Asset TV Masterclass: Real Assets

Ed Coyne, Senior Managing Partner at Sprott, discusses the outlook for gold, silver, copper and other real assets amid economic uncertainty, geopolitical conflict and the potential for persistent inflation. He joins Jodie Gunzberg, CFA®, Managing Partner at InFi Strategies and Don Marleau, CFA®, Metals & Mining Managing Director at S&P Global Ratings.

Video Transcript

Erin Real: Welcome to this Asset TV Real Assets Masterclass. Joining us are Ed Coyne, Senior Managing Partner at Sprott, Jodie Gunzberg, Managing Partner at InFi Strategies and Don Marleau, Metals and Mining Managing Director at S&P Global Ratings.

Everyone, thank you so much for being here. We're going to dive right in. Let's start with you, Ed. Can you please start by telling us a little bit about Sprott?

Ed Coyne: Sprott's a unique firm, we're a global leader in precious metals and critical materials. We have over four decades of experience in this space, and we're one of the largest firms out there that focuses just on the metals and materials markets. We have over $40 billion in assets under management. We're also a publicly traded company; we trade on both the New York Stock Exchange and the Toronto Stock Exchange under the ticker symbol SII. And what's unique about our firm is that we offer multiple solutions. Whether you're looking at the physical market, we own physical gold, silver, platinum, palladium, uranium and copper. We also have a suite of ETFs and mutual funds that give you exposure to the underlying mining stocks themselves. Last but certainly not least, we do private lending, where we raise capital and loan it to mining companies predominantly for operating leverage purposes.

For our investors looking at this space, we have multiple ways to invest in it, whether it's the physical, equity or debt market. We also have multiple ways to do it from a vehicle standpoint, whether it's ETFs, physical trusts, direct lending, etc. We're a unique firm. We cover much of the waterfront and focus on precious metals and critical materials.

Erin Real: Now, setting the scene, I will turn to you, Don. How would you describe the current environment for real assets?

Don Marleau: Hi, Erin. We've been highlighting the scarcity of hard assets like gold mines, steel mills, and critical minerals for several years. Prices for most of these metals responded as expected to inflation, which means that prices are about 20% higher than before the last bout of inflation. Now, we look at credit risk in metals and mining, which is basically debt load backed by hard assets. And in that respect, credit quality has been improving for most of the last decade, and that is backed by a long track record of steadier prices for most metals and more disciplined capital spending on new assets.

Erin Real: Jodie, I'm going to turn to you now. Why should advisors consider adding real assets if they don't already exist in their portfolios?

Jodie Gunzberg: Typically, advisors would add real assets because of diversification and inflation protection benefits, even to hedge against the U.S. dollar. There are a lot of choices of real assets that investors can use, whether that's commodities, real estate or infrastructure. Sometimes, Treasury Inflation Protected Securities (TIPs) are considered, and now even Bitcoin is. And if anything, beyond the diversification and inflation protection investment case, they're great talking points. A lot of the advisors' practices are relationship-driven, and everybody knows what gold is, they know what corn is, they know what buildings are, they know what infrastructure is. So, it's an easy conversation point and a way to connect with investors who don't understand the benefits of real assets.

Erin Real: As opposed to some sort of municipal insurance vehicle, that's a little less tangible. But Ed, let's turn to you. For investors looking for commodities for the first time, let's discuss how they do this. How should one think about the opportunities that are available to them?

Ed Coyne: I think Jodie said it nicely. The market is physical first. So let's talk about the physical market, whether gold or silver. Right now, you're seeing the platinum and palladium market start to percolate back up. Uranium, copper, and all the physical assets are first a core allocation. And particularly when you think about gold, gold is a wonderful diversifier in a portfolio. It has a proven track record, people know what it is, and it has a history of zigging when the markets are zagging.

When people are looking at commodities for the first time, you have to ask them why. And the question is, are you looking to diversify your portfolio and maybe go risk off, or are you looking to be more opportunistic and go risk on? And if you're looking for the risk-on side, going beyond the physical and going into the miners themselves can be much more opportunistic. They can still be volatile; they are companies, things go bump in the night, and there is a risk of nationalization. All kinds of things can happen, but when the margins, dividend yields, and enterprise values over EBITDA all start rolling together, we also like the miners. For those who want to be tactical and opportunistic, I would say look at the miners, but start with the physical markets first and then graduate your way into the underlying mining stock second.

Erin Real: Don, how does all the movement in the dollar this year impact real assets?

Don Marleau: We're accustomed to a reliable negative correlation between the U.S. dollar and metal prices. So, a strong dollar should put pressure on prices as denominated in other currencies, and a weak dollar, as now, should boost prices. But that correlation was broken for a few years as gold prices strengthened and the U.S. dollar strengthened simultaneously. Now we're seeing the dollar weaken, gold strengthen to record highs, which is closer to the natural correlation. A weaker U.S. dollar should disincentivize imports in other metals like steel, which is a key policy goal. We've seen that the U.S. has imported about 20 to 25% of its steel for many years, and excess capacity should be able to absorb more production. In aluminum, on the other hand, which has a 50% tariff, U.S. metal buyers now face some of the highest costs in the world, with no significant amount of domestic capacity to substitute in an environment with a weaker U.S. dollar.

Erin Real: Jodie, how should investors think about the evolving role of the U.S. dollar, particularly given that central banks are now diversifying their reserves? Are there alternative currencies and settlement systems? What's going on there?

Jodie Gunzberg: The U.S. dollar remains the world's reserve currency, but the ground is shifting. The central bank's dollar share declined from 72% in 2000 to below 58% in 2025. Meanwhile, gold's share has a reserve, is rising, and the yuan is quietly gaining ground, especially in Asia. For investors, this translates to more currency risk, more volatility across global portfolios, and we're seeing the early adoption of alternative settlement systems and more bilateral trade outside the dollar. Practically, this means more attention to active currency management and more weight on non-dollar assets and stores of value like gold, Bitcoin and broad commodities—a serious look at foreign equities and bonds in structurally sound economies.

