Wheaton Precious Metals: A Strong Buy Amid Rising Precious Metal Prices
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy WPM?
Source: Fool
- Surge in Precious Metal Prices: By late January, gold reached $5,500 per ounce and silver peaked at $121 per ounce, indicating increased holdings by investors and central banks amid ongoing geopolitical uncertainties and fears of currency debasement.
- Wheaton's Business Model Advantage: As a precious metals streaming company, Wheaton provides upfront capital to miners in exchange for fixed low-cost purchasing rights on future production, thus insulating itself from rising labor and fuel costs that traditional miners face, ensuring profitability.
- Production Growth Potential: Wheaton's total production in Q4 was 205,000 gold equivalent ounces (GEOs), with projections to reach 1.2 million GEOs by 2030, a 50% increase, bolstered by its agreement with BHP to acquire a 33.75% stake in silver production at the Antamina Mine, adding 70,000 GEOs annually.
- Fixed Cost Advantage: Wheaton's contract costs are $650 per ounce for gold and $12.50 for silver, providing predictable fixed costs that are crucial amid the current backdrop of the war in Iran and the closure of the Strait of Hormuz, ensuring profit margins even as expenses rise.
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Analyst Views on WPM
Wall Street analysts forecast WPM stock price to fall
9 Analyst Rating
8 Buy
1 Hold
0 Sell
Strong Buy
Current: 147.610
Low
118.00
Averages
137.91
High
160.00
Current: 147.610
Low
118.00
Averages
137.91
High
160.00
About WPM
Wheaton Precious Metals Corp. is a Canada-based precious metals streaming company. The Company, through strategic streaming agreements, partners with mining companies to secure a portion of their future precious metal production. The Company has approximately 35 streaming agreements. Its segments include Gold, Silver, Palladium, Platinum and Cobalt. Its gold segment includes Salobo, Sudbury, Constancia, San Dimas, Stillwater, Blackwater, Platreef and others. Its Silver segment includes Penasquito, Antamina, Constancia, Blackwater and others. Its Palladium segment includes Stillwater and Platreef. Its Platinum segment includes Marathon and Platreef. Its Cobalt segment includes Voisey's Bay. The Company has also entered into a definitive agreement to acquire the Spring Valley Project located in Nevada, United States of America.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Wheaton Precious Metals Sees Growth Amid Rising Precious Metal Prices
- Price Surge Driver: Rising geopolitical tensions and increasing budget deficits have driven gold and silver prices significantly higher, with gold reaching $5,500 per ounce and silver peaking at $121, enhancing Wheaton Precious Metals' growth potential.
- Optimistic Production Forecast: Wheaton projects production of 860,000 to 940,000 gold equivalent ounces by 2026, a 50% increase from current levels, bolstered by its agreement with BHP, increasing its stake in silver production at the Antamina mine to 67.5%.
- Fixed Cost Advantage: The company's business model allows it to maintain average costs of $650 per ounce for gold and $12.50 for silver through 2030, providing predictable fixed costs and mitigating risks from rising fuel and labor expenses.
- Market Risk Warning: While Wheaton benefits from rising precious metal prices, a significant decline in gold and silver prices could severely impact its earnings, prompting investors to carefully assess market trends before investing.
See More
Geopolitical Tensions Drive Surge in Gold Investments
- Record Gold Purchases by Central Banks: Central banks in China, India, and Turkey have been buying record amounts of gold in recent years to diversify their assets, reflecting a strong global demand for safe investments amid rising inflation and budget deficits.
- Mining Companies' Inflation Hedge: Agnico Eagle Mines and Wheaton Precious Metals benefit from rising gold and silver prices, and their operational models allow them to maintain relatively stable profit margins even as fuel costs rise, providing investors with effective tools to hedge against inflation.
- Agnico's Clean Energy Strategy: Agnico Eagle's Kittilä mine in Finland, the largest gold mine in Europe, signed a clean electricity agreement in 2023 to ensure 100% renewable energy use, reducing reliance on diesel and enhancing its resilience against energy cost fluctuations.
- Wheaton's Fixed Cost Advantage: Wheaton Precious Metals locks in contract costs at $650 per ounce for gold and $12.50 for silver through streaming agreements, ensuring profitability amid rising metal prices while effectively mitigating the impact of rising fuel and labor costs.
See More
Strategic Significance of Precious Metals Investment
- Geopolitical Impact: The escalating geopolitical tensions worldwide have led many investors to turn to safe-haven investments like gold and silver, indicating a sustained demand for precious metals, particularly as central banks in China, India, and Turkey have been purchasing record amounts of gold to diversify away from the U.S. dollar.
- Mining Company Advantages: Agnico Eagle Mines and Wheaton Precious Metals, as precious metals mining stocks, can provide leveraged upside during rising precious metals prices while maintaining a degree of insulation from rising fuel costs due to their low-cost, high-quality mines, ensuring profitability.
