It’s not just the paranoia of Fed-bashing, hard money zealots: precious metals really do make a lot of sense now.

Fact is, the market’s wild intraday gyrations are giving investors the cold sweats. With some analysts calling for a market crash in 2019, gold and silver are starting to regain their luster after a bad year.

A classic crisis hedge that often and unfairly takes a back seat to gold is silver. But if you’re concerned about stock market volatility, both gold and silver warrant your attention.

This backdrop explains the keen interest lately in Wheaton Precious Metals (NYSE: WPM). Based in Vancouver, Wheaton Precious Metals operates as a silver and gold streaming company in Canada and internationally.

Is the company positioned for sustained growth in 2019 and beyond? Or will gold and silver mania prove a short-term fad? Let’s find out.

Who Is Wheaton Precious Metals?

Wheaton Precious Metals was formerly known as Silver Wheaton Corp. but changed its name in May 2017. The company also changed its ticker symbol, from SLW to WPM.

Wheaton historically has focused on silver and it still does, but the name change signaled a diversification into other precious metals such as gold.

Wheaton is an unconventional play on the silver market, with smaller interests in gold. Rather than producing silver, Wheaton is a “streaming” company that makes an upfront payment to miners in return for the right to buy a fixed percentage of their production. The company then makes smaller, incremental delivery payments as it receives the metals.

Wheaton is a dominant precious metals streaming company, with a market cap of $6.8 billion. The company has streaming agreements for 20 operating mines and 9 development stage projects.

Without exposure to the actual production side of the business, Wheaton is more of a pure play on silver and gold prices. As several fundamentally flawed and overvalued stocks take a tumble in the coming months, precious metals will prove their mettle.

How Has Wheaton Precious Metals Stock Performed?

Precious metals are poised for a rally; analysts are particularly bullish over silver prices. However, the yellow and white metals have taken a pounding in recent years, which in turn has weighed on Wheaton’s stock.

Over the past 12 months, WPM has lost 25% compared to a gain of 5.5% for the S&P 500. Over the past two years, WPM has lost 14.7% versus a gain of 23.3% for the S&P 500. Over the past five years, WPM has lost 25.5% compared to a gain of 51.2% for the S&P 500.

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How Has Wheaton Precious Metals Performed In 2017/2018?

In 2018 year to date, WPM has lost 30.9% compared to a gain of 1.2% for the S&P 500. WPM fared better in 2017, with a gain of 11.6% compared to a gain of 19.4% for the S&P 500.

Who Are Wheaton Precious Metal’s Rivals?

Competition is fierce in the gold and silver mining industry. The landscape is dotted with a myriad of risky penny stocks and dubious operations that seem designed not to produce gold and silver but to fleece investors.

Here’s a look at three of Wheaton’s credible and comparable peers.

Pan American Silver (NSDQ: PAAS)

Vancouver-based Pan American Silver (market cap: $1.9 billion) explores, mines, processes, refines, and reclaims silver mines. The company owns and operates silver mines located in Peru, Mexico, Argentina, and Bolivia. It also produces and sells gold, zinc, lead, and copper.

First Majestic Silver (NYSE: AG)

Vancouver-Based First Majestic Silver (market cap: $1 billion) acquires, explores, develops, and produces mineral properties, with a focus on silver mining in Mexico. First Majestic also produces and sells its own bullion rounds and bars, whereas most of its competitors produce and market bullion through private mints.

Franco-Nevada (NYSE: FNV)

Toronto-based Franco-Nevada (market cap: $12.4 billion) operates as a gold and silver royalty and streaming company in the U.S., Canada, Mexico, Peru, Chile, Australia, and Africa. The company also holds interests in platinum metals, oil and gas, and other resources.

Will Wheaton Precious Metals Go Up In 2019 (Should You Buy)?

Wheaton is highly leveraged toward silver and gold prices, which are expected to rise in 2019. Rekindled inflation only makes the case more compelling for precious metals and by extension Wheaton.

After years of dormancy, the specter of inflation is emerging as a real threat. The 2017 U.S. tax cut package adds stimulus to an economy that’s already in expansion, which is a recipe for overheated growth. The escalating global trade war is putting further upward pressure on prices. Several companies in a wide variety of industries are reporting higher input costs due to tariffs; these costs are passed along to consumers.

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Both gold and silver are on a path for price appreciation, silver in particular. One reason silver retains its value during global uncertainty is the metal’s value in industrial processes. Gold has few industrial applications, but without silver, many processes would grind to a halt.

According to the Silver Institute, 46.1% of world silver supply is used in industrial applications. Silver’s unique properties, such as its thermal and electrical conductivity and catalytic ability, make it difficult for manufacturers to substitute silver with a cheaper metal. Electronic products, such as smartphones, are heavily reliant on silver.

The supply-and-demand dynamics behind silver are more complicated than many investors realize, as this video makes clear:

Also fueling the expected rise in silver prices is a growing shortage that resulted from cutbacks in production among miners in recent years, as the price of the metal slipped.

Silver mine production started to get back on track in 2018, but only after silver production in 2017 fell for the second consecutive year due to a string of supply disruptions across the Americas (see chart):

Now, as equities show extreme volatility and investors fret over a possible stock market collapse, precious metals are coming to the fore as classic crisis hedges.

In the near term, mining stocks’ prices move with the price of what they produce. Over the long haul, however, only rising production and growing reserves create value. And the larger a mining company becomes, the more difficult and expensive it becomes to replace output.

However, Wheaton Precious Metals isn’t hampered with the fixed operating and capital costs of traditional miners. Nor does does it shoulder exploration risk. To be sure, the company’s upfront royalty payment to a miner can be lost if a mine fails, but that loss is minor compared to the huge costs incurred if a miner strikes out on a mine.

With interests spread throughout North and South America, Wheaton Precious Metals also is much more diversified than traditional miners, or most of its streaming competitors.

Will Wheaton Precious Metals Go Down In 2019 (Should You Sell)?

Precious metals often subject investors to wild roller-coaster rides, which is why on average a portfolio’s total allocation to the asset class should not exceed 5%-10%.

Wheaton Precious Metals is positioned for a prosperous 2019, but gold and silver prices are highly sensitive to investor emotions and unforeseen global events. The stock could get toppled by geopolitical developments that have nothing to do with the company’s underlying fundamentals.

WPM is an enticing opportunity, but it’s not for risk-averse investors.

Overall Wheaton Precious Metals Forecast And Prediction For 2019

Rising geopolitical risk, worsening dysfunction in Washington, DC, growing signs of inflation, and an overvalued stock market all add up to bullish conditions for silver and gold. At the same time, industrial consumption of silver is expected to expand over the next few years.

Recent data suggest that the inflation beast is stirring from its long slumber, which means investors will increasingly turn to gold and silver.

Meanwhile, adding to international financial instability is the massive amount of private and public debt that’s sloshing around the globe.

With a forward price-to-earnings (P/E) ratio of 27.1, WPM is reasonably valued in light of its growth prospects and compared to its rivals.

The average analyst expectation is for Wheaton Precious Metals to rack up year-over-year earnings growth in 2019 of 11.3%, an estimate that’s on the conservative side.

Wheaton Precious Metals offers the potential for market-beating capital appreciation, but it’s also a solid inflation hedge. The time to purchase inflation hedges is now, before the rest of the investment herd belatedly jumps on the bandwagon and pushes up their prices.

John Persinos is the managing editor of Investing Daily.