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Royal Gold Surges in '08 Despite Metal's Volatility

Gold prices were on a rollercoaster ride this year, but shares of Royal Gold have defied the volatility and are up about 50 percent year-to-date.

"We receive our revenues free of cost, which is a very advantageous way to own gold," said Stanley Dempsey, executive chairman and former CEO of Royal Gold.

Royal Gold does not face much of the risks of mining, but Dempsey says it still sees all of the reward. The Colorado-based company acquires royalties on gold and silver mines, but does not operate them.

"If the mine adds reserves or steps up its production we get the benefit of that, and of course we aren’t contributing to the capital or the operating costs," he added.

The current market conditions are giving Royal Gold many chances to acquire more royalties, according to Dempsey, and he has a positive outlook on gold prices.

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“I think we’re all concerned about inflation and the decline in the dollar,” he said. “When the dollar declines, gold prices go up, so we are bullish on gold.”

Contributing to his bullish outlook on gold are the decline in worldwide gold production, the increased difficulty of finding and developing new mines and the hesitation of banks to sell or lease gold.