Silver Wheaton, A Super Buy at $22.50

By: Dudley_Baker

Don’t buy Silver Wheaton yet as it will probably drift down to serious support around the $22.50 range over the summer months.

Silver Wheaton, the go-to silver company for many investors, has taken a pounding of late.
The shares trade on both the NYSE and the Toronto Exchange under the symbol SLW. To quote from the company’s website,

Established in 2004, Silver Wheaton has quickly positioned itself as the largest metals streaming company in the world. The company currently has fourteen silver purchase agreements and two precious metals agreements where, in exchange for an upfront payment, it has the right to purchase all or a portion of the silver production, at a low fixed cost, from high-quality mines located in politically stable regions…”

In most cases Silver Wheaton has right to buy the production at $4 an ounce and of course there is no exploration risk or there part, thus a win-win situation. 

The shares hit a high of $46.90 on April 8 but currently trading around $30, thus a 33% haircut, so far. So, is the bottom in place? We think not.

However, the slow summer season is just starting for the resource shares and therefore, we see the potential for further declines in the share price.

Looking at the chart below you will see strong support around $28.50 - $29. A break of this near support will portend lower prices and the next support which we see is at $22.50.

 Influencing our decision on SLW is our view that silver has not made its low since peaking close to $50 in late April. We see silver possibly moving back to the low to mid $20 range before the final bottom is in place.

After this necessary and healthy cleansing silver and Silver Wheaton will once again become market darlings.

Some patience now will be greatly rewarded in the coming months.

Silver Wheaton is just one of the many resource companies we have on our watch list and we will be monitoring the prices of over 50 companies searching out the best opportunities and entry timing for our subscribers.

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Dudley Pierce Baker
Guadalajara/Ajijic, Mexico
Email: support@preciousmetalswarrants.com
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Dudley Pierce Baker is the owner and editor of Precious Metals Warrants and Insiders Insights. Articles are written by Dudley Baker along with contributing editors, Arnold Bock of Mendoza, Argentina and Lorimer Wilson of Toronto, Canada. PreciousMetalsWarrants provides an online subscription database for all warrants trading on junior mining and natural resource companies in the United States and Canada and a free weekly newsletter. InsidersInsights alerts subscribers when corporate insiders of a limited number of junior mining and natural resource companies are buying and selling.

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