Wheaton Precious Metals (WPM.TO)

Gold and silver had a decent bounce off the lows last year. Doesn’t think that either gold or silver are going to take off in a big way. Maybe there is scope for gold to pop above $1400 if the markets come unglued over the next 6 months. However, he still thinks we are range bound and you want to take a profit and sell into that rally. If we get a pullback in gold in the next month or 2 of $1300 or less, you want to nibble at it.

It is a royalty company. They finance projects in exchange for royalties. They trade at a high multiple because there is not the messy problem of operating issues. Franco is the main competitor.

(Market Call Minute) Looks like it put in a technical bottom buy you would have to buy it cheaper for him.

Silver is positive at this time of year. Chart shows a downward trending line, which is being tested at the moment. Broken above its 50 day moving average. Trying to poke positive here. You have relatively short time for seasonal play, from now through to the end of February. Looks promising.

Caught up in tax loss selling, which is over. It was almost a selling panic. It took out its previous low. Should rebound into January and then one would take another look at it then. Watch to see if it takes out last summer’s peak.

A lot of tax loss selling in the last couple of months. There is a rebound possible, but some more time to go in the silver and gold sector before a rebound.

They are under tax loss selling for another day or so. It’s been a tough year. You could not replace the assets at the current stock price. You need a pickup in bullion to get these guys going. Thinks we may need one more leg down to chase out the last of the momentum guys. Wait for the bounce at least.

Nice in that is a royalty play so you don’t have to worry about cost overruns, but you have to worry about price and it becomes a play on the price of silver and gold. If he liked silver it would be the vehicle to play, but with the tapering in the next 6 months, he would rather see a complete washout of gold and silver and buy on the way back up.

A silver streaming company. Basically they buy silver with upfront payments and then get silver returned to them at a price of whatever was agreed on. They basically get the margin between the cost of their agreement and the silver price. They don’t have the operating cost risks or capital overrun costs that mining companies have. Yield of 1.72%.

Royalty company, so if you produce a commodity, you might get silver as well as what you are after and so SLW buys silver futures from you as cash up front and some see this as a form of last resort financing. SLW often does better when you do. Gold and silver tend to sell together and gold is low. Silver held a little bit better but silver will get hit if gold does and he thinks gold will.

You have to have an outlook on what you think silver is going to do. This is precious metals, primarily gold and silver. Thinks gold and silver are going lower before they go higher. Doesn’t have the CapX requirements that mining companies do, so if you want to invest in these commodities, this is a better company to do it in as it is more defensive. He would stay away from the sector.

He has a model price of $26.92. If he were to buy this, he would wait until $20.25. If it were to have negative transit from this, it looks like it’s going to go to $15.11.

Prefers FNV-T. There are some questions about the main pieces within SLW. Wait until the end of December and if nothing happens he will be very nervous about the next 6 months.

The peak period of strength for silver starts anywhere from January all the way through to about April. If you own, he would suggest you take profits before the quarterly futures expiration in March, so you are looking from January to mid March for silver. Look for an entry point more into December. However, the chart is showing lower lows and lower highs and is trading significantly below moving averages. You want to see improving relative performances.

Growing market share, diversifying somewhat. But they are a slave to what is going on with the underlying commodity prices. Buy next quarter when tapering kicks in.