Gold and silver streamer Wheaton Precious Metals Corp. (NYSE: WPM) fell a little over 8% in September, but was off more than 9% from the high it set early in the month. The thing is, Wheaton wasn't alone in its decline. Fellow streaming peers Royal Gold (RGLD 3.25%) and Franco-Nevada Corp. (FNV -4.29%) also traded lower, with both falling more than 8% from their early highs in September.
None of this trio actually operates any mines. Their business models are to provide cash up front to miners in exchange for the right to buy gold and silver at reduced prices in the the future. They then sell the gold at higher prices on the spot market. So, even though they don't face any of the inherent risks of running a mine, they still have to deal with the uncertainty inherent in the commodity markets.
On that score, gold spent most of September heading lower. Silver was on the downswing, too. And, as you would expect, investors pushed the stock prices of Wheaton Precious Metals, Royal Gold, and Franco-Nevada lower in response. Major miners like Barrick Gold and Goldcorp saw similar declines as well.
When comparing miners like Barrick and Goldcorp to streaming companies like Wheaton, Royal Gold, and Franco-Nevada, it's important to keep in mind both their differences and the similarities. While streaming companies don't have to deal with the difficult task of running mines, they still have to deal with the impact of often-volatile commodity price swings. There's nothing that you can do about that, with September just the latest reminder that gold and silver prices are still important to the top- and bottom-line performance, as well as the stock price, of Wheaton and its peers.