Please ensure Javascript is enabled for purposes of website accessibility

Why Wheaton Precious Metals Corp. Fell Nearly 10% in September

By Reuben Gregg Brewer - Updated Oct 4, 2017 at 9:53AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Wheaton Precious Metals had a down month, but don't worry -- it was pretty much what you'd expect.

What happened

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.

So what

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.

A miner holding a silver nugget

Image source: Getty Images

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.    

Now what

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Royal Gold, Inc. Stock Quote
Royal Gold, Inc.
RGLD
$110.25 (3.25%) $3.47
Franco-Nevada Stock Quote
Franco-Nevada
FNV
$169.32 (-4.29%) $-7.59

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.