Opinions
David Cockfield
Wheaton Precious Metals
WPM-T
DON'T BUY
Mar 03, 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%.
This is well down from where it was in the past. A company that basically invests contracts to get the metal at a fixed cheap price. This is being challenged by some of the local governments, particularly in Central America. It is an ongoing problem. Right now, he is neutral on precious metals. If he were to see the silver price take off, he would become a little more positive. Right now, he would wait on the sidelines.