http://www.theaureport.com/pub/na/15737?utm_source=delivra&utm_medium=email&utm_campaign=Gold+Final+12%2D2%2D13

TGR: You like streaming and royalty companies, right?

DHS: I really do, even though they haven't been spared from the declines we've seen in the resource sector, much better than anyone else. But those that are well run have the potential to bounce back. I like their business model because they are spared much of the risk the typical mining company carries.

TGR: Can we talk about specific companies in that sector?

DHS: Some that come to mind are Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), which everybody knows about, and Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX). The one I like the best (I'm a shareholder) is Sandstorm Gold Ltd. (SSL:TSX).

TGR: Are Sandstorm Gold and Sandstorm Metals & Energy Ltd. (SND:TSX.V) related?

DHS: They share the same management but focus on different metals. CEO Nolan Watson and Senior VP David Awram were present at the creation of the silver-streaming model with Silver Wheaton Corp. (SLW:TSX; SLW:NYSE). I've interviewed them a couple of times, and I really believe they have the right idea.

TGR: Sandstorm has a much smaller market cap than Franco-Nevada and Royal Gold. In the present climate, is this an advantage?

DHS: There are advantages and disadvantages. Sandstorm doesn't have the cash that Franco and Royal have, but it does have a nice credit line. And Sandstorm's streaming agreements tend to be non-dilutive. Management keeps tweaking its model and learning how it can do better next time.

I call Sandstorm a lean, mean, fighting machine. That could change, though, if its alliance with Entrée Gold Inc. (ETG:TSX; EGI:NYSE.MKT) on Rio Tinto Plc's (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) Oyu Tolgoi copper-gold project in Mongolia comes through for it. We won't know for a few years, but this is the kind of potential I like to see.