Sandstorm Gold (SAND) surprised quite a few investors this week when they made a deal in Mongolia, the headline-grabber of late when it comes to political uncertainty for mining companies. They also brought sister company Sandstorm Metals & Energy (SND.V STTYF) along to the party, to pick up a small copper stream to go along with SAND’s gold and silver strams, and both companies were punished pretty harshly on Friday as a result.

Now, this new deal wasn’t the only reason for SAND’s drop of nearly 10% on Friday — but it was part of it. Other gold miners and gold royalty companies are also dropping — Barrick Gold announced that they’re cutting back and looking at costs and divestments in light of high costs and problems in Africa, the gold price fell almost 2% (which is a big one-day move for gold) because of (depending on who you ask) weak technicals, sell stop liquidations, major investors backing off of gold, or the high-level G20 talk about currencies and the threatened “currency wars.” And Royal Gold (RGLD) and Franco-Nevada (FNV) are also down substantially as a result of gold’s drop, falling 3-5% or so. That’s the flip side of being levered to gold — when the gold price falls, so does your stock price.

For Sandstorm, I think this is a buying opportunity and I think investors may be overstating the risk of the Mongolia deal with Entree Gold (EGI). Entree holds a piece of some of the expansion territory for the Oyu Tolgoi mine in Mongolia, which is slated to become the largest copper and gold mine in the world — or at least, one of the largest. Oyu Tolgoi is also a political football, which is why Turquoise Hill (TRQ) and Rio Tinto (RIO) are not surging as it builds up to commercial production — the fear is that the government will try to squeeze in with a higher stake, or raise taxes on the mine as they squeeze out more funding for Mongolia’s rapid development.

I have no idea how it will work out, or how strong the property rights of Entree Gold and the operators of the mine will turn out to be if politics turns more acquisitive in Mongolia — but I think the likelihood of Rio Tinto and partners pushing ahead with the mine over time is very high. ...