James Davolos: Precious Metals Royalty & Streaming Deep Dive

May 26, 2023

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INSIGHT

Sticky, Structural Inflation Insight

Inflation is likely to stay volatile and higher due to structural economic changes post-2019.
Global competition for labor, exhausted cheap resources, and lack of productivity gains underpin this stickiness.

INSIGHT

AI's Impact on Labor Doubts

AI's benefits on labor cost reduction are overestimated, particularly for less skilled roles.
Middle management layoffs may provoke political backlash, limiting efficiency gains from AI.

INSIGHT

Structural vs Cyclical Inflation Explained

Cyclical inflation stems from temporary demand/supply shocks and corrects over time.
Structural inflation arises from inelastic supply/demand factors, like copper supply constraints, causing lasting price pressures.

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Hey guys! This episode, we have James Davolos, from Horizon Kinetics, as a returning guest, sharing valuable insights on various topics. James discusses the nature of sticky inflation and the distinction between structural and cyclical inflation.

He also dives into the royalty business model in the precious metals industry, exploring its history and the concept of streaming agreements. James provides insights on exiting a royalty business and emphasizes the importance of conducting due diligence on high-quality royalty companies.

[0:00] Inflation is going to be sticky
[6:00] Structural vs Cyclical Inflation
[12:00] Royalty Business Model in Precious Metals
[15:00] History of the Royalty Business Model
[20:00] Streaming Agreements
[28:00] Getting out of a Royalty Business
[33:00] Due Diligence on a High Quality Royalty Company
[46:00] The worst time to be in a Royalty Business
[1:02:00] More from James and Closing Questions

If you like what you heard, find out more about Horizon Kinetics here.

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