Randy Smallwood, CEO of Wheaton Precious Metals (WPM), recently told CNBC a shift in global gold investment patterns is fueling the yellow metal's historic price rise.
While the eastern part of the world, particularly China, has long been a dominant player in precious metals investment, Smallwood pointed out that the West is starting to catch up.
“For the past four or five months, we’ve seen signs that the West is beginning to increase its holdings," Smallwood said. "We've seen a lot of strength coming out of the eastern part of the world, but now the West is catching up. Every week seems to bring a new floor to gold prices, which indicates that the western world is starting to invest in gold.”
Smallwood highlighted that the increased appetite for gold reaches beyond individuals or investors. Economic uncertainty, especially concerns surrounding the Chinese real estate market, has contributed to gold's price trend.
A streaming company
WPM, a streaming company, operates quite differently than traditional mining operations.
"Our company only has 40 employees," Smallwood explained. "We sign contracts with mines to acquire a portion of their byproduct — whether it's gold, silver, cobalt, or even platinum and palladium, which are soon coming into the mix."
WPM's selective approach to partnering with high-margin mines allows it to maintain a fixed-cost base and access highly promising mining operations without the operational risks of running the mines.
"We don’t operate the mines ourselves, but we’re very selective about what mines we buy into. This delivers a really low-risk way to get access to high-margin mining projects," Smallwood said.
The company’s financial performance underscores its strategic approach, with operating margins over 80%.
“We outperform both gold and silver," Smallwood said, noting that WPM’s stock has risen about 130% over the past five years. Augusta Precious Metals $0 (10 Years) $50,000 "Best Overall" by Money Magazine, Award-Winning for 6 Years, Thousands of 5-Star Rankings Goldco Vary $25,000 Industry leader with over $2 Billion in gold and silver. Top rated precious metals company with buy back guarantee Birch Gold Group Vary $10,000 Since 2003 BGG served over 32,000 customers. A+ rating with BBB, AAA from BCA & has multiple celebrity endorsements Addressing the silver market specifically, Smallwood acknowledged the role of Chinese stimulus in driving demand for precious metals. “There’s a long, strong appetite for precious metals in China — gold more as a store of value, but silver is crucial for industrial applications," he said. "Any type of stimulus there is always going to expand capacity on both fronts — gold and silver. China has been one of the strongest sources of gold investment from a bullion perspective, and individuals there are a little nervous about the real estate market, which further fuels demand.” Featured Partners (Ad)Expand Details
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