Erin Real: Ed, given that central banks are accumulating more gold, what price implications does this have?

Ed Coyne: It's been interesting. Central banks, over the last three years, so in '22, '23 and '24, were buying over 1,000 metric tons a year. And just to put that in perspective, that's at $3,400 plus an ounce, that's over $125 billion a year of gold they're accumulating and buying annually. We're seeing the same thing this year as well, and part of it is an unofficial way to back their currencies both here and abroad, even though that's not in a direct policy, as they continue to print more money to back other assets on the balance sheet, gold serves in that role. You're also seeing what Jodie said: there are different ways to settle now. You're seeing gold being used to settle oil trades and so forth in other parts of the world, and it's serving the role that it's always been, as an alternative currency to the U.S. dollar. But central banks are driving a lot of this.

And as we take on more debt here and abroad, gold's also being used to offset some of that and have a real asset on balance sheets. Gold is filling that role by balancing the ledger with central banks, the U.S. dollar and other currencies. And I think cryptos are going to start doing that at some point down the road as well. And we're seeing gold and cryptos work together in many cases. I'd be happy to talk about that also because that's a phenomenon that's started to change over the last three to four years, as people look at both as productive assets.

Erin Real: How about you extend upon that?

Ed Coyne: If you think about cryptocurrency, if anyone remembers about seven or eight years ago, there was a great ad. It was showing people walking around, dragging their bags of gold and silver and so forth, and they called Bitcoin gold, which I get, but they also referred to Ethereum (Ether) as silver, which made no sense because silver gets consumed, whereas gold gets stored. So you really can't consume a digital currency, right? But that woke the world up to think about assets outside of traditional stocks and bonds. And that was probably the best thing that happened to the gold trade: it sort of legitimized it once again and said, you know what? Having a portion of your assets outside the traditional banking system makes sense. It makes sense to have a portion of your assets outside of stocks and just bonds, the old 60/40 model. And that reinvigorated the gold story in a lot of ways.

We deal with many private families, endowments, universities, trusts and so forth. And when we're talking to families, in many cases, it's the grandparents who talk about gold, the parents accept it, and the kids roll their eyes. That's changed. A lot of these people now are looking at it and saying, "Hey, we want to look at risk-on allocations like cryptocurrencies because we think the cryptocurrency market is going to grow and Bitcoin being the primary one, but we want to offset some of that with something like gold." We're seeing more and more institutions and investors looking at both cryptos. And I say just cryptos because not just Bitcoin, but Bitcoin is a de facto cryptocurrency out there. They're working together with gold, which I think is fascinating to watch, where seven or eight years ago, they were mortal enemies. So that's changed significantly in the last half a decade.

Erin Real: Doesn't it also have much to do with the regulatory environment? Given that we all watched the downfall of massive crypto exchanges, and now it seems to be growing up, if you will.

Ed Coyne: It is growing up. And again, there are some great cartoons and memes about gold versus cryptos, but gold has the benefit of thousands of years. Crypto is still a new thing, and people can't physically hold crypto, so you do have to think of it in a different way, but they do function in a lot of ways in a very similar way.

The biggest thing I will debate is whether crypto is a store of value. Most investors aren't buying it because they sold their business and want to stockpile their wealth. They're buying it because they think it's going to $200,000 or $300,000 a coin, right? Where you're not seeing central banks buying cryptos and so forth. That may evolve, or we may digitize more things over time, like the U.S. dollar, gold, or whatever the case may be. But for central banks, the store of value, is held in the real asset, the precious metal side of the equation. I think crypto is a risk-on, frankly, type of allocation, whereas physical gold is more of a risk-off diversification allocation.

Erin Real: And price plays a huge role in all of this, as you mentioned before. So, how have investors missed the big move for gold and silver?

Ed Coyne: The big move thing, that's something I always like to sit people down and say, people thought they missed it when gold was at $1,800. And then it broke through $2,000, oh, I missed the move. $2,500, I missed the move. $3,000, I missed the move. Gold is a relative asset. Gold is relative to what the U.S. dollar is doing, our other currencies are doing, relative to the S&P, and the value of bonds. It doesn't have a dividend yield, it doesn't produce income, so it's a store of value. It's a relative asset to the rest of the market and the economy.

I was talking to an investor a couple of months ago, and he had a really interesting concept. He said the price of gold doesn't change; everything around gold changes. Gold is like the hub of an economy; it's the regulator. And as the market goes up, as inflation goes up, so too does gold, which keeps up with inflation. I think that's why people call it a store of value.

Gold is interesting in that regard. The wrong way to think about the idea is that you've missed the trade or you're getting the pricing right. And it's a diversification tool, portfolio, or store of value tool in your portfolio. So the further you go down your risk spectrum, the more you want to have things like gold and alternative assets. The more conservative you are, you probably don't need as much of it. So it depends on the rest of your portfolio, and again, it goes back to what I said, it's more of a relative asset to the core of your portfolio.

Erin Real: Jodie, let's turn back to you. Given the rising geopolitical fragmentation we're going through right now, and you also see concerns about fiat debasement globally, what role, if any, should Bitcoin or cryptocurrency in general — digital assets — play alongside traditional stores of value like gold, silver, and things you can touch?

Jodie Gunzberg: The thesis of Bitcoin as digital gold is arguable, like Ed said, but it's also, I think, never been stronger because, like gold, Bitcoin has a capped supply and operates outside of the conventional financial systems. In an era where fiat currencies are being devalued and central bank trust is under pressure, Bitcoin offers a new possible form of monetary insurance. And the adoption is now really institutional. We've seen, by now, that combined U.S. spot Bitcoin ETFs top $70 billion, and that's with big names in the institutional space, like Wisconsin's pension fund, which just disclosed direct holdings. That was a first, for a large public plan. And the asset, though still volatile, is very much like risk on, risk off. So, there's that component of it. It may be a good diversifier sometimes, but the risk sentiment still drives it.

