Silver Wheaton Corp (NYSE:SLW) is the world's only pure play silver middle man.^[1] SLW does not own or operate its own mines, but instead the company buys silver at below market prices via long-term contracts with five major silver producers: Goldcorp, Lundin Mining, Hellas Gold, and Glencore. SLW then sells the silver to major industrial customers at a markup.

Silver prices are the single largest determinant of the company's profitability. SLW's contracts, while indexed for inflation, allow the company to pay a fixed rate for the silver it purchases, regardless of silver price fluctuations. When silver prices rise significantly, the company is able to pocket the difference. When silver prices fall, the company still has to pay the same fixed price. Moreover, the company has no control over how much silver its mining partners produce. SLW is not compensated in any way if the mines miss production expectations.

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