If You Want Exposure To Rising Silver Prices, Don't Overlook Wheaton Precious Metals

Summary

• I've been allocating more towards silver mining stocks in anticipation of this breakout move. One name I've ramped up exposure to recently is Wheaton Precious Metals.
• Wheaton is the only royalty/streaming company that gives investors substantial leverage to both gold and silver.
• If it were included in the Silver Institute's list of Top 20 producing silver companies in the world, WPM would slot into the number 5 spot.
• Silver has lagged, and it hasn't allowed the substantial silver component in Wheaton's portfolio to shine. That's now changing.
• The recent steep drawdown in the shares since last summer is something that investors should take advantage of because, eventually, WPM will be back to outperforming again.

It isn't easy to find value in this market. Many investors might still be chasing the same stocks that have been big winners over the years, even though multiples are stretched to extremes, and it will take 5-10 years for most of these high-flying stocks to grow into their current valuations. I would argue that, on the whole, the mega-cap growth companies will underperform for the short to medium-term; I see far better options.

Investors (particularly those in the U.S.) are faced with the prospects for a continuous surge of monetary inflation, as an additional stimulus package will soon arrive just as COVID-19 vaccines become more readily available over the next several months. It will be a double-shot (no pun intended) of economic growth, as stimulus checks will provide a boost to consumers, and pent up demand for travel, dining, etc. will drive more spending as the hardest-hit areas of the economy begin to open back up fully (or at least return to some normalcy).

With the Fed hell-bent on keeping short-term rates low, and considering the focus has shifted to average inflation targeting — allowing inflation to rise well above the 2% goal before the Fed feels the need to act — the money supply will continue to break records (and not the kind that we want to see broken). Forget the ever-elusive CPI inflation — which will finally present itself shortly — as it's the current monetary inflation that is deeply concerning.

At this time, investors should broaden their horizons and start looking for asset classes and individual stocks that are not only values (both absolute and relative to the market as a whole) but that offer the best protection from inflation.

Obviously, that's the purpose that gold and silver serve. Gold has been in correction mode since last summer, but

Analyst’s Disclosure:I am/we are long WPM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.