Previously here at EEON, we shared a few different ways that investors seeking to hedge their portfolios by purchasing gold or gold-related assets could do so. Today, we’re going to take a closer look at one of the organizations profiled in that article: Wheaton Precious Metals Corporation (WPM). Founded in Vancouver, Canada in 2004, Wheaton Precious Metals Corp is a multinational precious metal “streaming company”, primarily focused on the production, purchase, and sale of gold, silver, and palladium. Shares in the company are up over 300% since mid-2016 as Wheaton continues to diversify its global operations and benefit from a recent uptrend in the value of gold and silver bullion.

In the precious metals industry, “streaming” is a term for when an organization like Wheaton signs an agreement with a precious metals mining company to purchase some or all of the metal output of a particular mine at a predetermined price. Typically, a streaming company has no control over the operations of the mines that produce precious metals. This type of arrangement allows companies like Wheaton to purchase metals like gold from the miner at discounted prices and further benefit from increases in the market price of the precious metal in question. In turn, investors in the precious metals mine are ensured predictable pricing on any metal their mine produces. In 2019, Wheaton procured over 400,000 ounces of gold, over 20,000 ounces of silver, and over 20,000 ounces of palladium from 20 active streams.[1],[2] Although Wheaton’s active streams are largely located in South America, it also has active interests in mines located in Greece, Canada, Portugal, and the US.

Wheaton primarily focuses on making short-term deals with precious metal mining operations, which places it in a position to reassess the price it is willing to pay for an ounce of precious metal and renegotiate regularly. The recent coronavirus-inspired uptrend in the price of both gold and silver has benefitted Wheaton substantially and sent the shares in the company to new highs as the value of Wheaton’s existing streams increase. This dynamic has placed Wheaton shares on momentum traders’ radars and earned the company the #182 spot on EEON’s list of Best Momentum Securities as of early August 2020.

Combined with high ratings in Growth and Scalability driven by Wheaton’s 13.7% YoY revenue growth, and 10% profit margin, respectively, Wheaton’s shares demonstrate the unique value offered by precious metals streaming organizations. Companies like Wheaton are able to position themselves to benefit from increases in the value of precious metals by taking some of the uncertainty out of the precious metals mining industry.

[1] Source: Wheaton 2019 Sustainability Report

[2] Source: Wheaton Streams