Key Points
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Gold and silver prices have pulled back sharply, but macro risks could keep precious metals in focus.
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Wheaton offers exposure via its streaming model, which shields it from costs that pressure traditional miners.
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Its long-term production growth makes it an appealing precious metals stock if spot prices remain elevated.
Precious metals entered 2026 with strong momentum as gold and silver climbed amid central bank buying and global uncertainty. After gold reached roughly $5,400 per ounce and silver $116 per ounce, prices have plunged 24% and 49%, respectively.
The falling prices sound alarming, but geopolitical tensions remain high, U.S. deficits are elevated, and rising energy prices could bring another wave of inflation. For investors seeking exposure to silver and gold, precious metals stocks are an appealing choice because higher spot prices boost margins.
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However, rising oil and fuel prices squeeze traditional miners by pushing up operating costs. That is where Wheaton Precious Metals‘ (NYSE: WPM) differentiated business model stands out. Here’s what investors need to know.
Wheaton offers upside exposure to elevated precious metals prices
Precious metals miners benefit from higher spot prices, which translate directly into growing profit margins. However, elevated fuel prices can also drive up operating costs. Known as all-in sustaining costs (ASIC), this represents the cash cost of producing each ounce of the precious metal, including labor, administration, and fuel.
Because many miners rely heavily on diesel and other fuels for their equipment, rising prices amid the ongoing conflict in Iran have put downward pressure on those margins. Instead of running mines, Wheaton is a precious metals streaming company, which means it helps finance miners in exchange for the right to buy future metal production at discounted prices.
This business model helps protect Wheaton from rising costs by granting it the right to purchase a percentage of the mine’s future production at a predetermined price for the life of the project. As a result, Wheaton has a locked-in contractual agreement for silver and gold at between 15% and 20% of the spot price in many of its newer agreements, protecting it against inflationary pressures.
Image source: Getty Images.
The company delivered record results in the first quarter, with revenue surging 92% year over year and net earnings reaching a record $582 million, up 129% from last year. The company also declared a dividend of $0.195 per common share in May, up 18% from last year.
Looking ahead, the company projects 50% production growth by 2030, with target output increasing from 1.2 million Gold Equivalent Ounces (GEOs) per year.
A smart precious metals bet — if prices remain strong
Investing in Wheaton Precious Metals isn’t without risks. The main vulnerability of its business model is its reliance on precious metal prices. While it doesn’t have direct exposure to operational costs, its earnings could plummet if spot prices of gold and silver decline meaningfully from here.
That said, major global banks continue to project gold and silver prices to remain elevated in the coming years. For example, JPMorgan Chase projects gold at around $6,300 per ounce by the end of 2027, while projecting silver at around $85 per ounce.
These high expectations for precious metal prices, coupled with Wheaton Precious Metals’ recent 33% decline, make it an appealing stock for investors seeking exposure to silver and gold without the operational costs associated with traditional mining stocks.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Courtney Carlsen has positions in JPMorgan Chase and Wheaton Precious Metals. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
