Big Banks Forecast Gold Could Hit $6,000: Is Wheaton Precious Metals a Buy?

• Wheaton Precious Metals shares person outperformed golden and metallic from one-year to 10-year intervals.

• That's due to the fact that it tin bargain hundreds of thousands of ounces astatine an 80% discount.

• This prime offers maturation positive stableness successful a volatile industry.

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When Randy Smallwood, CEO of Wheaton Precious Metals (NYSE: WPM), told Bloomberg Television successful October that helium was "confident" that golden prices would deed $5,000 per ounce wrong the adjacent year, his telephone seemed outlandish. After all, golden had conscionable surged 21% successful nether 2 months, and seemed owed for a breather. But successful the 3 months since, golden prices person climbed different 15%, and are wrong striking region of $5,000 per ounce.

If golden simply maintains its momentum, Smallwood's marketplace telephone volition travel existent with astir six months to spare. Now analysts astatine JPMorgan, Citigroup, and Bank of America person laid retired scenarios wherever golden hits $6,000, though not needfully this year.

Whether golden prices surge, drift higher, oregon adjacent enactment level from here, it's bully quality for Wheaton Precious Metals. Its shares person already benefited enormously from the ongoing golden boom, having returned 128% implicit the past year. That's a coagulated bushed connected gold's 68% rise, and the astir two-to-one bushed is nary accident. Thanks to immoderate almighty advantages of its concern model, this Vancouver-based institution with conscionable 44 full-time employees has a agelong past of outperforming gold.

Wheaton Precious Metals is simply a precious metals streaming company, meaning it provides financing upfront for mining projects successful instrumentality for the close to bargain a fixed magnitude of the mine's accumulation astatine a discount to spot price. These discounts tin beryllium precise steep, which allows Wheaton Precious Metals to amplify its net during golden booms.

As an example, instrumentality the company's November woody with Hemlo Mining to assistance the second get a excavation conscionable northbound of Lake Superior. Under the streaming agreement, Wheaton Precious Metals is providing $300 cardinal to Hemlo to make its mine, successful instrumentality for the close to bargain 10% of its payable golden output, until 135,750 ounces of golden are delivered (the "First Dropdown Threshold").

After that, Wheaton Precious Metals tin bargain astir 7% of Hemlo's payable golden output, until different 117,998 ounces of golden are delivered (the "Second Dropdown Threshold"). After that, Wheaton Precious Metals tin acquisition 4.5% of payable golden for the remainder of the mine's accumulation lifetime.