The current market drop has strong similarities with the 2008 financial crash, said Wheaton Precious Metals CEO Randy Smallwood.
Smallwood spoke to Kitco Thursday. The company’s year end results were reported Wednesday. Overall revenue was $861 million in 2019, representing an 8% increase from 2018. Total production of gold equivalent ounces was 707,200 in 2019. The company said it exceeded guidance.
Precious metals have been dipping in the face of the market plunge. Gold prices were down sharply in midday U.S. futures trading.
“I think looking at 2008 is a good comparable. What we saw was a flight to safety,” said Smallwood.
The highest rank on that flight to safety is the American dollar, said Smallwood.
“That’s why we see weakness in precious metals right now. But precious metals are truly the superior, long-term store of value.”
Ultimately, Smallwood believes precious metals will come out of this ahead.
At Wheaton, Smallwood said he is taking steps to make sure the business can operate with minimal impact. He said remote working, self-quarantine and social-distancing are all policies and procedures his company is working through.
When asked what he needs from government officials, he said “limit the panic.”
“When you see volatility like today, it all comes down to how the messaging is coming out,” said Smallwood.
“I tend to believe there was some pretty poor messaging that came out yesterday, and that is what drove the market today.”
Regarding yesterday’s financials and Wheaton’s current production mix of precious metals, Smallwood said there is no set profile of precious metals, rather it is driven by the opportunities in front of the company.
He believes gold production will dominate at Wheaton. In 2019 the company produced about 406,000 ounces of gold compared to about 22,000 ounces of silver. However base metal companies are hurting for capital, and Smallwood said he has seen “some great opportunities” for projects needing to arrange a silver offtake.
