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The precious metals industry is a source of fascination for many people. There are so many aspects of it, from miners to refineries to dealers and collectors. In addition to buying precious metals themselves, you have the opportunity to invest in publicly traded precious metals companies.
Wheaton Precious Metals is a company that works on the basest level of the industry, involved in the mining and processing of gold and silver. But it isn't officially a mining company. How exactly is this business set up, and is it worth investing in? Here's everything that you should know before you get started.
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About Wheaton Precious Metals
Wheaton Precious Metals partners with mining companies, but it isn't actually a mining company. The firm doesn't develop mining projects, nor do they pay ongoing costs of labor and mining equipment. In fact, they have only a fraction of the overhead costs of a mining company.
They are called a precious metals streaming company. The premise is simple: They pay a lump sum to mining companies that want to develop certain mining projects. Once the project is underway, they then receive a certain portion of the precious metals that are harvested. Ultimately, they work like an investment company that kickstarts the projects of smaller businesses.
As these mining operations bring out precious metals, Wheaton Precious Metals turns a profit. They keep a certain amount of cash on hand so that they can pay for future projects to be developed. Then their precious metals are refined and sold, which turns into dividends for the shareholders.
As of writing, Wheaton Precious Metals has a whopping 23 projects that are currently underway. This makes them one of the biggest streaming companies for precious metals on the planet. Since there are so many projects being worked on at once, there's less risk to the shareholders if one project underperforms compared to the projections.
Mining projects do come to an end, of course. Every mine is developed with a sense for its lifespan. That's why Wheaton Precious Metals also has 13 projects in the development stage. Once these mines are developed and begin operating, they will create new sources of income for the shareholders.
According to the Wheaton Precious Metals website, the company's overall goals are:
Advantages for Shareholders
There are several mining companies that trade on the public stock exchanges. With these companies, you can read extensively about the mining operations, including the costs of equipment and labor and sustainability. The big drawback to these types of operations is that there's a much bigger overhead cost, and there's more room for risk.
Since Wheaton Precious Metals is not responsible for the operation of the mines, they don't have the risks of poor management or labor issues. But they get the same access to high quality, just-mined gold and silver.
Similarly, the operating costs for Wheaton Precious Metals are much more predictable than with mining companies. They pay a lump sum for the development of the mine, and then they pay another sum when the mine begins showing returns. There's no need to worry about sudden expensive changes in plan.
There's also a unique setup to the company's dividends. Shareholders are guaranteed to receive a minimum floor dividend each quarter. When the company performs exceptionally well, that number is much higher. This helps to take out some of the uncertainty and risk surrounding company profits.
Even though the company's risks to shareholders are low, there's a high level of reward. You get the same kind of rewards as someone who invested in a new mining outfit. As the prices of gold and silver rise, the profits also rise.
On top of all of this, Wheaton Precious Metals is always considering the potential for new projects. They have over a dozen projects in development, which means that they've signed contracts for mines that have yet to begin operation. But they also have many other speculative projects that they haven't yet invested in.
This means that there's a constant potential for new revenue streams and areas of growth to be added. As current projects reach the end of their lifespans, Wheaton Precious Metals has plenty of prospects to replenish them.
Over the past few decades, the natural resources industries have become aware of the need for corporate responsibility. There is an inevitable environmental impact with every project. But these companies have taken on policies that are meant to minimize environmental problems, maximize positive community impact, and create sustainable development.
The president of Wheaton Precious Metals, Randy Smallwood, says that it's extremely important for the company to mine responsibly and give back to their communities. He says that this approach to corporate responsibility is important not just for financial reasons, but because it is the morally correct thing to do.
As one of the biggest precious metals streaming outfits in the world, Wheaton Precious Metals has a surprising amount of power. Their policies affect every aspect of the mining operations that they invest in. They have stated that it's important to work with mining companies that also share values of sustainable mining.
Wheaton Precious Metals has a sustainability program that governs not just how the company chooses its projects, but also how the employees live their lives. Every initiative is documented and measured, so shareholders can see what kind of progress has been made over time.
The company website breaks down some of the most important values that the company operates under.
The first is integrity. Wheaton Precious Metals has a code of ethics and conduct that is applied at every part of the company. Whether it's an executive discussing potential new ventures or an employee working with one of the mining operations, there is a strict adherence to the company's ethical standards.
Sustainability is the second value. As mentioned, Wheaton Precious Metals has strong policies regarding the sustainability of their operations. They thoroughly investigate potential projects and partner companies, only working with those that also share their sustainable mining vision.
The third value is safety. Wheaton Precious Metals is committed to the safety of everybody involved in the company. Not only does that include the office employees and shareholders, but it also includes the miners and operators at the invested projects. To this end, they do a lot of work to measure workplace safety and reduce workplace risks.
