Source: Clive Maund for Streetwise Reports 12/18/2018
Technical analyst Clive Maund charts this royalty and streaming company and explains why he expects its shares to continue to rise.
There was big news out of Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) late last week, when the company announced that it has settled a tax dispute with a Canadian agency on terms favorable to itself. What it boils down to is that foreign income on earning generated by Wheaton International will not be subject to tax in Canada, and while tax liabilities in Canada will be increased, the net impact of this should be minimal and way more than offset by the tax relief on foreign income.
Not surprisingly, Wheaton stock gapped higher on huge volume on this news, which will clearly have a long-term beneficial impact on the company. This stock action was very bullish and suggests that it will head much higher eventually, and here it is worth noting that the company is very undervalued compared to say Franco-Nevada or Royal Gold.
What about the market crash I hear you ask, and its impact if silver drops to say $10? The first point to make regarding this is that $10 is not so far below the current price at about $14.60, secondly given that the overall AISC (all in sustaining costs) for silver is about $16, it is unlikely to stay at that level for long without generating an acute supply shortage, and the third point is that we can expect Precious Metals stocks to anticipate the bottom in gold in silver if they drop further. The action in Wheaton on Friday indicates renewed strength, a strength that suggests that it will not be impacted much by any further falls in the price of silver, and furthermore that whenever silver does take off higher again, a robust bull market in Wheaton should ensue, and once the major sector bull market eventually gets going, it should perform very well indeed.
On the latest 6-month chart we can see the spectacular high volume gap up on Friday on the news, which just by itself is very bullish and portends much higher prices. Notice how this move vaulted the price above the resistance at the top of a Double Bottom base pattern. Note that the “old wives tale” about gaps having to be closed doesn’t apply here, because the gap was a “breakaway” gap, and this type of gap is not normally closed and usually leads to a vigorous advance, especially when the gap is large and accompanied by heavy volume as is the case here. Notice also how the gap up move on Friday stalled out at resistance at another smaller gap, and in the vicinity of the falling 200-day moving average. While it may pause here for a little while to digest Friday’s gain, the energy behind this move suggests that it is going to continue to press higher.
The long-term 14-year chart shows that Wheaton is cheap here compared to back in 2011, like most PM stocks. While it could be beaten back down by silver dropping to say $10 on a market crash, the gap higher on Friday on the biggest upside volume since 2011 makes it likely that the support shown at the $15 level will hold, and this show of strength implies that it may not drop back at all, or only by a trivial amount. The major bull market expected in this stock in due course, which will be triggered by an emerging bull market across the sector that is expected to be spectacular, will be triggered by a break out of the top of the expanding channel shown, all of which being likely to occur when the Fed (and other central banks) are pressured into wading in with emergency QE to alleviate an acute credit crisis precipitated by the market crash.
The conclusion is that Wheaton Precious Metals is a safe and solid silver investment here, one that is unlikely to be impacted much, if at all, by the market crash and any further weakness in silver resulting from this, and one has very substantial upside potential, especially when the major sector bull market gets underway. There is a large quantity of shares in issue at 444 million but this is a large company, and as we saw on Friday, this won’t stop it going up.
Wheaton Precious Metals website.
Wheaton Precious Metals Corp, WPM, WPM.TSX, closed at $18.94, C$25.34 on 14th December 2018.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years’ experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
Read what other experts are saying about:
Sign up for our FREE newsletter at: www.streetwisereports.com/get-news
Disclosure:
1) Clive Maund: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. CliveMaund.com disclosures below. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Wheaton Precious Metals. Click here for important disclosures about sponsor fees.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals Corp., a company mentioned in this article.
Charts provided by the author.
CliveMaund.com Disclosure:
The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
( Companies Mentioned: WPM:TSX; WPM:NYSE,
)