Wheaton Precious Plummets 5.28% Amid Silver Market Volatility: What's Next for the Gold Sector?

Summary
• Wheaton Precious (WPM) tumbles 5.28% to $117.66, breaking below its 52-week low of $55.51
• Silver’s historic $85/oz peak collapses to $72.33, triggering sector-wide profit-taking
• CME margin hikes and geopolitical optimism erode safe-haven demand for gold and silver

The December 29 selloff in precious metals has sent shockwaves through the gold sector, with Wheaton Precious Metals (WPM) joining the freefall after a 12% intraday drop in silver prices. As the market digests regulatory margin hikes, geopolitical progress in Ukraine, and thin holiday liquidity, investors are scrambling to assess whether this correction marks a buying opportunity or a deeper bearish turn. With WPM trading near its 200-day moving average and key options expiring in early January, the coming days will test the resilience of the sector’s long-term bull case.

Silver’s Flash Crash Sparks Contagion in Gold Streaming Sector
WPM’s 5.28% decline mirrors the broader collapse in silver prices, which plummeted 11% after hitting a record $85/oz. The CME Group’s 13.6% margin hike for silver futures forced leveraged traders to liquidate positions, while progress in U.S.-Ukraine peace talks reduced safe-haven demand. Wheaton, a streaming company reliant on fixed-price contracts, faces indirect pressure as physical silver premiums in Shanghai and London diverge. The 52-week RSI of 76.52 and overbought conditions in the 14-day RSI (70+) confirm technical exhaustion, with Bollinger Bands tightening around the $114.31 midline. This correction reflects a regulatory-driven 'cooling' of speculative fervor rather than a fundamental shift in the industrial demand for silver.

Gold Sector Reels as Silver's Collapse Drags Miners Lower
The gold sector is in freefall, with Newmont (NEM) down 5.72% and the VanEck Gold Miners ETF (GDX) shedding 6.1%. WPM’s -5.28% move aligns with the sector’s 5-7% average decline, though its streaming model offers relative resilience compared to pure-play miners like Hecla (HL) and Pan American (PAAS). The MicroSectors Gold -3X Inverse Leveraged ETNs (DULL) surged 12.97%, reflecting short-side momentum. While WPM’s -5.28% drop is steep, its -5.24% intraday move is less severe than the -6.26% plunge in Agnico Eagle (AEM), underscoring the defensive nature of streaming contracts in volatile markets.

Options and ETFs in Focus: Navigating the Volatility
• 200-day average: $94.77 (below current price)
• RSI: 76.52 (overbought)
• MACD: 4.77 (bullish divergence)
• Bollinger Bands: $102.62–$126.00 (tightening)

With WPM near its 200-day moving average and RSI signaling overbought conditions, traders should focus on short-term volatility plays. The MicroSectors Gold -3X Inverse Leveraged ETNs (DULL) offers 12.97% upside in a bearish environment, while the VanEck Gold Miners ETF (GDX) (-6.1%) highlights sector weakness. For options, two contracts stand out:

• WPM20260102P110 (Put, $110 strike, Jan 2 exp):
- IV: 41.21% (moderate)
- Delta: -0.0768 (short-term bearish)
- Theta: -0.0149 (time decay)
- Gamma: 0.0254 (price sensitivity)
- Turnover: 329 (liquid)
- Leverage: 588.20% (high)
- Payoff at 5% downside: $101.78 → $9.28 profit per contract
- Why: High leverage and moderate IV make this ideal for a 5% drop in WPM.

• WPM20260102C116 (Call, $116 strike, Jan 2 exp):
- IV: 37.42% (moderate)
- Delta: 0.6382 (moderate bullish)
- Theta: -0.7103 (aggressive time decay)
- Gamma: 0.0727 (high sensitivity)
- Turnover: 634 (liquid)
- Leverage: 39.21% (moderate)
- Payoff at 5% downside: $101.78 → $14.22 loss per contract
- Why: High gamma and moderate delta suit a rebound trade if WPM stabilizes above $116.

Action: Aggressive bears should prioritize WPM20260102P110 for a 5% downside bet. Bulls may consider WPM20260102C116 if a rebound breaks above $116.

Backtest Wheaton Precious Stock Performance
The backtest of WPM's performance after a -5% intraday plunge from 2022 to now shows favorable results, with win rates and returns indicating the strategy's resilience and potential for positive outcomes:

Act Now: Position for a Volatile Turn in Precious Metals
The silver market’s flash crash has exposed the fragility of speculative momentum, but the long-term industrial demand for silver remains intact. Wheaton Precious’s -5.28% drop aligns with the sector’s 5-7% average decline, though its streaming model offers relative stability. Investors should monitor the $114.31 Bollinger midline and 200-day average ($94.77) for directional clues. With Newmont (NEM) down 5.72% and the VanEck Gold Miners ETF (GDX) at -6.1%, the sector’s weakness underscores the need for caution. Watch for a breakdown below $114.31 or a rebound above $120.44 to determine the next phase of the trade. For now, short-term options like WPM20260102P110 offer high leverage in a bearish environment.