Wheaton Precious Metals CEO: The driving force on gold is strong demand in Asia

Randy, what is your theory as to the key driver of gold right now? Well driving force on gold right now it's just really strong demand out of Asia both from central banks and on the retail side we're seeing strong, strong. I think what we're seeing is a lot of the retail population in in Southeast Asia of China and and other parts of Southeast Asia are shifting, shifting some of their net worth from property into gold, feeling a lot more confident about gold than than property in the longer term. And so we're seeing a real big pickup in retail demand. And then on top of that central bank demand, particularly the Bank of China, but the central bank in China, but but a lot of other banks in that area also driving demand for gold. So kind of two questions on that. One, do we know why they're buying so much gold in Asia and do we know how much longer it will continue? Well, I think it's yeah, I mean I'm going to just make a comment on the on the, on the on the Chinese central bank in the in the sense that I I think what they're trying to do is just build up some strength behind their own currency to to try and compete with the US dollar. You know right now the the Chinese central bank has has reported about 2 1/2 thousand tons of gold backing it. The United States has about 8 1/2 thousand tons. So how long they they still need another 6000 tons to truly compete with the US dollar that, that, that, that could go for quite a while. Randy. When when when viewers ask what is the trend in production cost, what's the easiest way to understand that over the past few years, Well, production costs, I mean we're a streaming company, so our costs are defined by contract. But even we've been able to drop our costs our our last quarter end here we had a 10% drop in cost year over year and so our margins are even higher than probably near record highs that we've ever had. There's no doubt higher prices has driven some profitability and we are starting to see some movement starting to see a bit of a wake up in the equity space of of the gold mining companies and the streaming companies. You know there's these higher prices will will provide that support costs. Of course, inflationary pressures are challenging, especially in remote locations and some of these jurisdictions are very, very tough to to to keep a handle on that, but higher prices always help. Can you explain the difference between a streaming and a mining company and why you're getting better margin than the traditional miners right now? Yeah, we we only have 40 employees. We don't own mines. We actually invest into mines, but we're very selective about what we invest into and what we invest into as a streaming company is a portion of the production. And so for instance, Valet, one of the largest mining companies in the world, well known for its iron ore production, has a huge copper mine in Northern Brazil. We get 75% of the gold from that mine at a fixed cost of about 400. And I think it's about $425.00 an ounce, $430.00 an ounce. They deliver 75% of whatever gold they produce to us. We turn around, sell it into the market at the spot price and then pay them 400 and some odd dollars an ounce. That's a stream and it means that we don't, we're not people heavy, we don't have a lot of as I said, we've got a total of 40 employees in the company. But because we've invested into good assets, what we provide to shareholders is, is is low risk investing into the precious metal space. Would you argue that owning actual mines is, is too high risk? Well, there's definitely more risk associated with it now in a rising environment. That risk equals leverage and leverage in a rising environment sometimes helps if you invest in to the right asset. I think where I would put streaming is a is is a much lower risk way and I think to be honest everyone's portfolio should have a a bit of a diversified approach some higher risk approach into some of the miners. But as a good stable exposure to precious metals you you definitely need to have some streamers in your portfolio. Are there, are there a lot to choose from Now I know you've done some recent deals in Africa for instance, but are there a lot more, a lot more choices? Well, there is. We've last year was a record year for us. We added eight new assets and so you know our growth we've got about 40 to 50% growth in production expected over the next four to five years. And so there's there's a lot to choose from in terms of assets. We we were very well funded of course we're generating very strong cash flows. We had about a 20% beat on on the market census over our first quarter. That cash is going back into the ground to look for new opportunities and streaming is very attractive for the mining companies as a source of capital. So we're we've, we're, we're going to be continuing to grow.