Introduction to the Silver Market Dynamics
The silver market has long exhibited regional price variations due to factors like local demand, import duties, transportation costs, currency fluctuations, market liquidity, and allegedly, market manipulation by bullion banks.
In silver’s historic move this past year, a notable premium has emerged in Asian markets, particularly in Shanghai and India, compared to London’s LBMA & the US-based COMEX futures market.
As of late 2025 and into early 2026, silver prices on the Shanghai Gold Exchange (SGE) and the Shanghai Futures Exchange (SHFE) have traded at premiums of up to $8-$10 per ounce over COMEX spot prices, with gaps narrowing to around $5-6 in some instances, but still representing a significant arbitrage opportunity.
For example, while COMEX silver might hover around $71-$80 per ounce, Shanghai equivalents have reached $77-$91, driven by strong industrial and investment demand in China.
This disparity raises an intriguing question for companies like Wheaton Precious Metals Corp. (WPM), a leading precious metals streaming company: What, if anything, prevents WPM from redirecting its silver sales to higher-priced markets like India or China instead of the US or COMEX-linked channels?
Streaming companies like WPM acquire silver at predetermined low costs from mining partners and then sell it into the open market to realize profits. In theory, selling into premium markets could boost revenues substantially.
However, contractual, operational, or logistical hurdles might limit this flexibility. To address this, we examine WPM’s business model, market practices, and key disclosures from its prospectus and related filings.
The silver market has long exhibited regional price variations due to factors like local demand, import duties, transportation costs, currency fluctuations, market liquidity, and allegedly, market manipulation by bullion banks.
In silver’s historic move this past year, a notable premium has emerged in Asian markets, particularly in Shanghai and India, compared to London’s LBMA & the US-based COMEX futures market.
As of late 2025 and into early 2026, silver prices on the Shanghai Gold Exchange (SGE) and the Shanghai Futures Exchange (SHFE) have traded at premiums of up to $8-$10 per ounce over COMEX spot prices, with gaps narrowing to around $5-6 in some instances, but still representing a significant arbitrage opportunity.
For example, while COMEX silver might hover around $71-$80 per ounce, Shanghai equivalents have reached $77-$91, driven by strong industrial and investment demand in China.
This disparity raises an intriguing question for companies like Wheaton Precious Metals Corp. (WPM), a leading precious metals streaming company: What, if anything, prevents WPM from redirecting its silver sales to higher-priced markets like India or China instead of the US or COMEX-linked channels?
Streaming companies like WPM acquire silver at predetermined low costs from mining partners and then sell it into the open market to realize profits. In theory, selling into premium markets could boost revenues substantially.
However, contractual, operational, or logistical hurdles might limit this flexibility. To address this, we examine WPM’s business model, market practices, and key disclosures from its prospectus and related filings.
Wheaton Precious Metals’ Business Model and Silver Operations
WPM operates as a “pure-play” precious metals streamer, providing upfront capital to mining companies in exchange for the right to purchase a portion of their future production at fixed or discounted prices. Unlike traditional miners, WPM does not own or operate mines, avoiding direct exposure to operational risks and capital expenditures. Instead, it focuses on monetizing the acquired metals—primarily gold, silver, and palladium—through sales on global markets.
As of the 2020 prospectus (filed in connection with its London Stock Exchange listing and reflective of core operational structures that have remained consistent in subsequent filings), WPM held 23 long-term Precious Metal Purchase Agreements (PMPAs) covering silver from 20 mining assets across 11 countries.
These agreements entitle WPM to attributable silver production, often as a by-product from base metal mines. Key silver streams include:
Silver is delivered to WPM either as metal credits (refined and ready for sale) or in concentrate form (requiring further processing). The company then sells this silver through brokers, dealers, smelters, or traders, recognizing revenue when control transfers—typically at the point of sale for credits or upon title passage for concentrates.
Importantly, WPM’s sales are conducted globally, with no explicit geographic restrictions outlined in its agreements. Revenue is denominated in US dollars, and sales are made to large international organizations, often concentrated among a few counterparties (e.g., two buyers accounted for 33% and 25% of 2019 revenue).
If a buyer defaults, WPM can redirect sales elsewhere, indicating built-in flexibility.
Prospectus Insights: Agreements with US Entities and Potential Restrictions
WPM’s 2020 prospectus provides detailed disclosures on its PMPAs, operational risks, and financial arrangements.
