Shares in precious metals streaming company Silver Wheaton Corp. (USA) (NYSE:SLW) slumped 10.32% to $23.56 Tuesday following an across-the-board collapse in precious metals (PM) prices.
Silver Wheaton traded nearly 11 million shares and was in similar company. Barrick Gold Corporation (USA) (NYSE:ABX) was down 11.16%, Pan American Silver Corp. (USA) (NASDAQ:PAAS) lost 11.17%, and Endeavour Silver Corp(NYSE:EXK) slipped 11.33%.
The strength in the US dollar was responsible for the PM woes. The financial markets are increasingly convinced that a rate hike by the Fed is on the cards this December, and that is anathema for gold and silver.
Silver Wheaton Corp. (USA) (NYSE:SLW) controls 5% of the global silver market
Though Silver Wheaton does not operate any silver mines of its own, as a streaming company it purchases rights to the future production from miners that it finances.
As a result it is directly affected by the volatility in gold and silver prices. Of late it has entered deals for gold financing too. When PM prices rule weak, Silver Wheaton is able to strike very competitive production uptake deals with mining companies, and these can pay off very handsomely over the long run if gold and silver prices take off.
Silver Wheaton CEO Randy Smallwood is rather smug about his deal with Barrick Gold at the long-delayed Pascual-Lama mine in Chile.
“We get about 2-2.5 million ounces of silver at $3.90 an ounce,” he said recently about that deal. “That is definitely offsetting our cost for being delayed, it is the best half-built gold mines in the world and will be the best gold mine in the world.”
Technically, however, Silver Wheaton is looking rather weak on the daily chart, having fallen out of a triangle topping pattern on high volume.
Further, there appears to be the possibility of a quick fall to $22, the next line of support.