 Good day fellow investors. Now last week in a video I discussed gold royalty companies and how their business model is very very very attractive. However, what I want to compare in this video are valuations of gold royalty companies and gold miners and the best way to do that is to compare the largest gold royalty company Franco Nevada corporations that has a market cap of around 14 billion and Barrick gold that has a market cap of around 19 billion so those are pretty close which gives a perfect comparison material. So let's immediately start. If we look at Franco Nevada's royalty stream coming they have 46 producing mineral streams mines that give them streams advanced 41 and a huge exploration potential with 172 potential streams coming on. They additionally have 61 oil streams. So this is a very very well diversified company with streams coming from all around the world. Taking a look at Barrick. Barrick has core operations with three four mines that are really huge and some other gold operations that are also there. So we can say that Barrick is also pretty good diversified. Also for the exploration part Barrick has a huge exploration pipeline from execution from pre-facibility studies and other explorative at lower level projects. So Franco Nevada Barrick I would say they are an equal match. As for the production Franco Nevada is currently selling around 500 000 gold equivalent ounces while Barrick is selling 5.3 million gold equivalent ounces. So Barrick is selling 10 times more gold than Franco Nevada which is a big difference. Why is it such an important difference? Well if gold prices let's say and if you're exposed to gold you're expecting that gold prices shoot up. You own gold as a hedge probably. So if gold prices double Franco Nevada's revenue will also double but their profits the net profits will increase about 400 million I have made the calculation. So that's of course 400% from their current profits but their total net income will be around 600 million. However Barrick's net profit will go from the current 2 billion to 6 billion. And my question is will the market value a company that has 600 million in profits equally to a company that has 6 billion in profits? So from there I really see that Barrick has a huge potential if gold prices increase. So you really have to see okay am I more for safety if gold prices go lower Franco Nevada will probably continue to be positive. However Barrick gold if gold prices go below 1000 it's not cash flow positive anymore. So that's our things to compare when you invest. A comparison of debt Franco Nevada has no debt while Barrick is very fastly repaying its debt and its target is to be at 5 billion from at around 2018. They have met a lot of acquisitions in the last 10 years which were not good so there were also lots of impairments but they are now getting their act together and becoming really conservative gold producing company. So that's very good for Barrick. A look at the metrics price to cash flow Barrick is destroying Franco Nevada price to operating cash flow similar price to book value also price to earnings ratio is highly in favor of Barrick gold. The dividend yield is a bit lower but they are really repaying a lot of their debt. So when they reach that 5 billion target I think that Barrick's dividend will shoot up. In addition you have Barrick gold having much more upside exposure to gold. On the risk side we have to look at mining costs. So for Barrick the cash costs are around 500 per ounce however if you include all the other costs attached you came to all in sustaining costs of around 700 per ounce and Barrick hopes to be cash flow purely profitable at gold prices of 1000. So in order for Barrick to be a good investment gold prices have to stay above 1000. As for Franco Nevada their cash costs per ounce from their streaming deals is around 300 dollars per ounce so much lower than the 1000 Barrick offers. So when you analyze those two companies you have to see okay am I willing to pay so much more for Franco Nevada for the lower risk however if gold prices fall many mines will be closed and then also Franco Nevada's streams won't be there so that's also a risk that you have to keep in mind. However Franco Nevada is much less risky in case gold prices fall than Barrick that's a given. Nevertheless you have to see am I willing to pay a PE ratio of 100 for that safety or it's better to stick to Barrick even if gold prices fall and then if gold prices increase Barrick is much better option because there will be much much more profit at the same market capitalization. So for me the conclusion is easy gold miners at this moment are much better than gold royalty companies. Perhaps gold royalty companies have been a hit in the last 10 years they made profits constantly even if gold prices were declining and that is what pushed their price up. However we can say now they're in a bubble because they are so overvalued in comparison to miners. Both companies will probably be good investments in the long term but see how each investment fits your risk reward portfolio exposure. Barrick is for the most more risky but much higher potential. Franco Nevada is for those who prefer less risk but also your renounce of future potential. Looking forward to your comments thank you for watching consider subscribing for more content like this and I'll see you in the next video.