And in addition, the regulatory frameworks are still evolving. For most portfolios, I think Bitcoin is not a replacement for gold. You may see it alongside gold, potentially as an asymmetric hedge against the monetary disruption and policy error. But for many professionals, an allocation, I think somewhere in the 1% to 3% range, maybe high on the 5% range, can complement gold and other commodities and other real assets, and it can add some optionality for scenarios where fiat confidence breaks down. We see a bit of the comparison you mentioned between silver and Ether.

One thing about Ether that can be used alongside Bitcoin, like silver, is that it is sometimes used alongside gold. Ether is consumed for every computational step on Ethereum. In a way, as you might use silver as an industrial metal, you might use Ether as a building component, a commodity feeding into the digital infrastructure in Ethereum.

Erin Real: That's an interesting way to think about it. Ed, I'm going to turn back to you. Would you agree with Jodie that Bitcoin should be alongside gold, or do you think that Bitcoin is slowly replacing gold as a store of value?

Ed Coyne: I don't think it's a replacement. We have a lot of institutional managers now who are using it as another piece to the puzzle. Let's say they have a 3% to 5% allocation of gold, and that's the risk-off side of the equation. And then on the risk-on assets, you look at the way cryptos move in general, they're still mimicking the NASDAQ a little more. It's more of a tech reflection than a currency reflection in the market. We want it to be a currency reflection, and it may at some point mature into that, but I don't think it's replacing it. I do think they serve different purposes in a portfolio.

As I talked about a little earlier, we're seeing more and more investors. We have a couple of partnerships where they have an alternative asset basket, they have crypto, they have gold, they have real estate, they have different things. And so you see big universities' endowments, most of their portfolio is in alternative strategies, and you don't see the traditional stocks there. Some of the big pensions might still be 60/40, a lot of income stream from bonds and so forth. It depends on what product, firm, or company we're talking about. Still, many of these big institutions and universities are heavily weighted to the alternative side of the equation. And you see that more and more, both gold and crypto are in the same portfolio. So, I don't see a replacement there; I see them working together and doing different things in the portfolio over time.

Erin Real: Ed, how do rising geopolitical tensions, along with low global debt levels, affect the long-term investment case for gold and silver?

Ed Coyne: The debt level goes back to what central banks are doing. As they take on more debt, they need something to back that. Unless you're the U.S., where you have tanks and planes and say, "No, we want our money back," you need something, and gold is serving that role, and you're seeing central banks all around the world continuing to buy more gold. That's what's happening on the debt side.

On the geopolitical side, it's a sad statement, but unfortunately, a true one. We have geopolitical occurrences on a daily basis now. This kind of idea that something is going to go bump in the night, and gold is going to skyrocket, has become more and more diluted. And when it does happen, it affects the price of gold, but it has very little to do with the value of gold over a full cycle. When you think about why you're investing in it, you're not investing in it for the price movements unless you're trying to trade it. And good luck to you if you're doing that. It's a great way to lose a lot of money fast. But if you're buying it as a tool in your portfolio, geopolitics doesn't change the value that much. It might move the volatility and price around, but it's not changing the long-term value, the "why" behind why you're investing in gold.

Geopolitics is fun to talk about. It does create disruptions in the market, but when you look at what's moved gold over time and what's created true value over time, it's other things like balance sheet quality, business quality, inflation, deflation, and different types of markets moving here and abroad. From a geopolitical standpoint, it's much bigger than something happening overnight.

Erin Real: Go ahead, Jodie. Do you want to add something?

Jodie Gunzberg: I was just going to add to that and say that while maybe on a day-to-day basis, the geopolitical backdrop doesn't drive any asset, specifically like gold, but what it does is it moves not only investors but the central banks towards accumulating gold.

I just pulled a couple of numbers. According to the International Monetary Fund (IMF), in 2024, the global debt hit a record $315 trillion. That's over 330% of the world's GDP. And the problem is that the central banks are boxed in; they can't normalize rates without fiscal stress. They're creating this environment of financial repression and persistent negative real yields, which is extremely bullish for gold if you look at history. They are linked through global debt issuance and the way that central banks try to manage risk. And if you look at how much gold the central banks have snapped up, the World Gold Council has said in '23 and '24 both that central banks took 1,000 metric tons of gold in both years, and that's the fastest pace on record.

For example, when the Ukraine war escalated, countries like China and India materially increased their reserves to diversify away from dollar exposure and hedge against the risk of U.S. sanctions.

One more thing about gold and central banks is that I've looked at gold's relationship to a number of factors for a long time, whether it be the stock market or the dollar, which the dollar is related to because it's priced in dollars. But there's no one factor you can pin to predict the price of gold, but the central bank is buying and selling, and they always get it wrong.

Erin Real: That's important.

Jodie Gunzberg: So, there's something, actually, not that they know, but that not everybody else knows, but they're slow. They're slower than the investor.

Ed Coyne: They're turning a big boat around.

Jodie Gunzberg: They're putting it wrong. If you want to look at central bank buying and selling, maybe take the contrarian view and go the other way.

Erin Real: I want to turn back to silver for a second. Let's talk about silver because it is interesting. There's this growing industrial demand for silver. You have EVs, you have solar, you have AI infrastructure. So, how should investors balance silver's dual role as a precious and industrial metal?

Jodie Gunzberg: That's a good question because silver has an interesting role in a portfolio, as it sits at the intersection of the monetary hedge with the industrial engine. On the monetary side, silver aligns with gold as a store of value in uncertain times, but the industrial demand is booming. So, according to the Silver Institute in 2024, silver's industrial usage hit a record 654 million ounces, with over 200 million ounces going to solar panel production alone. That's a nearly 30% jump from pre-pandemic levels.

