Wheaton Precious Soars 4.9% on Gold Rally, Hits 52-Week High Amid Valuation Concerns

Summary
• Wheaton Precious Metals (WPM) surges 4.93% to $118.4, hitting its 52-week high of $118.4
• DCF analysis flags 34.6% overvaluation despite 86% YTD rally
• Sector leader Newmont (NEM) gains 5.13%, outpacing WPM’s intraday move
• Gold and silver prices surge on Fed rate cut, boosting streaming royalty stocks

Wheaton Precious Metals has surged to a 52-week high amid a broader commodities rally driven by gold and silver price momentum. The stock’s 4.93% intraday gain reflects renewed investor appetite for precious metals exposure, though valuation checks suggest the rally may be extending beyond fundamentals. With Newmont (NEM) leading the sector and gold prices near record levels, the move underscores a shift in risk appetite toward inflation-hedging assets.

Gold and Silver Price Surge Ignites Wheaton’s Rally
Wheaton Precious Metals’ 4.93% intraday gain is directly tied to the broader commodities rally, particularly gold and silver prices. The Fed’s recent 25-basis-point rate cut and dovish guidance have weakened the U.S. dollar, reducing the opportunity cost of holding non-yielding bullion. Gold prices rose to $4,274.37 per ounce, while silver hit record highs above $60, amplifying demand for streaming and royalty companies like Wheaton. The stock’s performance also reflects optimism around its Hemlo Mine gold stream deal, which expanded reserves and production capacity. However, a DCF analysis from Simply Wall St. suggests the stock is 34.6% overvalued, raising questions about sustainability.

Precious Metals Sector Soars as Newmont Leads Charge
The precious metals sector has surged alongside gold and silver prices, with Newmont (NEM) leading the charge with a 5.13% intraday gain. Wheaton’s rally mirrors the sector’s momentum but lags slightly behind NEM’s performance. The sector’s strength is underpinned by central bank demand, geopolitical tensions, and a weaker dollar. While Wheaton benefits from its royalty model, which amplifies returns during price spikes, its valuation premium to peers like NEM (trading at 51.2x vs. 20.9x industry average) suggests investors are paying a premium for its growth profile.

Options and Technicals: Navigating Wheaton’s Bullish Momentum
• 52W High: $118.4 (touched today)
• 200D MA: $92.08 (well below current price)
• RSI: 64.12 (neutral to overbought)
• MACD: 2.09 (bullish divergence)
• Bollinger Bands: Price at upper band ($113.17), suggesting overbought conditions

Wheaton’s technicals indicate a strong short-term bullish trend, with the 52-week high acting as a key resistance. The RSI and MACD suggest momentum is intact, though the stock is trading near overbought territory. Traders should monitor the $113.17 upper Bollinger Band and 200D MA for potential support. The options chain offers high-leverage plays for those betting on a continuation of the rally.

Top Options Picks:
• WPM20251219C116 (Call, $116 strike, 12/19 expiry):
- IV: 22.71% (moderate)
- LVR: 35.61% (high leverage)
- Delta: 0.744 (moderate sensitivity)
- Theta: -0.4079 (rapid time decay)
- Gamma: 0.0761 (high sensitivity to price moves)
- Turnover: $53,947 (liquid)
- Payoff at 5% upside ($124.32): $8.32/share
- This call offers aggressive leverage for a bullish continuation, with high gamma amplifying gains if the stock breaks above $116.

• WPM20251219C115 (Call, $115 strike, 12/19 expiry):
- IV: 36.45% (elevated)
- LVR: 24.25% (moderate leverage)
- Delta: 0.718 (moderate sensitivity)
- Theta: -0.4404 (rapid decay)
- Gamma: 0.0497 (moderate sensitivity)
- Turnover: $24,181 (liquid)
- Payoff at 5% upside ($124.32): $9.32/share
- This contract balances leverage and liquidity, ideal for a breakout above $115. High IV reflects market anticipation of volatility.

Action: Aggressive bulls may consider WPM20251219C116 into a break above $116. For a more balanced approach, WPM20251219C115 offers liquidity and leverage if the stock consolidates near $115.

Backtest Wheaton Precious Stock Performance
The backtest of WPM's performance after an intraday surge of at least 5% from 2022 to the present shows favorable results. The 3-Day win rate is 55.05%, the 10-Day win rate is 57.23%, and the 30-Day win rate is 62.77%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 6.32%, which occurred on day 57, suggesting that WPM can deliver decent gains following a 5% intraday surge.

Bullish Momentum Intact, But Valuation Caution Looms
Wheaton Precious Metals’ 4.93% surge to a 52-week high reflects strong demand for gold-linked assets, but valuation checks suggest the rally may be overextended. The stock’s technicals remain bullish, with the 200D MA and Bollinger Bands offering key support/resistance levels. While the options chain provides high-leverage plays for a continuation of the rally, investors should monitor the DCF analysis’ 34.6% overvaluation warning. Sector leader Newmont’s 5.13% gain reinforces the sector’s strength, but Wheaton’s premium to peers warrants caution. Watch for a breakout above $118.4 or a pullback to $107.14 (200D MA) to gauge sustainability.