The next value is respect. Not only does Wheaton Precious Metals carry a sense of respect for every employee and miner, but they also respect the environment. On top of this, there are policies in place to ensure that they respect the integrity and practices of the cultures in their mining communities.
The company's fifth value is accountability. As mentioned, there's a huge amount of transparency regarding projects, finances, speculative ventures, and partner companies. When a decision is made, there's a sense of accountability. The company is accountable for all of the projects that it helps develop, as well as what happens with them. By taking an accountable position, they are able to better helm the development of these operations.
Finally, the last value is excellence. Most companies strive for excellence, and this seems like a fairly generic goal. But Wheaton Precious Metals does develop their projects and policies with clear goals in mind. Not only do they want to provide value for their shareholders, but they want to provide value for their partner companies and all the involved miners.
Wheaton Precious Metals is partnered with 23 currently operating mines, plus 13 projects that are in development. On the company website, you can see the broad global locations of each of the projects.
The currently operating mines are located throughout Europe, North America, and South America. There are four mines operating in Mexico and three in Peru. There are also five mines operating in Canada, which makes sense, given both the country's vast size and its status as the company's headquarters. Wheaton Precious Metals is Canadian in origin.
Most of the projects in development are located in South America, in countries like Argentina, Chile, and Peru. There are an additional four projects in development in Canada, and just one in development in the US. As of writing, there are no mining operations in development in Europe, Africa, Asia, or Australia.
The streaming agreements with each of the operating mines are different. In some, Wheaton Precious Metals receives all of the silver and a portion of the gold. In some, Wheaton Precious Metals receives a portion of the gold but no silver, or vice versa. The company does not appear to have any streaming agreements for precious metals or natural resources other than gold and silver.
Currently, Wheaton Precious Metals receives 100% of the silver from an incredible 13 of its operations. The company does have some gold contracts, but it is much more invested in processing silver. It has more silver on hand and develops future projects with silver in mind.
There are four projects in which Wheaton Precious Metals receives 100% of the gold. In the Rosemont and Kutcho projects, the company is poised to receive 100% of both the gold and silver found in the mines. The mining company will presumably take other natural resources and precious metals that are extracted from the job site. There may be limited gold and silver at these mines.
Is Wheaton Precious Metals a Scam?
Wheaton Precious Metals is not a scam. In fact, this company has one of the highest levels of transparency in the precious metals industry. Because the shares are publicly traded, the company publishes extensive information regarding its finances and ventures. You can access all of the financial information about the operation online.
The question is whether Wheaton Precious Metals is worth investing in. This is one of the most successful precious metals streaming outfits on the planet. It is traded on multiple stock exchanges, and the shares go for high amounts. Does Wheaton Precious Metals still have room to grow?
When you invest in stocks, the easiest way to turn a profit is by buying low and selling high. But buying high can still show dividends if the company is well-established. Because of the management and the number of projects in place, Wheaton Precious Metals seems poised to remain as valuable as it currently is. There may be further room for future growth.
One thing to be aware of, though, is that this is not a typical precious metals investment. You cannot purchase gold and silver directly from Wheaton Precious Metals as an individual investor. Instead, you're purchasing a share in the company. This means that your investment is subject to a variety of economic forces beyond the pure value of gold and silver.
The value of precious metals companies tends to increase when the stock market is in turmoil. But you also have to worry about the value being affected by canceled projects, delays, global economics, and the competition. That's why a stock investment comes with more inherent risk than an investment in actual precious metals.
But stocks do pay dividends. You'll make a small portion of the company's profits, which can add up year over year.
Pros & Cons of Wheaton Precious Metals
Wheaton Precious Metals is a wildly successful precious metals company. Their manner of operation allows them to turn a profit without having huge overhead. This setup has made them an extremely lucrative investment, and they are one of the more stable presences in the precious metals mining sector.
But there are always considerations when you're deciding whether to buy stocks. You need to be aware that stocks are risky, and the value can be majorly affected by outside market forces. You also need to be aware that a successful company has less room to grow than a company that's just starting up.
That said, Wheaton Precious Metals does consistently pull in solid quarterly profits and dividends. For this reason, if you're looking for a specific publicly traded precious metals company to invest in, this might be a good choice. You don't have to worry about certain factors, like equipment or labor costs.
You can't buy actual precious metals from this company. Precious metals are an ideal investment because they are a tangible asset. They have also retained their value for centuries, since long before the world was industrialized. That makes them one of the most stable investments in the history of mankind.
People often invest in precious metals as a way of preparing for the future. Precious metals increase in value when the stock market and real estate market struggle. If parts of your portfolio are struggling, precious metals may provide the cushion you need until the market recovers.
If you want to invest in tangible gold and silver, we have recommendations for several excellent precious metals IRA companies. While gold and silver can't pay dividends, they can give you some peace of mind regarding the future.
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