To put that into perspective, for the first time, solar manufacturers are actually absorbing more silver than what's seen in global coin and bar demand combined. So what that means for investors is that silver is no longer just trading as a safe haven, but it's riding secular tailwinds from the electrification, renewables, and advanced computing. And that means the price can spike on supply shocks or when manufacturers restock, but it can also see volatility if industrial activity slows.

For the allocation, the best way to balance that duality is to own both physical silver, maybe through ETFs or bullions, or consider a basket of miners. Miners, you have to be a little bit careful because they might be tagged as silver miners, but they might be mining any metal of the moment, so there's no direct relationship to silver. You could also use other instruments like futures, but silver can offer more upside in demand expansion periods. The miners carry operational and political risk. They make decisions for shareholder values, which can be different than anything that has to do with the price of silver. So you get a little bit lower correlations, probably like in the 0.6 range, rather than the direct exposure. But the net result is that if you hold some sort of mix, silver provides gold-like insurance with a built-in call option on the green energy and tech growth story.

Erin Real: Let's turn to copper for a second.

Ed Coyne: Sure.

Erin Real:  We haven't spoken about this one. Rising demand, actually surging. There's this electrification that's going on; we need copper for that. There's also this tight physical supply; it's a perfect storm. So, how should investors evaluate physical copper exposure versus the miners, as Jodie mentioned, and how do you balance this in one's portfolio?

Ed Coyne: Copper is one of my favorite stories because everything we're doing right now, you can't do without copper, right? You can create electricity through wind, and you can debate if that's effective or not. Solar, you can do hydro, nuclear, we can talk about that. Oil, gas, and coal are a lot of ways to create energy, but there are not a lot of ways to move energy. Right? So you've got silver, which is the best conductor, but it is too expensive. You've got tin that overheats and catches on fire, so you can't really use it. So really, copper's it.

And forgetting everything we've talked about with AI and everything else, just the basic block and tackle of revitalizing and maintaining our U.S. grid, not to mention what's happening in India and China and the electrification of the world. Electricity is life; you can't do anything without it. Case in point, everything we have here needs electricity, so we need more copper. And all the copper ever mined in the world, we need to double that in the next two or three decades to maintain a semblance of supply-demand balance. We think that the imbalance is going to continue. All the easy copper has been largely taken. Some of the largest copper mines out there are running out of runway. New discoveries are limited; it takes a good decade to get a new copper mine up and running from the point of discovery to the point of extraction and refinement.

We're in an issue here, and prices in our view over multiple market cycles need to continue to go up to benefit those and say, "Hey, I'm going to get paid to pull this out of the ground, refine it, and sell it." And unless we come up with some wild technology we don't know about yet, there's no other way to move electricity around. So, this is going to be here for a long time.

And I think one of the things that Wall Street got wrong early, and I think they are getting right now, is that they have always historically thought of copper as a bellwether of the strength or weakness of the economy. And in some degree, that's still true. China consumes over 50% of all the global copper out there today, and if China slows, will the price of copper slow? It kind of goes back to my geopolitical thing. The price may slow, but the long-term value is going higher. And so that's something we really believe in right now is that the price may fluctuate a little bit based on the strength and weakness of the economy, but regardless if the economy's growing or not, we need more of this, period. Whether it's to maintain what we currently have or to add on to what we need, we need a lot more of it, and it's getting harder to find. So, we like the value of it a lot.

Erin Real: This is just a sidebar on copper. Are there any artificial ways to create copper, or is it like oil?

Ed Coyne: Not really. There are some, but not on the same size, scale and volume. And the problem with copper is, like I said with tin, you're dancing with the devil here. You might save a few bucks, but you may burn down your building. So it's one of those things that if copper goes from $10,000 to $20,000 a ton or a pound, if these prices start to go higher, in the big picture, it's still not that big of a deal to the overall production of what we need to create there. To try to cut corners and create a synthetic way to move electricity, we would applaud it because we need it anyway. We need both; it's kind of like crypto and gold. If we had a new technology tomorrow, I wouldn't change the narrative for copper much over the next two or three decades. These things take a long time. So if there is stuff out there, to the extent it can be used in large-scale projects, we're a long way off from that.

Erin Real: Makes sense. Don, we missed you. Is there anything you'd like to add to the growing industrial demand for silver or rising copper prices? What are your thoughts?

Don Marleau: One of the things that we're always conscious of is price volatility because we're looking at debt and downside risk for these mining companies. So, since copper has a great story, it's S&P Global Research that found that we need to be doubling the amount of copper potentially in the next few decades to meet our goals for electrification, which seems improbable given how companies are spending to explore. I think Ed's bang on, in terms of technological changes and the technological changes we see for copper, well, they've already occurred. So, SX-EW is a processing technology that basically allowed for a lot of processing of low-grade copper, but that's 30 to 40 years old now. Nickel has had that kind of technological breakthrough with HPAL in Indonesia, so you have an improbable burst in copper supply.

Nevertheless, we still monitor mining costs, which are probably one of the biggest headwinds that companies face right now. Companies can be profitable as they find, extract and develop new mines.

Erin Real: Ed, has the move in copper already happened, given the potential global economic slowdown that everyone keeps talking about, and will inevitably happen at some point?

Ed Coyne: It's interesting. Regarding the move in copper, I will echo what I said about the move in gold. I don't want to be callous about the price of things, but I've been in this industry for about 30 years now, and I can tell you that maybe I have 30 different experiences or maybe I have four or five experiences in those 30 years. But I know that if there's a supply-demand imbalance and more demand or more consumption than what we can deliver to the market, the price typically goes higher. And there'll be things that come in and create that volatility, but again, I caution people to focus on the price. And I encourage people to focus on not what something is valued at today, but what it is going to be valued at tomorrow, as far as what it is doing? Do we need it? Can we get away with not using it? And the answer for copper is no.

