The shares of Wheaton Precious Metals (NYSE: WPM) have lost 22% in value since mid-April as gold prices declined from $2,000/ounce in March to $1,800 at present. While other commodities including copper and iron reported a decline over concerns of lower demand due to China’s zero-tolerance policy on the pandemic, a strong U.S. Dollar led to a decline in gold futures. The Russia-Ukraine war is causing key changes in geopolitical strategies of many countries – leading to new trade relations and energy security pacts. Thus, Trefis believes that growing uncertainties surrounding this shift is likely to propell gold prices until global macroeconomic stability is attained. Trefis highlights the historical trends in Wheaton Precious Metals’ revenues across key operating segments in an interactive dashboard analysis.
Will demand for precious metals grow in 2022 and 2023?
In 2021, Wheaton reported 663.4 thousand gold equivalent ounces of sales at an average price of $1,811/ounce. Uncertainty surrounding macroeconomic recovery coupled with high benchmark oil prices led to a surge in commodity prices – assisting Wheaton’s top and bottom line in recent quarters. After observing a peak of $2,200/ounce in 2020, the precious metal registered a correction in recent months as the U.S. Dollar strengthened. Thus, the company reported a 5% (y-o-y) topline contraction and a 9% decline in operating cash flow. Per annual filings, sales of gold, silver, palladium, and cobalt account for 47%, 48%, 4%, and 1% of total revenues, respectively. Per the World Bank’s commodity market outlook, gold prices are projected to decline from $1,880/ounce in 2022 to $1,650/ounce in 2023. Similarly, silver prices are projected to decline from $24.20/ounce in 2021 to $21/ounce in 2023.
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Stock has moved in-line with broader markets
WPM stock declined from levels of around $33 in February 2020 (pre-crisis peak) to levels of around $24 in March 2020 (as the markets bottomed out), implying WPM stock lost just 27% from its approximate pre-crisis peak. It observed a strong rally post the broader market sell-off and reached $40 at present. In comparison, the S&P 500 Index has also gained 20% in-value since pre-pandemic levels. (related: Has ArcelorMittal Stock Lost Its Sheen?)
|S&P 500 Return||-3%||-16%||80%|
|Trefis Multi-Strategy Portfolio||-4%||-20%||218%|
 Month-to-date and year-to-date as of 5/16/2022
 Cumulative total returns since the end of 2016