In contrast, the ask is the minimum price that a seller will accept. The ask is always lower than the bid.
• Spread: The spread is simply the difference between the bid and ask price. One of the reasons why the spread is significant is because market makers attempt to profit from this pricing difference as an incentive to hold heavy volume of the target stock until they distribute it to you.
• Limit order: If you want to conduct a transaction at a specific price, the limit order is the method to use. Obviously, this gives you full control and transparency. On the other hand, there’s no guarantee that the target stock will reach your predetermined price.
• Market order: If you want shares on the spot, market orders execute at the next available price. The advantage is that market orders are virtually guaranteed to execute if placed during normal session hours. However, the downside is that the trade executes at the least-favorable price – buys on the ask, sells on the bid.
• Stop-loss order: If you wish to protect the dollar value of your portfolio, you may use a stop-loss order, which are essentially market orders in reverse. They execute at a predetermined price or the next available price, whichever arrives first. However, this caveat can possibly mean that this order type can exit your position at an unexpectedly low price.
• Stop-limit order: In the same vein, stop-limit orders are limit orders in reverse. They prevent surprises associated with stop-loss orders by only executing at the specified price. Again, there’s no guarantee that the stock will reach that price. - Execute your trade.
Once you’re ready to go, it’s time to execute your trade. For market orders, the process is very straightforward – simply input the number of shares you wish to buy and place the order. For limit orders, you must enter your specified buy-in price.
Best Online Brokers
Below is a list of best brokers for your consideration.
- Best For:Active and Global TradersVIEW PROS & CONS:Securely through Interactive Brokers’ website
- Best For:Global Broker for Short SellingVIEW PROS & CONS:securely through TradeZero's website
Prepare to Invest in IPOs
Given the present economic, societal and political circumstances, the Gold Royalty IPO could perform very well. Interest in safe-haven assets is sky high, and the business upside inherent in GROY stock should appeal to a broad range of investors.
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.