SLW makes a higher percentage on its gold and silver streams when the metals go down..... They get a discount of 5.90 to the spot price for silver on one of their deals with HBM and a $400 dollar discount on Gold off of spot price at the time of the transaction.... The more of these deals they have in place the better.... they are royalties...not hedges.... The only down side I see from the price drop is their reserve of over a billion silver ounces... But lets face it the slide is in the paper market not the physical. You still have to pay 29 nuicks an ounce to buy the physical for most bullion that is not so;d out right now. Also the central bank keeps buying for some reason.....
Legitimate business model question, as long as this MB is on the subject.
What happens to SLWs discounted gold & silver if originally estimated production falls off a cliff due to depressed spot prices below cost to produce? What happens if the miner that entered into an SLW agreement goes belly up? Is SLW "at the front of the line" when creditors divi up the assets?
We seem to be in a repeat of late 2008, but this time the economic destruction in the financial industry is much greater. The unfunded bankster liabilities (derivatives) have not disappeared since the thinking in the banking cartel still appears to be that all losses will be socialized (taxpayer pays the “too big to fail”). Back then SLW nearly went into bankruptcy. Of course nothing could please the banking cartel more than to have it actually happen whilst lining their vaults with gold and silver as first claimants to the assets. A hint that this could happen is that currently many bullion vendors are reporting long delays in filling orders, which makes no sense in what could be termed a “buyers market”.
Here we have been very cautious about making any investment commitment in SLW as it has appeared too overbought. But if a really rough spots happens in the future before PMs recover and SLW makes it through that would be the time to buy. It never seems to be a good idea to buy before the bottom is actually in, which many by their remarks on this m/b seem prone to do.
“...the central bank keeps buying for some reason...”
You don’t seem to understand that there is a limit to the level of theft taking place by central banks. Manipulation is a type of theft. When theft is enormous enough it will steal, literally, all the prosperity of everyone but those connected to the theft.
Since this downturn has taken on full force on Friday, 4/12/13, it is assumed that all involved in the manipulation garnered a large gain in their net worth on commodities that were meant as a medium of exchange. There is coming a time when this wealth transfer will become so egregious that it will lead to civil disorder. Greece and Cyprus are but recent examples. This sort of wealth transfer is not sustainable. When people get mad enough they will revolt. That possibility has to be changed, but the only way to do that is to return to honest money. EVERYBODY loses when revolt becomes reality, and the result can be much worse than changes everyone can agree on, and not just the financial elite.
And, by the way, if you are suggesting that those who follow your discussion go out and buy physical, just try it. It looks suspiciously like the central banks are acquiring all of it because most websites are stating long delays for everyone else. How much sense does that make? If people are selling out to the degree that this downturn represents there should be plenty of supply to those who want to jump in at these levels, except for the fact that it apparently isn’t reserved for them.
So go live in a cave with Glenn Beck and make up stories about evil forces stealing your soul & wealth. Eat plenty of Glenn's survival tinned baked beans. Then you can created flatulence from two orifices at the same time.
Nonsense. They get discounted price (not a discount to the spot) of $5.90 and $400. What are you smoking?
"HudBay agreed on a long-term contract that will supply Silver Wheaton 100% of HudBay's Constancia and 777 mine silver at a discounted price of $5.90 an ounce, as well as 100% of the gold production at its 777 mine at a discounted price of $400 an ounce until at least 2016."