- Clean Energy Agreements: Agnico Eagle's Kittilä Mine in Finland, the largest gold mine in Europe, signed a clean electricity agreement in 2023 to ensure that 100% of its power comes from renewable sources, which not only reduces operational costs but also enhances the company's image in environmental sustainability, aligning with global trends.
- Fixed Cost Advantage: Wheaton Precious Metals locks in contract costs averaging $650 per ounce for gold and $12.50 for silver through streaming agreements, ensuring profitability amid rising precious metals prices while mitigating the pressures of increasing fuel and labor costs, thereby strengthening its competitive position in the market.
See More
Wheaton Precious Metals: A Strong Buy Amid Rising Precious Metal Prices
- Surge in Precious Metal Prices: By late January, gold reached $5,500 per ounce and silver peaked at $121 per ounce, indicating increased holdings by investors and central banks amid ongoing geopolitical uncertainties and fears of currency debasement.
- Wheaton's Business Model Advantage: As a precious metals streaming company, Wheaton provides upfront capital to miners in exchange for fixed low-cost purchasing rights on future production, thus insulating itself from rising labor and fuel costs that traditional miners face, ensuring profitability.
- Production Growth Potential: Wheaton's total production in Q4 was 205,000 gold equivalent ounces (GEOs), with projections to reach 1.2 million GEOs by 2030, a 50% increase, bolstered by its agreement with BHP to acquire a 33.75% stake in silver production at the Antamina Mine, adding 70,000 GEOs annually.
- Fixed Cost Advantage: Wheaton's contract costs are $650 per ounce for gold and $12.50 for silver, providing predictable fixed costs that are crucial amid the current backdrop of the war in Iran and the closure of the Strait of Hormuz, ensuring profit margins even as expenses rise.
See More
BMO Capital Markets Resumes Coverage of Wheaton Precious Metals
- Coverage Resumption: BMO Capital Markets resumed coverage of Wheaton Precious Metals on Thursday, indicating a renewed market interest that could attract more investors to its stock performance.
- Rating Upgrade: The resumption of coverage comes with an upgrade in ratings, which may enhance market confidence in Wheaton, potentially driving its stock price up and reflecting analysts' optimistic outlook on the company's future performance.
- Market Reaction: Changes in analyst ratings typically influence investor decisions, and Wheaton's stock may experience positive effects, attracting more capital inflow and enhancing its market liquidity.
- Strategic Implications: The combination of BMO's coverage resumption and rating upgrade may prompt other financial institutions to reassess Wheaton's investment value, thereby enhancing its market position in the competitive precious metals sector.
See More
Inflation and Precious Metals Investment
- Inflation Pressure: The recent surge in oil prices due to the war with Iran could lead to a reacceleration of inflation, even though the inflation rate has decreased from 2.7% last year to 2.4% this year, indicating ongoing economic uncertainty.
- Business Model Advantage: Wheaton Precious Metals locks in costs at $650 per ounce for gold and $2.50 per ounce for silver by providing capital to miners in exchange for fixed-price production rights, effectively insulating itself from inflationary pressures and ensuring predictable profitability.
- Production Growth Expectations: The company anticipates an 11% increase in gold equivalent ounces this year and a 50% increase by 2030, which will drive earnings and cash flow growth, supporting its progressive dividend policy even if precious metal prices stagnate.
- Investment Return Potential: Wheaton Precious Metals' combination of fixed costs and production growth enables it to outperform traditional precious metals as an inflation hedge, although analysts note it is not currently among the top investment stocks recommended.
See More
Wheaton Precious Metals Sees Growth Amid Rising Precious Metal Prices
- Price Surge Driver: Rising geopolitical tensions and increasing budget deficits have driven gold and silver prices significantly higher, with gold reaching $5,500 per ounce and silver peaking at $121, enhancing Wheaton Precious Metals' growth potential.
- Optimistic Production Forecast: Wheaton projects production of 860,000 to 940,000 gold equivalent ounces by 2026, a 50% increase from current levels, bolstered by its agreement with BHP, increasing its stake in silver production at the Antamina mine to 67.5%.
- Fixed Cost Advantage: The company's business model allows it to maintain average costs of $650 per ounce for gold and $12.50 for silver through 2030, providing predictable fixed costs and mitigating risks from rising fuel and labor expenses.
- Market Risk Warning: While Wheaton benefits from rising precious metal prices, a significant decline in gold and silver prices could severely impact its earnings, prompting investors to carefully assess market trends before investing.
See More
Geopolitical Tensions Drive Surge in Gold Investments
- Record Gold Purchases by Central Banks: Central banks in China, India, and Turkey have been buying record amounts of gold in recent years to diversify their assets, reflecting a strong global demand for safe investments amid rising inflation and budget deficits.
