"Of course, Silver Wheaton isn’t risk-free. The company is exposed to fluctuating commodity prices. If streaming partners begin to shut down mines, it could send Silver Wheaton shares reeling."
Worse yet when small miners like AXU run out of money to produce and actually go backrupt, the situation will get worse....if the producing mines can't afford to mine Silver, paying only $4.00 for the end product doesn't mean anything....
mine shutdowns? I doubt that slw pays them bucks for their scrap silver so they can invest in their mines I do not belive they deal with regular silver mines. mostley copper and lead buying the by-product not the copper.
Which is why this is a great time for SLW to become a primary silver producer as well right now, even though they are in the streaming business. They should do M&As while the going is still good with their market cap and their cash levels. For example, doing a friendly takeover deal to merge with First Majestic (AG). THey need to do this now, in 2014. I mean do it this month even.
What people have said is true. If the mines are getting squeezed the streaming business would fall apart too. Also, mining companies can get financing via banks, and dont necessarily have to go through silver wheaton and get paid pennies on the dollar for silver.
By changing business models to have primary silver production as well as the silver streaming side, SLW and AG both emerge as a much stronger company that can even later in 2015 merge or be acquired by one of the major gold miners.
The real question is therefore, what is the fall-back position? If the small miners run out of money do they then become owned by SLW? If not, by whom? What happens to the contract w/ SLW? What would happen if the price of Ag then went back up? Will the Black Hawks lose tonight's game? (just put in the last one to see if you are paying attention).
If the small miners run out of money, they don't produce, and the contract with SLW is moot...I don't think SLW has any ownership rights to fall back on....the banks/stockholders will own the non producing miners...not sure, but seems logical. Maybe they shoud also think about buying AXU...they are getting squeezed like most small miners. None of these scenerios is very good for SLW, at least in the short term. If silver prices rise, then all is well..if not, heaven forbid silver keeps going even lower, the income stream will slow down considerably...I am not long for the reasons we are all discussing, but I will look hard at SLW under $20.