In this video, Motley Fool analyst Taylor Muckerman highlights some risks of investing in Silver Wheaton. First, Silver Wheaton typically signs long-term contracts with miners, but has no control over mine activity. There are market and local political forces affecting mining activity that could hurt production. Second, prices for silver are volatile and tend have been in decline. Third, while there is currently little competition in the silver streaming market, newcomers could easily enter the game and erode market share, because there is significant competition in the silver marketing business.
If you are looking for a company whose success is determined by the metals market, but without involving itself in the risks of physically mining the metals, then Silver Wheaton provides a unique play on the future of silver. SLW chooses to finance the mining of silver; it has grown sales and net income every year since 2008, and also has increased competitive advantages over its limited peer group. More details about our outlook for Silver Wheaton can be found here in our Motley Fool analyst report.