3 Reasons Royal Gold, Inc. Stock Could Fall

Royal Gold (NASDAQ: RGLD) is going great guns, surging almost 35% year to date as of this writing and handily outperforming peers Wheaton Precious Metals (NYSE: WPM) and Franco Nevada. To be fair, Royal Gold's operational performance in recent quarters has been impressive, and that's reflecting in its share price. That, however, doesn't mean that the stock can't reverse course, especially if it's entering overbought territory. Here are three reasons why Royal Gold stock could fall.

Yes, you read that right -- Royal Gold has something to lose if gold prices continue to strengthen.

As a streaming and royalty company, Royal Gold finances miners upfront and in return, secures the right to purchase streams of precious metals from them, usually for the life of mine, at low prices. For example, Royal Gold paid $610 million to Barrick Gold (NYSE: ABX) in September 2015 to buy a predetermined percentage of the gold and silver produced from the Pueblo Viejo mine at 30% of the spot price up to a certain threshold, and 60% of the spot thereafter.

Source: Fool.com