Uranium spot prices have been rising in 2021, in what we see as a strong new bull market. Investors are betting on nuclear energy’s profile as a highly efficient, reliable and clean energy source. Aggressive decarbonization goals worldwide are driving major policy shifts that are likely to bolster demand for uranium and nuclear energy.
Gold closed August at $1,814 with a dramatic dip early/mid-month and a quick recovery. Improved July payroll job data gave traders reason to question whether the Fed will maintain its easy monetary stance. Gold sold off but regained support, helped at month end by the Fed's dovish tone at Jackson Hole.
David Lin of Kitco News interviews John Ciampaglia, CEO of Sprott Asset Management. They explore the recent surge in uranium prices, supported by a growing understanding that nuclear power is perhaps one of the more reliable and safe sources of baseload power and uranium supply is limited.
"The current global economic landscape indicates improving economic conditions, higher inflation and rates expectations, as well as commodity supply shortages which are likely to support commodity performance. Our analysis suggests that gold is still the most effective commodity investment in a portfolio as it continues to stand apart from the commodities complex."
John Hathaway and Bill Strong join Stephanie Pomboy to reflect back on the Nixon Shock, and draw parallels to today. Pomboy describes it best: "Marking an anniversary can often seem like a hollow perfunctory exercise but I'd say this time, that is definitely not the case. The 50-year anniversary of the Nixon Shock and the policies he outlined in his speech carry unique resonance today."
Gold bullion and gold mining equities gained ground in July. We saw a recovery in gold bullion investments as positions were repurchased and the decline in real yields to all-time lows added to the buying rationale. We believe that gold is well-positioned for a typical late summer/early fall rally, given record-negative real yields, a USD that may be topping out and waning taper/tightening fears.
Sprott's Ed Coyne and John Ciampaglia join Per Jander of WMC Energy to discuss the promising investment case for uranium and the launch of Sprott Physical Uranium Trust (TSX: U.UN). The Trust invests and holds substantially all of its assets in uranium in the form of U3O8 or "yellowcake," which is created in the first stages of its lifecycle from mined ore to spent fuel.
June's gold selling was almost entirely a knee-jerk synthetic affair driven by algorithmic, headline scanning robotic macro funds. We believe the smackdown was a temporary reaction to the perceived change in the Fed's posture towards possible balance sheet reduction. In our opinion, gold and gold mining stocks are compelling buys and the investment rationale for precious metals exposure remains unscathed.
Gold and precious metals took a drubbing in June following the hawkish FOMC meeting that added two rate hikes to the dot plot. Chaos among most asset classes ensued and gold was unduly affected by the strengthening USD and rising real yields. This doesn’t change gold’s long-term fundamental tailwinds, given the unprecedented expansion and reach of monetary and fiscal policies, akin to a grand experiment.
Gold is on the rise again, as the market debates whether inflation will be transitory as economies recover post-COVID. Extreme volatility among cryptocurrencies like Bitcoin has also benefitted gold in Q2. Gold mining stocks are enjoying renewed activity as market participants recognize the free cash flow and profit potential this sector offers.
Gold is making headlines once again after the safe haven asset had its strongest month of gains since July 2020. Sprott CEO Peter Grosskopf joins Asset TV's Jenna Dagenhart to discuss Sprott's outlook for gold and gold equities. Grosskopf: "I think it's a very healthy environment for gold and we believe it is likely to do well going forward."
2021 marks the 50th golden anniversary of the "Nixon Shock," when the world's reserve currency was last partially tethered to gold. Since 1971, gold has mostly managed to trounce fiat paper as a currency and the yellow metal has held its own as an asset class. After 35 years in the gold trade and with the benefit of my Sprott team of experts, I feel qualified to state that today's environment offers a stellar opportunity to gold investors.
Gold's strong performance in May made up for the Q1 correction. Rising U.S. CPI data spooked markets, but helped boost gold and silver prices. As we head into summer (a seasonally strong period for the precious metals complex), we see several macro tailwinds working in our favor.
Ed Coyne joins Liz Claman Liz of FOX Business to look closer at gold. On The Claman Countdown. Liz and Ed talk about what happens to gold prices when the Federal Reserve tapers, or talks of tapering. Coyne explains why he believes physical gold should be a core allocation of most investor's portfolios.
"We are sticking to last year's forecast for the USD price of gold at the end of the decade. For our conservative base scenario, we have issued a price target of USD 4,800; in an inflationary scenario, even USD 8,900 is within the realm of possibility. Based on implied expectations in the gold options market, we see a 45% probability of gold reaching a new USD all-time high as early as December 2021."
With palladium trading near record highs, we revisit the drivers behind palladium’s rise. Overall, we see continued support for palladium prices, even at the higher levels they’ve touched post-COVID. Supply and demand fundamentals have once again come into focus.
April provided precious metals markets redemption from a challenging first quarter, with gold finishing the month up 3.60% and silver climbing 6.14%. Silver continues to benefit from expansionary monetary and fiscal policies worldwide and its key industrial role in the new technologies of the "green revolution."
