Silver Wheaton has increased its gold production in recent months. Moreover, the company’s gold production is expected to triple in 2013. Is this the right move for this company? What is next for the gold and silver markets?
Silver Wheaton’s recent decision to purchase Sudbury and Salobo led to a spike in the company’s gold production in the first quarter of 2013: Gold production sharply rose from 2,088 ounces in the first quarter of 2012 to 32,227 ounces in the first quarter of 2013. Furthermore, gold sales generated 13.5% of the total revenue in the first quarter of 2013 compared with 3.2% in the first quarter of 2012.
According to the company’s outlook for 2013, Silver Wheaton’s gold production will reach 145 thousand ounces, nearly three times the amount of gold produced in 2012. Conversely, the company’s silver production will fall by 4.1% in 2013 (year-over-year). Therefore, gold sales will generate 24% of the total revenue in 2013 compared with only 9% in 2012. Is this the right move for this company?
Is gold better than silver?
A quick examination reveals the profit margin on gold is lower than on silver. Based on the company’s financial reports, the profit margin on silver reached 86.3% in the first quarter of 2013; the profit margin on gold was only 78%.
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For further reading:
- Will Gold Continue to Dwindle?
- Will Gold Recover from its Recent Fall?
- Gold and Silver Outlook for May
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