Opinions
Jason Mann
Wheaton Precious Metals
WPM-T
DON'T BUY
Jan 16, 2017
Stock price when the opinion was issued
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From a trade perspective, a bit overbought. He's a trader at heart, and buys into dips. If you're a bull, by all means keep holding. But he took some $$ off the table.
Likes both gold and silver here. Gold and silver equities and exposure to them are very undervalued relative to long-term trends; analysts tell him it's likely going to stay that way for a while. The market just doesn't believe that gold and silver prices are going to remain elevated.
Gold is almost like an insurance policy. Good diversifier. Should be a good, long-term hedge. Deposits have become harder to find.
He prefers the business model of the royalty companies like FNV or WPM. As well, they operate counter-cyclically -- give money when gold prices are low and harvest when prices are high. Always looks expensive, but it's expensive for a reason.
This pick is for the person who doesn't currently own anything in the space, or who is a more conservative long-term investor. By far the strongest theme in the market. He believes we're the first year into a multi-year bull market in gold, with pullbacks.
In safe jurisdictions, collecting royalty fees. Great dividend growth. About 60% gold, 40% silver. No debt. Yield is 0.82%.
He does not trade these stocks because they are volatile and don’t have traditional earnings. He thinks of them as defensives. They peaked in the summer. He would argue that they are tied to the path of interest rates in the future. You don’t need to own gold as much right now. They don’t have operating risk so have high PE. It is not attractive to him.