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Silver Wheaton Corp. Message Board

  • neildavis2002 neildavis2002 May 20, 2013 9:03 AM Flag

    For PM Bulls: Are Streaming Companies Relevant Long term?

    If you're like me and believe that PM's are going a lot higher over the next several years due to governmental monetary and fiscal policies, I'd like to know what you think about the following. Many in the PM sector say that streaming companies like SLW are a safe bet to ride the wave in the silver market because they don't have to concern themselves with the heavy costs and risks associated with mining. Right now, with prices subdued and the PM market still not mainstream, that makes sense to me. Miners need financing for their projects, and with the general public sentiment of PM's being still quite low, they may not be able to get the necessary funds from traditional business loans or through equity financing. Streaming companies fill that need for the miners. But my question is, what happens when, as I believe, the bull market in PM's goes mainstream and enters the public mania stage? What happens when everyone you know, and even the CNBC anchors begin to realize that PM's are the place to be? The way I see it, while the streaming companies will be making good money on their existing agreements with the miners, their ability during this mania stage to secure new agreements will be greatly undermined due to the massive interest in mining shares by both individual and institutional investors. It seems to me that this increasing investor interest will negate the need for miners to part with their metals via a streaming deal. Why enter into an agreement with a streaming company when you have more than enough financing from equity sales and every bank in town is lining up to loan you money at low interest? So what I'm saying is that SLW looks like a good company in the current environment, but when the tide changes and PM's become the hot commodity, their services are simply not going to be needed by the miners until the bull market in PM's comes to an end. Any thoughts?

    Sentiment: Hold

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