Wheaton Precious Metals UPDATE

Graphic, cover, gold bomb, UPDATE

UPDATE

Wheaton.  The long view.

 

Feedback

from readers is our joy.  We are all infinitely stronger thinking together.  Going it alone in the stock market is like climbing Everest alone.  Maybe, but why?  Fitz wrote us with penetrating insight and experience impossible to ignore.  Here’s what he said following yesterday’s “Felony Gold.”

 

 

Chart, gold spot price
The gold spot price has been range-bound since December 2013. That’s four solid years of consolidation.  WPM’s revenue rests in part on gold prices.  How can a company thrive when the underlying commodity price has been range-bound for years?

 

“Thank you for doing the research on WPM. Personally I did quite well with Silver Wheaton back in 2009 to 2011. (now WPM) WPM tends to do best in a bear market when most stocks are dropping like a rock and the dollar is loosing value.

I’m thinking WPM will do well in this current trend down. WPM also gets more interest and increases in value as the dollar weakens. I admit I am a believer in gold and WPM, given my investment in the no so distant past.

From the last bull market for the next couple of years, WPM was a can’t loose investment. Then in 2011 it crashed hard. The tough part is knowing when to get out. When the price of gold fell from it’s 2011 high of 1700 dollars an ounce to below 1200 an ounce just this summer, WPM has been a looser.

However if you think that we are facing tough time on the street, then I personally think this is a good entry point. Had I got in at the recent bottom, I would already be up 10%. That’s not bad when the market seams to be in a crash mode.

I have made ,and lost, a lot of money with Silver Wheaton.  If I had got out at 1600 or so, I would be a wealthy man today. Kudos to your research. I think we can agree to disagree on this one. I’m getting in in 24 hours. We will see.”

 

 

 

gold-513062_1920
Gold is widely viewed as a hedge against dramatic currency devaluation. Unlike Bitcoin, gold is a store of value. Yet like Bitcoin, gold is subject to market conditions and the price swings therein. Exposure can be direct, or through an ETF such as the GLD, or derivative, like Wheaton.

 

 

He’s right.  At the time WPM was known as Silver Wheaton.  Way back in ’09 this issue made a stunning +1400% move.  But that was then.  Now is now.  Fitz feels an entry point is at hand now.  He is not alone.  As we stated yesterday, Investing.com ranks WPM a “Strong Buy” right here on internals.  We don’t see these positives in the footprints.  Here they are.

 

WHEATON HISTORY IN TECHNICAL FOOTPRINTS.

Silver Wheaton’s stunning rise, 2009.
Chart, WPM, silver
1400% moves are relatively rare and this one was straight up. Who wouldn’t wish to have caught that? But it’s 2018 now and the story is very different.

 

Chart, WPM, long decline
Wheaton’s post run multi-year decline. Following this long-term descent, Wheaton went directly into a clear consolidation phase(gray).

 

Chart, WPM, peak to trough
Wheaton’s consolidation leads into it’s current decline, a complete inversion of all moving averages, a Death Cross, and price-action leaving shares far below it’s 200-day EMA. Notice all EMAs continuing to descend.

 

The dollar is not weakening, but rather continuing it’s relative strength.  Longer term market direction remains unclear, despite broadly horrific price-action, across sectors.  If markets continue to weaken, perhaps the recession gold play will gain momentum.  We do not see that now, nor are we seeing such nascent strengthening in Wheaton Precious Metals.

 

At a 9.07 peg ratio, Wheaton is 3x the price of Amazon(peg 2.91), and more than 5x Netflix(peg 1.66).  Netflix and Amazon are two of the very best companies in the world.  Amazon has a runway for growth longer than any, and more shots on goal then the Chiefs.  We think AMZN, even right here, is a better candidate.  United Health and Verizon also offer more stability and growth potential.  Thanks to our readers for such insightful feedback.

 

Thanks for Reading.

water-2STOCKjAW.COM

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Additional resources:

Investopedia.com.  Seriously Wonderful.  Fact.
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https://www.schwab.com/public/schwab/client_home
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2 thoughts on “Wheaton Precious Metals UPDATE

  1. All valid points. I’m just not as optimistic as you about market direction. Even Jim Cramer recommends a position in gold on Mad Money.
    Your suggestion that the dollar will remain strong, does give me pause. You are absolutely right on the poor performance of WPM over the last seven years. History does not necessary repeat. Out of respect for your investigation and well researched argument, I’m going to cut my dollar investment in half and see how it goes. Thank you as always for your guidance, precision, indepth research. If we all thought the same thing as everyone else life would be very boring indeed. Keep up the great work. I have joined you in Verison and United Health. Both these positions have held their own through a rough patch in the market and I intend to add to these positions when they go on sale.

    Keep up the fantastic articles and THANK YOU for your insight, hard work, andI in depth research. You make investing fun.

    With very best regards,

    Ffitz

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    1. Love your thinking and always appreciate alternative perspectives. In clarification, we are not exactly optimistic. Rather, we see this market as dangerously unstable, and yet looking for a bottom. Little is working now. Likewise, we only know how the dollar is behaving now. Predicting currency direction is not our gig. Thanks again Fitz.

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