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XMFSinchiruna (26.55)

Silver Wheaton Delivers Pure Gold



November 10, 2010 – Comments (15) | RELATED TICKERS: SLW , PAAS , CDE

When you're priced for perfection, only the best will do.

The investment world has taken notice of Silver Wheaton (NYSE: SLW) in a very big way. Considering the stock's year-to-date surge of well over 120%, in the context of silver's rise over 55%, it is clear Silver Wheaton has been the quintessential darling of the precious metals patch.

With a performance like that under its belt, despite a blockbuster earnings report, Silver Wheaton could not stave off the presumed temptation of would-be profit-takers.

Silver Wheaton easily doubled its prior-year earnings -- which themselves were rather flawless -- with earnings of $69.2 million for the third quarter of 2010. Operating cash flow surged 55%, while the company's realized operating margin for each ounce of silver sold improved 42% to $15.72. Record production of 5.9 million silver-equivalent ounces (SEOs) leaves the company on track to meet 2010 guidance of 23.5 million SEOs.


redacted, please read original article at link below.


I suspect there may be no shortage of Fools with unrealized gains in Silver Wheaton. The stock has appreciated more than 1,000% in the nearly two-year span since I issued my timely buy recommendation. I have gone on the record with my long-term price target of $100 for these shares, but that doesn't mean I won't advocate locking in some profits along the way. Sure, the company's anticipated 70% production surge over the next few years suggests a mighty powerful growth trajectory, and it's entirely plausible that the shares may still continue to press aggressively higher with silver's ascent. But disciplined Fools need to ring the register from time to time, and these gains have been bordering on the obscene.


redacted, please read original article at link below.


When the dust ultimately settles on this multiyear secular bull market for precious metals, I have zero doubt that Silver Wheaton will have etched an epic journey of investment gains into historical accounts of the period. I strongly encourage Fools to maintain or seek exposure to this high-octane silver play, and I remind those with meaningful gains behind them that realized gains are the best kind by far.

Silver Wheaton Delivers Pure Gold

15 Comments – Post Your Own

#1) On November 10, 2010 at 9:41 AM, Valyooo (33.70) wrote:

I didn't own SLW until yesterda (sold a while back). Yesterday I sold 1/2 of my GPRLF before the tumble, and picked up some SLW while it was down 10%

Ok, i will share a secret because you have helped me out so wasnt profit taking that caused that drop. I know a big commodities trader, he said there are (idk if they are in talks still or if it went into effect yesterday afternoon) new rules that require fees for using too much margin in the futures market. Yesterdays drop was just the big boys readjusting their positions to avoid the fees.

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#2) On November 10, 2010 at 9:53 AM, XMFSinchiruna (26.55) wrote:


Nice timing with the switch, although be prepared to watch GPRLF outperform even SLW over the next year or so. :)

No secret there, my friend. The CME raised its margin requirement to 30% for silver contracts. That may or may not have been the trigger behind yesterday's bizarre price action. I try to refrain from ascribing single-day movements to specific causes unless they're ridiculously self-evident.

Enjoy your dual SLW/GPRLF exposure. That's a powerful combination.

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#3) On November 10, 2010 at 10:03 AM, outoffocus (23.11) wrote:

I've been booking gains during the recent runup via call options.  Admittedly I missed an opportunity to sell before the selloff yesterday. But I'm confident the selloff is a minor blip. But I agree we should book gains along the way.  Its just us small investors tend not to really have large enough positions to benefit from short term selling.

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#4) On November 10, 2010 at 12:21 PM, MoneyWorksforMe (< 20) wrote:

TMFSinchiruna ,

Do you know where I can find GPRLF's Q3 earning's report? The last one I could find on their website was for Q2 back on June 31st. 

As an aside, the next time they are due to report is at the end of December for Q4, correct? 


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#5) On November 10, 2010 at 12:30 PM, Valyooo (33.70) wrote:

I told my friend to buy exk at 3:58 yesterday. Unfortunately I didn't make it home before the market closed to buy it myself. My friend owes me one, haha

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#6) On November 10, 2010 at 12:55 PM, NOTvuffett (< 20) wrote:


SLW has a unique business model which has had great success recently.  Since they aren't a silver producer in the conventional sense do you think that they will be able to maintain their competitive advantage?  Do you still think it is a good value at the current price?

