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Silver Wheaton Corp. Message Board

  • investora2z investora2z Mar 29, 2013 12:53 PM Flag

    Ultimately, prices of silver will determine the future

    Due to its business model, SLW operates at very low capital risk (apart from upfront payments) and maintains excellent margins. It has 20 long-term purchase agreements associated with silver and/or gold relating to different mining assets, whereby it acquires silver and gold production from the counterparties. Attributable silver and gold, as it is referred to in its financial statements, is the silver and gold production to which SLW is entitled pursuant to the various purchase agreements. In 2012 it had a profit margin of 70%. It has nearly zero debt ($50 million debt with sales of $850 million in 2012) and has $778 million cash on its books. Q4'12 was particularly robust with nearly 50% growth in sales and 23% growth in net income. For the full year also, the growth was decent. If you take the clock back to 2009, the revenue was only $239 million and the net income was $73.5 million (net income in 2012 was $586 million). This exponential growth in sales and net income (and profit margins) has led to excellent returns for the investors as the stock was languishing at $3 in 2009. The current levels of $31 indicate the magnitude of growth in stock price. This is despite a 25% correction from the highs of $41 in November 2012. Stocks in the gold / silver mining industry take a long to come to production. The fast progress of SLW is mainly because it is not a typical mining company. The gold mining companies take a long tome to start production. But once they do, the stock takes off pretty fast. Companies like Coeur De Alene (CDE) have, therefore bought stake in Pershing Gold (PGLC) which is on the threshold of production (starting in 2014). For SLW, the whole growth story has taken place within nine years which is amazing and commodity investor Sprott has a small stake in the company. The long term story, however, is dependent on prices of Silver & Gold.

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    • There is no argument with your assessment. But please take a look at this Good Friday’s action in what appears to be the Hong Kong market for silver while markets everywhere else were closed for the holiday. It plunged 46 cents (according to Kitco). This has been almost a daily occurrence where Communist Chinese markets acquire PMs at a discount while all other markets only provide what might be considered retail prices after western CBs buy in at the lower prices that had just occurred in Asian markets. Nobody appears to be remarking on this.

      So the question arises, since everything available stateside has a “Made in China” label on it, how come the more favorable PM prices possible here are not being provided with a “Made in China” label (without tungsten cores, of course)?

      There appears to be possibly 2 conclusions:

      1. The Communist Chinese have a cooperative agreement with western CBs to take PM prices down for their population and western CBs.

      2. There is an objective by western CBs to see to it that those in the west are being led to believe that if they invest the price will be taken down further by western CBs after they experience the lower Communist Chinese PM prices, then drive prices upwards to discourage such investment, the objective being to eventually create a one world tyranny through a one world fiat currency system. Of course most know that this manipulation is managed through paper based futures markets that none can oppose without experiencing losses.

      If correct, this is quite sinister, and maybe a completely wrong assessment. PMs Editorials have not noted this. What do you think?

23.47-0.48(-2.00%)1:04 PMEDT