The dollar is the unit of currency used in the gold market. And that means a rising dollar will push down the price of gold, since fewer dollars are needed to buy the same ounce of the precious metal. If the dollar is rising, gold is falling, and you still want to own gold for diversification or whatever reason, here are three precious metals players you should be looking at: Royal Gold (NASDAQ:RGLD), Wheaton Precious Metals (NYSE: WPM), and Franco Nevada (TSX:FNV).

They're not miners

Royal Gold, Wheaton Precious Metals, and Franco Nevada do not operate any gold or silver mines. They are streaming and royalty companies. This is, perhaps, the most important thing to remember about this trio.

A hand holding a gold nuggest

Image source: Getty Images.

A streaming company provides cash up front to a miner in return for the right to buy gold and silver in the future at reduced rates. Here's an example of how it works: In 2015, when gold prices were in the doldrums, Royal Gold provided Barrick Gold (NYSE:GOLD) with $650 million in much-needed cash. In return, Royal Gold was given the right to buy gold and silver from the giant Pueblo Viejo mine at 30% of the spot price up to certain production levels, and 60% thereafter. There are the two key facts here: Royal Gold was able to grow by taking advantage of a gold market downturn, and it locked in high margins while doing so.    

On the margin

Royal Gold had a gross margin of around 80% over the trailing 12 months through May. Compare that to giant gold miners, like Barrick and Newmont Mining, which as a group, average around half that level. And Royal Gold never has to get its hands dirty in a mine.    

RGLD EBITDA Margin (TTM) Chart

RGLD EBITDA Margin (TTM) data by YCharts.

But that's today, after gold prices have rebounded from their lows. Go back to 2013 and 2014, leading up to Royal Gold and Barrick's 2015 streaming deal, when gold was still heading lower. Royal Gold's EBITDA margins were north of 70%, while Barrick's EBITDA margins were deep in the red (no wonder it needed some cash). Franco Nevada and Wheaton's EBITDA margins remained high compared to precious metals miners, too.

There's no question that falling gold prices will hit the top and bottom lines of Royal Gold, Franco Nevada, and Wheaton, but the low built-in costs of the streaming business provide this trio a great deal of financial leeway. A more concrete look at what that means: Both Royal Gold and Franco Nevada have increased their dividends annually for at least a decade (including 2017). Wheaton, for reference, has a variable dividend based on the cash it generates.    

Opportunistic growth

The flexibility afforded by the streaming business model is also what would allow this trio to benefit, on a fundamental level, from the falling gold prices that might accompany a rising dollar. Royal Gold's 2015 deal with Barrick is just one example. Franco Nevada inked a $610 million deal with Teck Resources that same year, and Wheaton inked two deals, with Vale and Glencore, worth a massive $1.8 billion.    

In other words, if gold prices are going down, Royal Gold, Wheaton, and Franco Nevada may get an opportunity to put some cash to work and expand their already diversified collections of investments. Diversification, by the way, is another factor to keep in mind.

The streaming business explained by Wheaton Precious Metals

How streaming works. Image source: Wheaton Precious Metals. 

Wheaton has investments in 29 projects, eight of which are in development. Royal Gold's portfolio includes 38 producing properties, 24 development projects, and 130 evaluation and exploration stage properties. Franco Nevada, meanwhile, has 46 producing mines, 41 development projects, and 172 exploration investments in gold and other metals, along with 80 investments in oil and gas projects. In fact, it's probably best to think of streaming companies as a curated portfolio of mine investments with all of those development projects offering future growth potential. It would be hard, if not impossible, for a miner to coordinate that many operating mines and projects at one time.    

The dollar, gold, and streaming

If the dollar starts to head higher, it will likely mean lower gold prices. Royal Gold, Wheaton, and Franco Nevada have profitable enough businesses to handle that scenario. Royal Gold and Wheaton, in fact, have already proven that they can keep rewarding investors with dividend hikes even when gold prices are falling. But that's just half of the picture, since falling gold prices also provide this group with an opportunity to invest for the future. A rising dollar may be bad for gold prices, but if you own Royal Gold, Wheaton Precious Metals, and Franco Nevada, you won't be too upset.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.