For GPRLF, is it liquid enough to trade it?

I would also like to hear your opinion on why silver had a big drop yesterday.  Sorry if you have answered that someplace else.

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#7) On November 10, 2010 at 2:07 PM, Gonzhouse (26.87) wrote:


SLW's has locked-in contracts for the price it pays (about $4 oz).  For GPRLF, I've bought more than 20,000 shares at a time with no liquidity issues.

In general, while you can quick-trade anything, most people who subscribe to the TMF Sinchiruna precious metals approach take a long term view.  PMs on a day-to-day basis can be highly volatile and you have to just ride it out.

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#8) On November 10, 2010 at 3:46 PM, clipper5903 (< 20) wrote:

This is perhaps the most asked question about Silver Wheaton: is it too late to buy in? I'm waiting for a dip this week to do so.

GPRLF has been good to me so I'm debating between adding on to my position or getting some SLW shares instead. 

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#9) On November 10, 2010 at 5:26 PM, XMFSinchiruna (26.55) wrote:


Great Panther's Q3 earnings should be out next week. Last year they reported on Nov. 16. I haven't seen a date set for Q4 earnings.


SLW remains an incredible investment with enormous growth potential. It used to be severely undervalued, whereas now I would say its price appropriately reflects its current assets at present prevailing silver prices. What is not factored into the shares, IMO, are the future price gains in silver or the gigantic growth potential through acquisition of additional silver streams going forward. The unique business model is their competitive advantage, and it remains so.

I have little to say about yesterday's price action. It didn;t phase me in the slightest. Considering where we've come from in the last few weeks, it was an insignificant blip. The CME margin policy change may have been a trigger, but that is speculation.


It absolutely is not too late to buy into SLW. Remember, my long-term target price is $100 per share, which still offers some cozy upside. It may not outperform silver mining peers to the degree that it has this year going forward, but it will still perform very admirably. If it scores a couple more silver streams like the Pascua-Lama deal, then my $100 target would be far too conservative. I would perhaps start small since we may see some near-term volatility, but if I owned no shares of SLW, I would not want to go another day without getting started.


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#10) On November 10, 2010 at 10:13 PM, Speed03 (< 20) wrote:

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#11) On November 11, 2010 at 9:31 AM, XMFSinchiruna (26.55) wrote:

As if on cue ... thanks for the heads up. That was another phenomenal quarter from GPRLF. Take note of how superior their net earnings are to even EXK, which itself is still a great stock despite trading more than twice GPR's market cap. Don't get caught up in P/E ratios, which have little value in determining value among miners. The company's reserve/resource estimate should prompt an abrupt repricing event, as these are very prolific silver desposits for which such estimates are long overdue.

By the same token, watch what happens to RBY when they release their reserve estimate for the F2 zone.

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#12) On November 11, 2010 at 9:53 AM, XMFSinchiruna (26.55) wrote:

Looks like Eric Sprott and I are aligned on SLW.

He pared his SLW holdings by 24% during Q3, although the stock remains his #2 equity holding.

I pared far less on a percentage basis, and SLW remains my top holding, but we were both booking some profits and readjusting our portfolios into that incredible show of strength.

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#13) On November 11, 2010 at 10:43 PM, jacobske (< 20) wrote:

What prevents someone from entering SLW's market and taking share away?



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#14) On November 12, 2010 at 8:39 AM, XMFSinchiruna (26.55) wrote:


That's a great question! While they have an enormous head-start on any would-be competition, other than a need for copious start-up capital I see few barriers to entry. One could argue, though, that Silver Wheaton is the Coca-Cola of silver streaming ... a brand that is associated with the product in a way that may be hard for a newcomer to overcome. Lastly, SLW's heft makes them a formidable foe for a newcomer defending against an unfriendly takeover.

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#15) On November 15, 2010 at 9:38 AM, SN3165 (< 20) wrote:

SNDXF.PK - Sandstorm Resources .  Gold royalty Worth a look !!

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