The opportunity to invest in precious metals has never been greater. Gold and silver prices are attracting attention this year. Over the past year, gold prices are up over 80%. Silver has surged even further, rising an incredible 195% over the past year.
Gold continues to act as a defensive store of value. Silver’s industrial demand makes it more volatile but more explosive during bull cycles.
Part of that surge is fueled by ongoing market volatility as investors turn to metals for stability. Demand remains strong as a slew of other factors, from inflation, geopolitical concerns, and supply constraints weigh in.
Even with the recent surge, metals remain supported by structural supply deficits and steady long‑term demand from central banks and industry. For those investors looking to capitalize on that long-term appeal, there are two avenues to explore. Traditional miners and streamers both offer unique appeal.
Here’s a look at both.
Source: Getty Images
Streaming offers lower‑risk exposure
Wheaton Precious Metals (TSX: WPM) is one of the largest precious‑metal streaming companies on the planet. Streamers offer a way for investors to get exposure to gold and silver without many of the risks that traditional miners face.
That’s thanks to the unique, yet lucrative model that streamers follow.
Streamers like Wheaton provide upfront financing to traditional mining companies. In exchange for that upfront capital, streamers gain the right to purchase a portion of future production at a fixed, discounted price.
That discount can be substantially lower than the market price. It also gives Wheaton the flexibility to sell those metals on at the market price. Wheaton’s average cash cost per ounce remains under US$500, giving it one of the highest margins in the sector.
The result is high margins, predictable cash flows and protection from the rising operational costs of miners. And because Wheaton isn’t responsible for the day-to-day operations of the mine, the company can move on and contract additional streams.
In fact, Wheaton boasts 23 active streams around the world and more than 20 additional streams in development. Collectively, those mines produce gold, silver, palladium, platinum and cobalt.
That diversified, lower-risk appeal is just part of the reason Wheaton’s stock has surged 120% over the past year.
For investors seeking exposure to precious metals with lower volatility and strong cash‑flow stability, Wheaton remains one of the most compelling options on the market.
Traditional miners offer direct leverage to rising gold prices
Turning to traditional miners, let’s talk about Barrick Gold (TSX: ABX). Barrick is one of the world’s largest gold producers. For investors seeking an investment with direct leverage to rising gold prices, Barrick is a top pick.
Unlike streamers, miners like Barrick generate revenue based on the amount of gold they produce and the price they can sell it for. When gold prices rise, miners typically see profits expand quickly due to operating leverage.
Similarly, when the miner becomes more efficient, fixed costs drop, and margins rise. Those costs are often referred to as all-in sustaining costs (AISC). Barrick’s AISC costs are just under US$1600 per ounce.
In the most recent quarter, the miner reported its highest-ever net earnings per share of $1.43. This also led Barrick to update its dividend policy. The company now targets a total payout of 50% of attributable free cash flow.
The most recently declared dividend of US$0.42 per share represents a whopping 140% increase over the prior quarter. That translates into a yield of 3.3%.
The biggest risk for miners like Barrick is that margins can tighten quickly if gold prices cool or operating costs rise.
For investors who want maximum upside when gold prices move higher, Barrick stock offers a more direct and responsive way to invest in precious metals.
Where to invest in precious metals
Wheaton and Barrick offer two different approaches to precious‑metals investing.
Wheaton leans toward stability, diversification, and lower operational risk. This makes it ideal for investors seeking metals exposure without the volatility of mining operations. Barrick offers stronger leverage to rising gold prices, greater upside potential during a bull market, and the opportunity to earn income.
Together, these two stocks create a balanced approach to precious‑metals investing. Both are great options to consider in any larger, well-diversified portfolio.
