Over the past couple of years, precious metals have gone on a tear. In late January, gold reached $5,500 per ounce, while silver peaked at $121 per ounce. Precious metals prices surged as investors and central banks increased their holdings amid ongoing fears of geopolitical shocks and currency debasement.
Precious metals have retreated from their highs earlier this year, but geopolitical uncertainty hasn’t gone away. If you’re bullish on the long-term prospects for gold and silver, Wheaton Precious Metals (WPM +1.98%) is one stock to consider buying in April. Here’s why.
Image source: Getty Images.
Wheaton Precious Metals’ business model is largely insulated from rising costs
Investing in precious metals stocks can be risky. That’s because miners have to manage significant volatility in the spot prices of gold and silver, but they are also vulnerable on the expense side. Mining requires significant energy and labor costs, and recent increases in fuel prices have weighed on those in the industry.
Wheaton Precious Metals is a precious metals streaming company, meaning it provides up-front capital to miners in exchange for the right to purchase some portion of the mine’s future production at a fixed, low cost. As a result, the company is not exposed to rising labor, fuel, and equipment costs that can plague traditional miners.
Today’s Change
(1.98%) $2.86
Current Price
$147.69
Key Data Points
Market Cap
$67B
Day’s Range
$145.90 – $149.28
52wk Range
$75.42 – $165.76
Volume
443
Avg Vol
2.6M
Gross Margin
72.17%
Dividend Yield
0.47%
Investing in Wheaton gives investors leverage to rising precious metal prices, as its business model magnifies earnings when spot gold and silver prices go up. The company has contractually defined costs per ounce averaging $650 for gold and $12.50 for silver through 2030, providing it with predictable fixed costs. Meanwhile, 80% of its production is from mines operating in the lowest half of their cost curves.
Having fixed costs is a huge advantage, especially amid the current backdrop of the ongoing war in Iran and the closure of the Strait of Hormuz. Fuel can be a significant expense for miners, and as fuel prices rise, miners will see that eat into their profit margins.
Wheaton’s precious metal production is growing rapidly
Wheaton’s total production in the fourth quarter was 205,000 gold equivalent ounces (GEOs), and management projects this production will reach 1.2 million GEOs by 2030, a 50% increase from current levels. Looking to 2026, the company expects to produce between 860,000 and 940,000 GEOs.
One driver of this increase was its agreement with BHP to acquire BHP’s 33.75% stake in silver production at the Antamina Mine in Peru. Wheaton now has a 67.5% stake in assets in this region, which will add 70,000 GEOs annually starting this month.
One thing to keep in mind is that Wheaton’s earnings could plummet if spot prices of gold and silver decline meaningfully from here. If you think the bull run in precious metals is over, it’s best to avoid the stock. However, if you are bullish on future gold and silver prices, particularly as geopolitical tensions escalate and budget deficits widen, investing in Wheaton Precious Metals is a potentially smart way to capitalize on this.