Critically, it reveals no specific agreements with US banks, refiners, or other US entities that would mandate or restrict silver sales to US markets like COMEX.
Here’s a breakdown of relevant sections:
WPM operates as a “pure-play” precious metals streamer, providing upfront capital to mining companies in exchange for the right to purchase a portion of their future production at fixed or discounted prices. Unlike traditional miners, WPM does not own or operate mines, avoiding direct exposure to operational risks and capital expenditures. Instead, it focuses on monetizing the acquired metals—primarily gold, silver, and palladium—through sales on global markets.
As of the 2020 prospectus (filed in connection with its London Stock Exchange listing and reflective of core operational structures that have remained consistent in subsequent filings), WPM held 23 long-term Precious Metal Purchase Agreements (PMPAs) covering silver from 20 mining assets across 11 countries.
These agreements entitle WPM to attributable silver production, often as a by-product from base metal mines. Key silver streams include:
- Peñasquito (Mexico, operated by Newmont): 25% of payable silver, with ongoing payments at around $4.26/oz (adjusted for inflation).
- Antamina (Peru, Glencore): 33.75% of payable silver (reducing to 22.5% after 140 million ounces), at 20% of spot price.
- Constancia (Peru, Hudbay): 100% of payable silver, at approximately $6.02/oz.
- Yauliyacu (Peru, Glencore): 100% up to 1.5 million ounces annually (50% thereafter), with tiered payments starting at $3.90/oz.
Silver is delivered to WPM either as metal credits (refined and ready for sale) or in concentrate form (requiring further processing). The company then sells this silver through brokers, dealers, smelters, or traders, recognizing revenue when control transfers—typically at the point of sale for credits or upon title passage for concentrates.
Importantly, WPM’s sales are conducted globally, with no explicit geographic restrictions outlined in its agreements. Revenue is denominated in US dollars, and sales are made to large international organizations, often concentrated among a few counterparties (e.g., two buyers accounted for 33% and 25% of 2019 revenue).
If a buyer defaults, WPM can redirect sales elsewhere, indicating built-in flexibility.
Prospectus Insights: Agreements with US Entities and Potential Restrictions
WPM’s 2020 prospectus provides detailed disclosures on its PMPAs, operational risks, and financial arrangements.
Critically, it reveals no specific agreements with US banks, refiners, or other US entities that would mandate or restrict silver sales to US markets like COMEX.
Here’s a breakdown of relevant sections:
Streaming Agreements and Delivery Obligations
While the prospectus shows no contractual roadblocks, practical considerations might influence WPM’s sales strategy:
Conclusion: No Insurmountable Barriers from Agreements
Based on WPM’s 2020 prospectus and consistent disclosures in later filings, there is nothing inherently stopping the world’s largest silver streaming company from selling its silver into higher-priced markets like India or China to take advantage of the Shanghai Silver Premium resulting from bullion bank price suppression schemes in western markets.
No specific agreements with US banks, refiners, or entities mandate US/COMEX sales or restrict global redirection. The company’s flexible sales model—global in scope, redirectable, and unhedged—positions it well to exploit disparities.
While practical challenges exist, the $8-10/oz discount on COMEX and the LBMA represents a potential revenue uplift of 10-14% per ounce, worth exploring for a company with 20-25 million ounces of annual attributable silver.
Investors should monitor WPM’s quarterly reports for any shifts in sales strategy amid ongoing market fragmentation.
COMEX & the LBMA are papering themselves into irrelevancy in the global silver market. We suggest longtime WPM CEO Randy Smallwood consider disconnecting from paper mirages for the reality of PHYSICAL silver price discovery in the East.
- PMPAs are structured as life-of-mine contracts with upfront payments (e.g., $485 million for Peñasquito) and ongoing per-ounce costs (fixed or spot-linked). Delivery occurs in physical form—concentrates from mines like Zinkgruvan (Sweden) or Aljustrel (Portugal), or doré/credits from others.
- Refining is handled by third parties, such as Met-Mex Peñoles in Mexico for Peñasquito silver, but no US refiners are mentioned as mandatory partners.
For US-based assets like Rosemont (Arizona, Hudbay—not yet operational) or Stillwater (Montana, focused on gold/palladium), agreements include operator guarantees but no sales destination clauses. - No contractual obligations tie silver delivery or sales to US entities. For instance, the Antamina stream (a major silver source) is guaranteed by Glencore, a Swiss multinational, with sales occurring worldwide.
