Since I wrote about Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW) two weeks ago when it dropped 11%, it has dropped further from $19.70 to $16.30, another 17% drop. At the time, I cautioned investors to wait until the Canadian Revenue Agency (CRA) issue is cleared up, but honestly, I did not expect the decline to be this extreme.

This is not only due to the possibility of Silver Wheaton having to pay more taxes to the CRA, but also to the fact that the price of silver is at its five-year low, close to US$14.

The risk/reward is attractive

For the long-term investor who believes that the world needs silver, the risk/reward table has turned. There’s reason why the price of silver could soar.

Silver Wheaton’s cost per ounce of silver is about US$4 and the cost per ounce of gold is about US$400. Even with the decline in the price of silver at US$14 and gold at US$1105, Silver Wheaton is still profitable.

With the cost of mining being unsustainable, and mines shutting down temporarily as a result, the supply of silver will eventually diminish as the demand for the precious (seemingly not so precious now) metal continues.

There are many uses of silver, including in the areas of electrical, electronics, coins, metals, photography, jewelry, silverware, and so on.

The business

Let’s not forget that Silver Wheaton’s long-term business model as a silver streaming business is still the safest around. It doesn’t pay any ongoing capital or exploration costs required by other mines. Instead, Silver Wheaton pays other mines a fixed cost for their silver and gold by-product.

Specifically, Silver Wheaton has agreements with various mines to buy a fixed portion of silver and gold from them at a low fixed cost for the life of the mine.

What should investors do?

If you’re looking for exposure to precious metals, I believe Silver Wheaton is the best bet. There’s a slim chance the company would default because it has low debt levels. Most importantly, there’s no chance to lose with its business model as a streaming company.

If you believe precious metals will eventually increase in price, there’s no reason to buy silver or gold bullion or coins, unless you like their shininess, because Silver Wheaton pays you a dividend while bullion and coins don’t. So, you get paid to wait when you hold Silver Wheaton. Currently, the company pays a 1.5% yield, although that yield is based on the cash generated by operating activities in the previous four quarters.

In other words, you won’t invest in Silver Wheaton for its dividend, but to get safe exposure to precious metals.

Our TOP turnaround stock for 2015

When tech companies fall from grace like this Canadian icon did, it's typically impossible to regain relevance. Here at Motley Fool Canada, we think this company and its CEO are prepared to prove all of the doubters wrong. We have even named it one TOP turnaround stock for 2015. Will you be left on the outside looking in should our intuition come to fruition?

If you're a curious soul (like me), then you can download the name, ticker symbol, and price guidance absolutely FREE.

Simply click here to receive your Special FREE Report, "A Top Turnaround Stock Idea for 2015."


Let’s not beat around the bush – energy companies performed miserably in 2015. Yet, even though the carnage was widespread, not all energy-related businesses were equally affected.

We've identified an energy company we think offers one of the best growth opportunities around. While this company is largely tied to the production of natural gas, it doesn't actually produce the gas. Instead, it provides the equipment required to get natural gas from the ground to the end user. With diversified operations around the globe, we think it's a rare find in the industry.

We like it so much, we’ve named it as 1 Top Stock for 2016 and Beyond. To find out why, simply enter your email address below to claim your FREE copy of this brand new report, "1 Top Stock for 2016 and Beyond"!

Fool contributor Kay Ng has no position in any stocks mentioned. The Motley Fool owns shares of Silver Wheaton. (USA). Silver Wheaton is a recommendation of Stock Advisor Canada.