Silver Wheaton Corporation: Acquire!

We do own this stock having made our first purchase at $9.41 and have been tracking it with the view of acquiring a few more shares. Today we put in an order for Silver Wheaton Corporation (SLW) but we pitched it a tad low and ended the day empty handed. We didn’t want to chase the price higher and so we waited patiently for the price to come back, which now looks like an error of judgement on our part. Still there is always another day and another opportunity.

As we can see from the chart above SLW appears to have formed a base at the $13.00 level and is currently trading below its 200dma. The technical indicators are also heading north which suggest a higher stock price going forward.

For those of you who are new to this web site and as a brief reminder to our regular readers, this company is not a silver mining company.

Silver Wheaton is a new innovation in that it is a silver only company and does not own or operate any mines.

Its total revenue is derived from silver sales, which it acquires from gold and base metal mining companies as a by-product of their operations. This is the only company that we are aware of that operates in this manner. Its position is unique in the market place. By placing contracts with other miners for their silver at favourable rates and selling on to the general market they have created a terrific niche for themselves.

Today SLW closed at $15.08 and looks set to go higher as silver prices pick up speed in their renewed challenge of silvers previous highs.

Silver Wheaton Corporation. (TSX: SLW, AMEX: SLW) has also recently been listed on the New York Stock Exchange (NYSE: SLW).

Have a good one.

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Comments

[john p]

"Silver Wheaton is a new innovation in that it is a silver only company and does not own or operate any mines.

Its total revenue is derived from silver sales, which it acquires from gold and base metal mining companies as a by-product of their operations. This is the only company that we are aware of that operates in this manner. Its position is unique in the market place."

INCORRECT - SILVERSTONE RESOURCES SST-X WORKS EXACTLY THE SAME (THO' ON A SMALLER SCALE), AS WELL AS BEING AN EXPLORER.

From their web site:

The company expects to have 2008 silver sales of greater than 2 million ounces of silver, increasing to more than 3 million ounces in 2009.

Silverstone’s sales are generated from its purchase of by-product streams from operating base metal mines. The company has a ten-year silver purchase contract with the Cozamin mine in Mexico, as well as life-of-mine agreements with Lundin Mining to buy 100% of payable silver from the Neves-Corvo and Aljustrel mines in Portugal.

The company has the right to purchase 12.5% of the life of mine of payable silver from Loma de la Plata zone from the Navidad project – Aquiline Resources Inc. with a minimum of one million ounces of silver per year and the right of first offer with respect to the sale of any additional future silver production streams by Aquiline.

In addition, Silverstone earned a 100% ownership in three properties as well as two joint ventures in Mexico (all past producing silver-gold mines). It is aggressively exploring Copala, and plans to release a resource estimate by the end of Q2 2008.

[Silver Prices]

John,

We take your point, however, we draw your attention to "It is aggressively exploring" which tells that they are also explorers and carry the associated risks. Silver Wheaton is not an explorer and does not carry such risks rendering it unique.

We dont mean to split hairs on this issue but they are not EXACTLY THE SAME as you suggest.

[Doug]

What about the Dec $20 Calls? Quoted at 75¢ bid at 90¢ ask.
A 15% move from here worth maybe a 40% move on the calls?

[Silver Prices]

Doug,

As with last year we may get a dip in August so we would think about an 'options trade' then.

[Bruce Gordon]

Interesting. So Silver Wheaton is a silver commodity company, though not a mining company. making SLW something on the order of what Archer-Daniels-Midland (ADM) is in the agricultural commodities sector (I happen to own shares of both).

[SS]

(1) Did Silver Wheaton get an upgrade on Aug. 6 or was I hearing things?

(2) FYI http://www.bloggingstocks.com/2007/12/23/best-stocks-for-2008-silver-wheaton-slw/

Please note date of article. We still have a few months to go before the year ends.