- Mining Companies' Inflation Hedge: Agnico Eagle Mines and Wheaton Precious Metals benefit from rising gold and silver prices, and their operational models allow them to maintain relatively stable profit margins even as fuel costs rise, providing investors with effective tools to hedge against inflation.
- Agnico's Clean Energy Strategy: Agnico Eagle's Kittilä mine in Finland, the largest gold mine in Europe, signed a clean electricity agreement in 2023 to ensure 100% renewable energy use, reducing reliance on diesel and enhancing its resilience against energy cost fluctuations.
- Wheaton's Fixed Cost Advantage: Wheaton Precious Metals locks in contract costs at $650 per ounce for gold and $12.50 for silver through streaming agreements, ensuring profitability amid rising metal prices while effectively mitigating the impact of rising fuel and labor costs.
See More
Strategic Significance of Precious Metals Investment
- Geopolitical Impact: The escalating geopolitical tensions worldwide have led many investors to turn to safe-haven investments like gold and silver, indicating a sustained demand for precious metals, particularly as central banks in China, India, and Turkey have been purchasing record amounts of gold to diversify away from the U.S. dollar.
- Mining Company Advantages: Agnico Eagle Mines and Wheaton Precious Metals, as precious metals mining stocks, can provide leveraged upside during rising precious metals prices while maintaining a degree of insulation from rising fuel costs due to their low-cost, high-quality mines, ensuring profitability.
- Clean Energy Agreements: Agnico Eagle's Kittilä Mine in Finland, the largest gold mine in Europe, signed a clean electricity agreement in 2023 to ensure that 100% of its power comes from renewable sources, which not only reduces operational costs but also enhances the company's image in environmental sustainability, aligning with global trends.
- Fixed Cost Advantage: Wheaton Precious Metals locks in contract costs averaging $650 per ounce for gold and $12.50 for silver through streaming agreements, ensuring profitability amid rising precious metals prices while mitigating the pressures of increasing fuel and labor costs, thereby strengthening its competitive position in the market.
See More
Wheaton Precious Metals: A Strong Buy Amid Rising Precious Metal Prices
- Surge in Precious Metal Prices: By late January, gold reached $5,500 per ounce and silver peaked at $121 per ounce, indicating increased holdings by investors and central banks amid ongoing geopolitical uncertainties and fears of currency debasement.
- Wheaton's Business Model Advantage: As a precious metals streaming company, Wheaton provides upfront capital to miners in exchange for fixed low-cost purchasing rights on future production, thus insulating itself from rising labor and fuel costs that traditional miners face, ensuring profitability.
- Production Growth Potential: Wheaton's total production in Q4 was 205,000 gold equivalent ounces (GEOs), with projections to reach 1.2 million GEOs by 2030, a 50% increase, bolstered by its agreement with BHP to acquire a 33.75% stake in silver production at the Antamina Mine, adding 70,000 GEOs annually.
- Fixed Cost Advantage: Wheaton's contract costs are $650 per ounce for gold and $12.50 for silver, providing predictable fixed costs that are crucial amid the current backdrop of the war in Iran and the closure of the Strait of Hormuz, ensuring profit margins even as expenses rise.
See More
BMO Capital Markets Resumes Coverage of Wheaton Precious Metals
- Coverage Resumption: BMO Capital Markets resumed coverage of Wheaton Precious Metals on Thursday, indicating a renewed market interest that could attract more investors to its stock performance.
- Rating Upgrade: The resumption of coverage comes with an upgrade in ratings, which may enhance market confidence in Wheaton, potentially driving its stock price up and reflecting analysts' optimistic outlook on the company's future performance.
- Market Reaction: Changes in analyst ratings typically influence investor decisions, and Wheaton's stock may experience positive effects, attracting more capital inflow and enhancing its market liquidity.
- Strategic Implications: The combination of BMO's coverage resumption and rating upgrade may prompt other financial institutions to reassess Wheaton's investment value, thereby enhancing its market position in the competitive precious metals sector.
See More
Inflation and Precious Metals Investment
- Inflation Pressure: The recent surge in oil prices due to the war with Iran could lead to a reacceleration of inflation, even though the inflation rate has decreased from 2.7% last year to 2.4% this year, indicating ongoing economic uncertainty.
- Business Model Advantage: Wheaton Precious Metals locks in costs at $650 per ounce for gold and $2.50 per ounce for silver by providing capital to miners in exchange for fixed-price production rights, effectively insulating itself from inflationary pressures and ensuring predictable profitability.
- Production Growth Expectations: The company anticipates an 11% increase in gold equivalent ounces this year and a 50% increase by 2030, which will drive earnings and cash flow growth, supporting its progressive dividend policy even if precious metal prices stagnate.
- Investment Return Potential: Wheaton Precious Metals' combination of fixed costs and production growth enables it to outperform traditional precious metals as an inflation hedge, although analysts note it is not currently among the top investment stocks recommended.
See More