So the reality is, I wouldn't look at this and say, "Hey, I missed this current price," because 10 years ago it was a little over $2,000, hey, I missed it. Now it's over $10,000 and it's climbing. So again, if you can widen your lens when looking at commodities, you really need to do that. It's not like a company that's rolling out a new iPhone or a new product or a new car. This is a long, multi-market cycle, multi-generational type of allocation. And so, I encourage people to take a wider lens when looking at commodities in general, but that's very true as you're thinking about copper.

If the economy slows, the price is going to sell off a little bit, and that's a knee-jerk reaction, but the long-term supply-demand imbalance is a real thing. I don't care how much recycling we pump into this market; it won't meet that demand. So we see that the price is escalating over time, with the course of volatility along the way. So, I encourage people not to get hung up on the current price of where it is today and think long-term, what's the value of this, and what is it needed for? And we need a lot more of it.

Erin Real: Don, how does the macro outlook and heightened economic uncertainty impact the metals and mining space as a whole?

Don Marleau: There's always going to be some economic sentiment that drives metal prices. For example, we must be conscious of an overreaction to economic news. On the upside, we've seen a steady to softer global economy that has been generally favorable for metal prices, so things are in good shape. If there's a lot of downside risk on the economy, to Ed's point, there are places where there might be some downside risk in metal prices, but the costs of production are rising pretty steadily, and I guess pretty relentlessly. The price downside for metals appears to be a lot lower than it has been in other cycles because we just don't have the prospects for a bunch of low-cost oversupply to hit the market.

Expect the economy to give us some sentiment indicators, but you've got to look at supply-demand balances and cost profiles metal by metal to understand the downside. Copper probably has not much downside. Nickel, on the other hand, may have a lot, given that we are seeing new supplies coming onto the market.

Erin Real: Does Sprott offer other types of investments outside precious metals? And if so, are there any critical materials that Sprott likes at the moment?

Ed Coyne: We talked about copper. If it's not clear yet, I love copper. I think it's going to be something that's going to continue to define not just us as a firm, but us as a U.S. economy over time.

But we also love uranium. Uranium is one of these things, that when you think about nuclear power, you think about 24/7 base load energy needs. You think about data centers and AI and hospitals and military bases, they don't have the luxury of the power going out for a second, right? If you look at California, they were having rolling brownouts. One of the things they did was they decided to extend the operating license of Diablo Canyon, which is one of the last nuclear power plants out there in operation, and this is before we even talk about expansion. In just the existing plants that we have here and abroad, we don't have enough uranium to feedstock these reactors.

Then you've got new reactors coming online. In areas like China, over two to three dozen new reactors are coming online in the next decade. You also have coal plants that are still coming online. This goes back to what I said earlier; this takes decades. This is probably a lifetime allocation; this isn't happening overnight, right? These things take a long time. You've got new nuclear reactors coming online, you've got new coal plants coming online, and those are the two opposite ends of the spectrum. So, we really like uranium.

We like the storage and battery metals: nickel, lithium and so forth. I think those are a little more interesting because you're going to get wild volatility there. Five years ago, we were all told we were going to be driving 100% electric cars, but that's not happening anytime soon. You're not seeing big trucks out there being electrified; there's nowhere to charge them. They're too heavy, they can't cross the bridges we have in our current infrastructure. That's not happening anytime soon. But those metals are going to go up and down a lot, and so that's kind of more on that risk-on side of the spectrum.

If I'm sitting on the other side of the table as an investor or advisor, I would say gold is my risk-off allocation from a diversification standpoint. I would say silver's kind of my bridge metal, and what I mean by that is it's moving out of that currency, gold shadow type asset, precious metals asset, and moving into the critical material side of the equation with reflective technology for solar and cameras and so forth. And then you have your copper and your uranium. So those would be the four disciplines I'd be looking at now as an investor. Again, gold is my risk-off, silver is my balance from precious to critical material, and copper and uranium. Those 24/7 base load needs are real needs.

Wind and solar energy are wonderful, as well as hydro energy, which is very specific to the region. You don't have the luxury to do hydro everywhere. There's natural gas, which is growing. But this idea that it's a replacement, we even talked about the energy transition, it's not a transition at all. It's really an addition. We need everything, right? We still need coal and more nuclear plants. And so for us, copper, silver, gold, and uranium are the four we really like.

Erin Real: I have to ask because it's in the zeitgeist right now. Cobalt, what are your thoughts on that?

Ed Coyne: Cobalt is interesting. We have a fund that gives you lithium, nickel, cobalt, and rare earths. As an investor at our level at $40 billion (in assets under management), part of the problem is that scale, right? How much are we going to get? And we're big believers in owning the physical metal itself, which sets us apart. We're not really into the option strategies and paper contracts to get exposure to the spot price. We actually want to own it. Cobalt's difficult to do that with in volume. So I think it's interesting. I think maybe looking at a couple of companies could be interesting. Still, for us as a firm, it's pretty far down the pecking order, as far as what metals we can manage and deliver value to our investors.

For the four I mentioned, volume, liquidity and an appetite are out there. There's a huge demand for the four metals I talked about already, with gold and silver, copper and uranium, our critical materials as they relate to uranium. But those we can invest in, those have scale, those our investors can participate in and profit from over multiple market cycles. Cobalt, you certainly can as well, but it's just the liquidity; it's going to be difficult to do at a large scale from a fund standpoint.

Erin Real: That makes sense. Jodie, what are real assets beyond metals and other commodities? You have things like energy and agriculture, infrastructure, real estate, and arguably the Treasury Inflation Protected Securities (TIPs). How are they positioned to perform in a potential environment of persistent inflation that we have seen for some time now, and financial repression?