The extraordinary events of 2020 have had a profound effect on virtually all markets around the globe and silver has been no exception. The metal’s supply/demand fundamentals, investment, prices, trade-flows and inventories have all experienced sensational fluctuations over the past 12 months or so, including a handful of historical records being achieved.
Defensive investment strategies are few and far between. Fixed income, debased by artificially low rates, no longer passes muster. Selling volatility to generate income seems like a form of insanity. Gold is the obvious answer. Whether in physical form or precious metals mining shares sporting good dividend yields and trading at depressed valuations, this unwanted investment strategy will prove seaworthy for all conditions.
Gold prices finished March at $1,708, closing off a difficult quarter on the heels of gold's positive, record year. COVID-19 vaccine rollouts in the U.S. encouraged market optimism which was reflected in rising U.S. Treasury yields and a strong U.S. dollar. Despite the cheerier economic outlook, the long-term risks associated with trillions of dollars of economic stimulus, and mounting debt, provide ample support for our bullish metals outlook.
Platinum prices have moved higher as COVID-19 has constrained supply amid rising demand. YOY, spot platinum is up more than 90%. Growing interest among investors for platinum's role as a store of value has also boosted prices. We examine how the global pandemic has impacted platinum supply and demand, and offer our bullish outlook.
February was a tough month for gold. Bond selling spiked into near panic mode and triggered a multi-asset sell-off into month-end. It was an uncomfortable replay of the 2013 Taper Tantrum in condensed form. Gold was not spared, but long-term trends remain in place for our bullish gold view.
For many U.S. investors the returns provided by owning physical gold — and the other precious metals including silver, platinum and palladium — come with a sobering surprise when the assets are sold and it’s time to pay taxes. The reason: The U.S. Internal Revenue Service (IRS) categorizes gold and other precious metals as "collectibles" which are taxed at 28%. Most other types of long-term capital gains are taxed at 15%-20%.
The silver market is abuzz in 2021. After climbing more than 47% in 2020, silver continues to play catch up to gold. Growing investment and industrial demand have driven up silver prices and created supply shortages, especially for investors looking to buy the physical metal. Silver ETFs have enjoyed record flows.
Silver climbed more than 47% in 2020, reaffirming its value as a safe haven portfolio asset during the COVID pandemic. But our bullish outlook for silver is based on its unique role as an industrial metal. Silver should be integral to any "green revolution" discussions, given that it is critical to the success of EVs, solar energy and 5G cellular networks. We believe that silver demand will likely explode in the next 10 years, and we don't foresee supply growth keeping pace.
Gold's unique attributes as a scarce, highly liquid, and uncorrelated asset demonstrate that it can act as a diversifier over the long term. Gold's position as an investment and a luxury good has allowed it to deliver average returns of nearly 11% over the past 50 years, comparable to equities and more than bonds and commodities. Overall, extensive analysis suggests that adding between 2% and 10% of gold to a U.S.-dollar-based portfolio can make a tangible improvement to performance and boost risk-adjusted returns on a sustainable, long-term basis.
World Gold Council: "Our analysis suggests that gold stands apart from cryptocurrencies in general and Bitcoin in particular. Gold is an effective, tried and tested investment tool in portfolios. It has been a source of returns rivalling that of the stock market over various time horizons; it has performed well during periods of inflation; it has been a highly liquid, established market; and it has acted as an important portfolio diversifier, exemplifying negative correlation to the market during downturns. The recent performance of cryptocurrencies has been noteworthy, but their purpose as an investment seems quite different from gold."
Gold started the year strongly, reaching almost $1,960 before dropping quickly back to support above the $1,800 range. We have been long-term bullish on silver, which has surged to an 8-year high. The Reddit crowd may accelerate this silver rally to extreme levels, but we can continue to make a strong fundamental case for silver that does not require any short squeeze schemes (real or imagined).
The fate of the stock market and the outlook for gold are more intertwined than most realize. Gold has been performing well, but its outperformance is a well-kept secret. If a general bear market sets in, more investors will embrace gold and gold mining stocks. In the meantime, macroeconomic and valuation factors continue to build in gold's favor.
2020 was a tremendous year for precious metals. Gold bullion gained 25.12%. Silver bullion rose 47.89%. Palladium climbed 25.86% and platinum increased 10.92%. Gold mining equities were up 21.96% and gold junior mining stocks rose 48.53%. We expect the precious metals rally to continue in 2021 and offer our Top 10 list for investors.
In a recent interview with Kitco News, John Hathaway, Senior Portfolio Manager of Sprott Gold Equity Fund (SGDLX), said that with significantly improved margins, rising gold prices and healthy production, investors can't ignore the value currently being generated in the mining sector for much longer.
Insights from Sprott
- WGC - Gold: The Most Effective Commocity Investment
- WGC - The Relevance of Gold as a Strategic Asset
- WGC - Gold Outlook 2021
- WGC - Gold Mining’s Contribution to the UN Sustainable Development Goals 2020
- World Silver Survey 2021
- Silver's Growing Role in the Automotive Industry - Jan. 2021
- Silver's Important Role in Solar Power - June 2020
- Silver's Role in a 5G Connected World - March 2020