- Silver concentrates are sold under short-term contracts to smelters or traders in North America, Asia, Europe, or elsewhere, with final pricing settled 1-3 months post-shipment based on market quotes. Credits are sold via brokers at spot prices.
- The prospectus emphasizes global market access: “Sales to large international organizations” with no geographic specificity.
In 2024, silver concentrate sales totaled $76.3 million (6% of total revenue), and credit sales $381.5 million (30% of total revenue), all at prevailing global rates. - No forward sales contracts or hedging were in place as of early 2026, allowing WPM to respond to market premiums.
The company’s longstanding policy is to remain unhedged, providing shareholders with full exposure to precious metals price upside. This approach has been consistent for years and remains unchanged based on the latest disclosures, including the Q3 2025 earnings release (November 2025), MD&A, and risk factors in press releases.
Provisional pricing adjustments are minor and based on international benchmarks.
- WPM maintains a revolving credit facility (up to $3 billion as of recent updates) with a syndicate of banks, including US institutions like Bank of America and JPMorgan. However, these are for general corporate purposes, such as funding new streams, and do not impose conditions on metal sales destinations.
- No liens, covenants, or clauses in the credit agreements restrict sales to non-US markets. The prospectus notes that operations are conducted through Cayman Islands subsidiaries for tax efficiency, with revenues in USD, but this does not limit sales geography.
- The prospectus highlights risks like commodity price volatility, operator dependencies, and international regulations (e.g., export controls in Peru or Mexico), but none specifically bar sales to non COMEX/LBMA markets.
- Political risks in source countries (e.g., blockades at Peñasquito) could delay deliveries, but once acquired, WPM has discretion over sales.
- Concentration risk exists with key buyers, but the ability to “redirect” sales mitigates this. No mention of US-centric obligations that would prevent arbitraging premiums.
While the prospectus shows no contractual roadblocks, practical considerations might influence WPM’s sales strategy:
- Logistics and Costs: Transporting physical silver to Shanghai or India involves higher shipping, insurance, and potential tariffs. China’s import duties on silver (around 3-5%) and India’s GST (3%) plus customs erode premiums unless offset sufficiently by Asian demand.
- Market Liquidity: COMEX and London markets offer deep liquidity for quick sales, whereas Shanghai requires compliance with SGE rules, potentially involving local partners. WPM’s reliance on a few international buyers might favor established US/European channels for efficiency.
If recent reports that Indian and Chinese firms have been approaching silver miners and offering 10% over silver spot price for direct access are any indication however, the global physical silver shortage would likely easily overcome any perceived liquidity benefits offered by COMEX or the LBMA. - Arbitrage Realities: The Shanghai premium often reflects physical demand in Asia, but WPM’s silver (mostly from Latin America) might not qualify for direct SGE delivery without additional processing or certification. Global traders already arbitrage these gaps, and WPM might indirectly benefit if its buyers resell to premium markets.
- Strategic Choices: WPM could theoretically partner with Asian refiners or traders to capture premiums, but its model prioritizes low-risk, high-margin sales over complex logistics. Management has not publicly indicated shifts away from traditional channels, possibly due to long-term buyer relationships.
Conclusion: No Insurmountable Barriers from Agreements
Based on WPM’s 2020 prospectus and consistent disclosures in later filings, there is nothing inherently stopping the world’s largest silver streaming company from selling its silver into higher-priced markets like India or China to take advantage of the Shanghai Silver Premium resulting from bullion bank price suppression schemes in western markets.
No specific agreements with US banks, refiners, or entities mandate US/COMEX sales or restrict global redirection. The company’s flexible sales model—global in scope, redirectable, and unhedged—positions it well to exploit disparities.
While practical challenges exist, the $8-10/oz discount on COMEX and the LBMA represents a potential revenue uplift of 10-14% per ounce, worth exploring for a company with 20-25 million ounces of annual attributable silver.
Investors should monitor WPM’s quarterly reports for any shifts in sales strategy amid ongoing market fragmentation.
COMEX & the LBMA are papering themselves into irrelevancy in the global silver market. We suggest longtime WPM CEO Randy Smallwood consider disconnecting from paper mirages for the reality of PHYSICAL silver price discovery in the East.