Jodie Gunzberg: That's a great question because, as we're coming out of this period of inflation and suppressed real rates, allocators have been forced to rethink that 60/40 mix they've used. They look for other opportunities where they can generate alpha and diversification. Global infrastructure funds have outperformed global equities by roughly 8% annually over the past couple of years. And as inflation protection and stable cash flows become more valuable, that has been a critical allocation. Infrastructure is one. Energy, both fossil and renewable, that's still a big spectrum there. That remains at the center because the U.S. pipeline contracts linked to the consumer price index (CPI) have seen substantial repricing as natural gas demand has soared as well.

On the agriculture front, we've seen a lot of supportive price pressure from volatility and climate change. Food security concerns are more pressing than ever, so that's really positive for the investors in the agriculture space. We've seen farmland real estate investment trusts (REITs) showing record rental escalations. Arguably, TIPs on the inflation front are technically a financial instrument, but some put them into a real asset bucket. They offer liquid inflation hedging.

For me, the key is to diversify. Not only diversifying beyond the metals and going into the industrial metals, but across energy, agriculture, infrastructure, real estate and TIPs. And the beauty of this, too, is it's not just the diversification across those asset classes or sub-asset classes, but it's by the instrument type. So you can go direct, you can go through equity, fixed income, you can go through futures, derivatives markets, you can do private markets, private equity, private credit. There's a huge pool to pick from in diversifying these real assets. And it is important to keep the mix and not just some separate allocation to gold, because depending on the different sources of inflation, that will drive the performance at different times and give you a steadier source of exposure for the purchasing power, generating income, and in order to keep your correlations, that diversification power with the inflation protection, especially in the stagflation or policy-strained scenarios.

Erin Real: Makes sense. Ed, we know AI data centers are coming online fast and furious. You have grid modernization as well. This is all driving long-term electricity demands and how that's going to evolve and play out. How critical is nuclear power? You touched upon this before, but I'd like to expand, and by extension, uranium, as you mentioned. And are they going to be able to meet the base load energy needs, and are the markets fully pricing in this demand shift?

Ed Coyne: The markets aren't pricing it in for sure, because the short answer is, no, we're not going to meet the demands. It's why we started to pump the brakes on everybody having electric cars. We don't have the infrastructure, we can't produce electricity, and we can't charge them fast enough. We don't have enough battery metals, actually, to create the batteries needed to do this. These are all aspirational. I remember early on, it was by 2050, we're going to be completely electric. That sounds great. I don't have grandkids yet, and I'm not sure my kids even pegged their significant other yet. But the reality is, it's probably not even my grandkids' lifetime. This is going to take, and I keep hitting on this, but it's going to take so long for those things to happen. Again, these are multi-market cycle types of moves.

But when you think about what's happening in nuclear power in particular, and you're thinking about data centers and AI, I want to take a massive step backward and talk about air conditioners in India. So about 5% of the Indian population currently has air conditioners. Air conditioning growth rates over there are running at about 35% to 40%. So we talk about data centers, AI, security, accessibility, all that stuff. We get outside the globe, some places don't even have electricity to have a single light bulb, or they're getting a washing machine for the first time. And the demand for electricity for that is unending; it's huge. They don't have the infrastructure in place to even meet that need. They're already curtailing what the wattage could be of an air conditioner in India because they don't have the electricity to support it, and that's changing rapidly.

It's fun to talk about data centers, it's fun to talk about AI, and energy security. That's all very important, but that's for one and a half to two billion of the population. The rest of the population is excited to have their first light bulb in their house. And so the electricity demand is really unending, and I just don't see an end in sight for that. And everybody should have a cool house in the summer, and everybody should have a light to read by at night, and that's where the world's going. And so, I applaud the rest of the world for getting more modernized, but the electricity demand is just staggering when you sit down and actually look at it and think about it. I don't know how we get there.

And so, nuclear is certainly part of that. It's clean, sustainable, safe, 24/7, and base load. The technology and its security are at the forefront now. And then you talk about, we're not even into small modular reactors and micro reactors and being able to create an energy source at a particular factory, or a data center, purely creating their own energy and consuming their own energy and being their own ecosystem. Those things will start to happen over time, and there'll be other energy sources out there, but nuclear is certainly one of those guiding lights that's going to get us down that path faster, safer and is more affordable than some other sources.

Erin Real: So given that, what is the base case for uranium?

Ed Coyne: We need a lot more of it. In terms of fusion versus fission, different technologies are coming online. Uranium sold off a lot about a decade ago when MIT and Harvard both came out with white papers and research papers on different technologies and ways to operate a nuclear reactor. We're decades away from that. It goes back to the whole copper story. These things take multiple decades to bring that technology online.

Currently, uranium is less than 10%, but it's closer to 5% of the operating budget for running an overall reactor. So even if uranium doubled in price, you still need it; it's not going to really change the dynamics that much of that reactor's profitability or functionality. It's still a relatively small part of a reactor's overall construction, maintenance, and running. We don't see a replacement happening anytime soon from a technological standpoint.

From a critical material standpoint, uranium is a de facto fuel source for running these reactors. Whether you're talking about small modular reactors, which are cool because those actually can use recycled or spent fuel rods from the larger reactors, so things are happening to elongate the usefulness of a fuel rod, and they can go from one unit to another, which is pretty cool also. But that's probably a half a decade to a decade out, before you start seeing modular reactors really become implemented at the commercial level. There's certainly been implementation at the military level when you think about subs and stuff that can be underwater for months on end; that's all nuclear. They're running those reactors on a submarine underwater for months on end and not surfacing. That's now starting to come to land in these smaller and more micro reactors, but still, that's not really at the commercial level yet. We're getting there, but we're probably a decade out before that becomes a commercially viable thing as well.

Erin Real: I just want to make sure I heard this correctly. 5% is about the spending on uranium for a reactor?

Ed Coyne: For a reactor, yes.

Erin Real: So you don't need that much.

