Barrick Gold Corporation (USA) (ABX), Goldcorp Inc. (USA) (GG), Freeport-McMoRan Copper & Gold Inc. (FCX): This Is How I Would Invest In Gold

The solution is to invest in a gold streaming company, and the one I like most is Sandstorm Gold Ltd. (NYSEAMEX:SAND). It’s a lower-risk gold company, as you’re still levered to the price of gold and to exploration upside; however, you’re not exposed to the risks of capital expenditure overruns. Led by the former CFO of silver streamer Silver Wheaton Corp. (USA) (NYSE:SLW), the company is taking that proven business model and turning it into golden returns. It’s that proven leadership that has caught my eye.

To understand the business of gold streaming, Sandstorm Gold Ltd. (NYSEAMEX:SAND) has a great slide in its recent investor presentation that’s worth a look:

Source: Sandstorm Gold Investor Presentation

It’s this model that makes me think of Sandstorm as more like a venture capital company with a twist. It provides the gold miner with some of the initial funding it needs to get a mine into production. It then has the right to buy gold from the producer at a very low fixed cost. It can then resell that gold at a very high margin and then pocket the difference.

You’re still subject to much of the volatility and market sentiment of gold, but that exploration upside provides a longer-term lift to profits. While there are other larger gold streamers, I like the management team and growth prospects at Sandstorm Gold Ltd. (NYSEAMEX:SAND) a lot better. It is a small company and it’s not without risks, but it is the one gold company that’s really caught my eye.

The article This Is How I Would Invest In Gold originally appeared on Fool.com is written by Matt DiLallo.

Motley Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold.

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