What: Shares of Royal Gold, Inc. (RGLD 2.45%), a nontraditional mining company that focuses on acquiring metal royalty and interest streams in exchange for capital, are looking far less "royal" today following a plunge of as much as 17% on the heels of weaker-than-expected first-quarter results.

So what: For the quarter, Royal Gold reported a 7% increase in revenue to $74.1 million, as the company recognized a record 65,868 gold equivalent ounces. It also announced that gold held on its balance sheet that was not reflected in revenue more than doubled to 11,500 ounces in Q1 2016 from the 5,300 ounces in inventory as of its sequential fourth quarter. Adjusted income, which excluded a one-time tax expense, came in at $0.17 per share. Profits during the quarter were hurt by a 12% decline in gold prices, as well as higher exploration costs in its Peak Gold joint venture.

Comparatively, Wall Street had been expecting Royal Gold to deliver nearly $90 million in total revenue and $0.29 in EPS, so this was a dreaded double-miss.

Now what: With the stock market in the midst of a six-year-long bull market run, Wall Street's tolerance for a sizable earnings miss ends with high-growth companies (which Royal Gold is not).

Image source: Flickr user G =].

Still, the magnitude of today's drop is a bit surprising. It's not as if Wall Street was unaware that gold prices have been sinking over the past year, and its estimates probably should have reflected that. Additionally, Royal Gold, being a royalty interest company, is arguably more intricately tied to the price movements of gold than just about any other metal mining company. Of course, Royal Gold is also at the mercy of the production capacity of the companies it strikes deals with, and some, including Thompson Creek Metals with Mount Milligan, ran into production snafus during the quarter that wound up reducing gold output.

What you really have to ask yourself here is whether or not the fundamental outlook for gold is attractive. Royal Gold has a pretty diverse portfolio of royalty interests, with the cost per ounce for many of its deals often ranging around $400, so remaining profitable doesn't seem like a big concern for the time being. The big issue is whether or not its margins will continue to contract based on fluctuations in the underlying price of gold. No one has the exact answer to this question, but a lot will likely depend on the health of the global economy and gold demand out of China.