Ed Coyne: You don't, and you think about gas in a car. Fuel cost is important. If anyone has had their yard mowed in the last decade, you see a fuel surcharge on your bill, right? So fuel is certainly an important part of it. Still, there's a lot more cost out there when you think of everything else that goes into creating that electricity- just the people alone, the infrastructure, the security, and all those things. It's back to the world of relative; it's expensive, but relative to the overall cost of operating and the reactor. It's a relatively small piece of the pie.

Erin Real: It's very interesting. I see why it's good for talking points with investors, because you could talk about it for ages.

Jodie, let's discuss how AI is reshaping industries and capital flows. Beyond the tech names driving those headlines, what are the second-order investment implications across sectors, resources, and infrastructure?

Jodie Gunzberg: The AI is changing not just how companies work but also how the capital flows and where it's flowing. From hardware and chips to raw materials to infrastructure, we've heard utility executives now attributing up to 15% of their projected power load growth to data centers and digital infrastructure, and that's driven directly by AI. There's a big question of whether the infrastructure will hold or whether it will become obsolete in light of how quickly AI is changing. But you've seen that Microsoft and Google have signed multi-billion-dollar deals with utilities just for power and grid connections. That's something that was unheard of five years ago.

The opportunities here are beyond the obvious tech names. Think about companies building the semiconductors, manufacturers of specialty alloys, the utilities grid operators and infrastructure funds. Real estate is being re-rated, especially anything tied to data centers or logistics. We've seen even labor markets shifting with productivity booms and displacement opening opportunities in training and cybersecurity. But again, throughout history, as we've seen new technologies, there's always a question of whether that technology changes faster so that the infrastructure built becomes obsolete. There was an instance in Chicago where they were creating new waterways for commodity trade, and it took them so long that the railway system caught up, and the canals became obsolete. And that was for commodity transport and goods transport in the old days, now this is data transport. So, there's a big question about whether this will hold.

Erin Real:  It's interesting. I think a lot's going to change in the next 18 months, let alone 18 years.

But actually, Don, let's turn to you now. Do you think that AI could impact the metal and mining space? How do you see it impacting it?

Don Marleau: For sure. We see exactly the same sort of important pulls on demand for AI and electrification. It is really remarkable that the U.S. is proposing to onshore aluminum, which we colloquially call congealed electricity. About 30% or 40% of the production costs of aluminum are electricity. If you could reshore that much metal into the U.S. without going through this gauntlet of AI demand, it seems unlikely. We estimated that you'd need as much electricity to power New York City to reshore all the aluminum into the U.S. Alcoa has estimated something like seven Hoover Dams, so it kind of tracks at $50 billion of electricity investments just to get that aluminum back into the U.S. And to think that those maybe 10,000 jobs are going to outcompete AI investments seems improbable.

We see a huge conflict there in terms of the industrial policy, but the demand is unquestionable. Our utilities analysts say that the spending on new power plants is coming. Ed's right, nuclear is a good prospect, but it's still quite a way away. Big investments, still at least five years away before we start to see those materialize. But in every other source, gas is in huge demand right now. Gas turbines are a huge demand factor in the industrial space.

AI from mining actually has some good potential because we've had a really hard time finding incremental metal. When we look at inflation, we look at tight supply chains, and we look at the availability of metal and where it comes from. It comes from more difficult places, and it's getting more expensive to produce. AI has the potential to help us scan the globe and find new sources of lower-cost metal, at the same time, like everything in AI, yet to be proven.

Erin Real: Ed, we've talked a lot about physical precious metals, but let's talk about the miners, specifically, the individual mining stocks. How are they performing? What's going on there?

Ed Coyne: Until recently, the miners were punished because of the sins of their fathers, so to speak. In the old days, the mine would start doing well, the companies would start becoming profitable, they'd issue more shares, they would dilute the value of the company, and they would just do that cycle over and over again because it's such a huge consumer of cash and human capital.

Well, this new wave since 2011, many of the CEOs have all been replaced, and the next wave of CEOs that have come in are thinking longer term, dialing up and down production. Part of that is because of technology. Technology allows you to dial up and down the production of a mine in a way that you couldn't in the past. Before you had an on-off switch, that was it. So whether the gold was going down or going up, you were pulling it out of the ground, didn't matter. Now you can kind of ebb and flow that in a way that you maybe couldn't two or three decades ago. But the world kind of forgot about miners for a very long time, and when you look at what the metals have done versus what the miners have done, there's been a huge disconnect.

Now, that's been a little different in the uranium miners and the copper miners. They're going up two or three X relative to the underlying assets they're mining. The gold miners are also starting to play catch-up with that; that gap is starting to close. And with the last year and a half, two years where gold's outperforming and silver's outperforming, the miners have now started to catch up a bit. And that goes back to whether people care or not. It is the old value trap. You can have a great business, wildly profitable, phenomenal balance sheet in a really smart part of the market, but if people aren't buying the stock, the stock's not going to move, right? And so, that was what was happening with the mining stocks in general. You're seeing institutions, individual investors and people start to move back into the space cautiously, and for the right reasons, because people have lost a lot of money in the past in these mining stocks.

But if you look at the long-term projection of where things are headed, we can't get there without mines. Everything we do, I always say, you have to dig a hole first before you can go up, and you have to pull things out of the ground to meet the needs of modern civilization. We just can't do it any other way. And so we think these mines look very attractive in the long term. Their balance sheets are better than ever. They've got dividend yields higher than S&P 500 companies. Profit margins are stronger, they're lower levered. They have great balance sheets; we just need the rest of the investment world to recognize that and start allocating capital to it. The big question is, is it a value trap or a value trade? And we think it's starting to graduate into a value trade or value allocation slowly.

Erin Real: And Don, what are some headwinds and tailwinds for miners that you see moving forward?

Don Marleau: Ed points to it, corporate development has been a bugaboo in this industry for a couple of decades. To the extent you had companies taking each other over or even having large greenfield investments, it didn't pay off in the return on capital, especially in the gold space. And that's where we're starting to see, okay, gold at record-high prices is starting to turn into an attractive return for these companies. But basically, finding these assets, developing them, and processing the metal are increasingly difficult. We're going into geologically more difficult places to be able to extract metals. We're also going into geographically more difficult places that don't have a mining history, for example. So, all of that speaks to how difficult it is for this industry; those are the headwinds.

The tailwinds are that these are strategically important assets. There's no doubt that a gold, coal, or copper mine has some attractive use, especially in a geopolitical stress scenario. The products are indispensable, and the assets are unique. With a good handle on costs, industry-leading companies should enjoy decades of profitability and market relevance because the demand is not going away.

Erin Real: Jodie, there's a lot of growing interest in private credit, we're seeing this across the board. How can investors assess the trade-offs between inflation sensitivity, liquidity, many other variables, and the return potential for private credit backed by real assets?

Jodie Gunzberg:  I'm glad you asked this, because private credit has truly exploded in the last couple of years, especially in the asset-backed strategies. In 2024 alone, over $200 billion flowed into these vehicles, a high not seen since the global financial crisis.

 What I would say is that the major trade-off is liquidity. These are not vehicles you can get in and out of daily; they're not daily liquid funds. Investors need to be comfortable with the lockups and the more complex due diligence required in investing in these. But the benefit for income-oriented clients and those looking to diversify away from the public markets is that these strategies offer both return enhancement and inflation resilience, provided that the allocation is matched to the client's time horizon and risk tolerances and liquidity needs.

Erin Real: It makes sense. Ed, finally, for investors looking to allocate one or more metals, how should one go about doing that?

Ed Coyne: I think it goes back to whether you're an advisor or an investor, you need to do an X-ray of your portfolio first. And I say that because if you're in a lot of tech companies, maybe some crypto companies, and you're further out on that risk spectrum, I think the story has to start with precious metals, specifically gold.

When you look at what gold's done in the last two and a half decades since the dawn of financial engineering, it's really kind of dialing up and dialing down QE, QE-1, QE-2, Operation Twist, all those things we've done to try to keep the parties going. Gold has done really well as a ballast to the rest of your portfolio. It's been a wonderful low-cost way to diversify a portfolio for the last two and a half decades. So for that type of client or that type of investor, I would stick with gold as your diversifying tool. And so often people look at what gold is and they're like, well, it doesn't pay dividends, so I'm not going to invest in it. But focus on what it's done. And it's been a very effective tool in helping diversify a portfolio.

Then, for those that may be more on the old 60/40 or more risk-off part of their life cycle of their portfolio, and they want to add a little more torque or the more opportunistic investor. I think you step into things like critical materials, copper, and uranium. And then you also step into the equity side, the mining side of things, because they have more volatility but also give you more torque. So, in the perfect world, if the cost was flat, which never happens, but if it were, and the price continues to go higher, the doubling effect of margin expansion would be incredible in the mining space. Now the trick is, do they have their cost under control? So you're going to get more volatility because of that.

But then I think, as I mentioned earlier, physical first, equity second, graduate into that equity space. And then silver is kind of one of those assets that I think, or precious metals, that's really interesting because it still kind of lives in the gold's shadow. It's now outperforming gold, year-to-date; it just kind of started to catch up. But what's unique about silver is that it gets consumed. Where gold doesn't really get consumed, it gets stored and it gets used, but it never really disappears. Silver disappears over time. So, the supply-demand dynamics of silver are becoming more and more fascinating as it gets consumed more.

It goes back to what I said earlier. On the precious metal side, I love gold. Silver is really interesting because it has the duality of both being a precious metal and a critical material. And then copper and uranium, those are the four. And then again, if you're a newer investor to the space, start off with the physical market, look at it as a diversifying tool. As you get comfortable, think about graduating into the miners from an opportunistic standpoint to add more torque to your portfolio.

I do want to add one other thing, you talked about private credit, private debt. We have this wonderful private lending suite or franchise. The only negative really is it's capacity constrained, there's only so many good projects out there you can lend money to. So it's about a $2 billion sort of franchise, as it were. And we're doing all sub-$100 million loans. So we sort of live in a part of the world that the rest of the market doesn't really participate in. Banks aren't going to do sub-$100 million loans to mining companies, and the big companies that loan to mining companies aren't going to mess with sub-$100 million loans. So we have a really unique space there as well.

For the larger family offices and more sophisticated investors, and I say sophisticated, I mean it in dollar values. If they have a $100 million or $200 million portfolio, our private lending business could also be very interesting for them, but that's really on the back end. I'd say physical first, equity second, debt third, if you have that type of portfolio that you can diversify that far into. But for most investors, owning some physical metal is a great place to start.

Erin Real: Jodie, do you have any final thoughts on this subject?

Jodie Gunzberg: What I would say is that I believe that real assets do have a place as part of the core strategic asset allocation. It's not just 60% stocks, 40% bonds. I think that the diversification, the inflation protection, and the variety of assets that go into real assets may be a really solid choice for investors over the long term. And tactically, there may be opportunities to invest in certain spots of it, but I do believe that real assets play a role.

Erin Real: Don, I'll ask you the same question. Any final thoughts?

Don Marleau: If we are talking about bonds, the credit quality of the mining and metals sector has basically improved for a decade. These are unique assets, and the bonds are backed by some scarce assets that should be profitable for a long time to come. So, a pretty good makeup for the sector from a credit perspective.

Erin Real: Thank you so much for your time and your considerable insight. We really appreciate having you in the studio. And thank you for watching this Real Assets Masterclass. I was joined by Ed Coyne, Senior Managing Partner at Sprott, Jodie Gunzberg, Managing Partner at InFi Strategies, and Don Marleau, Metals and Mining Managing Director at S&P Global Ratings. I'm Erin Real with Asset TV.