Insights

Video

Update on Gold and Gold Equities

Update on Gold and Gold Equities

May 15, 2021 - Sprott CEO Peter Grosskopf joins Asset TV's Jenna Dagenhart to discuss Sprott's outlook for gold and gold equities.

Video Transcript

Jenna Dagenhart: Gold is making headlines once again after the safe haven asset had its strongest month of gains since July 2020. Joining us now to share his outlook is Sprott Chief Executive Officer Peter Grosskopf. Peter, before diving in, could you tell our viewers a little bit more about Sprott?

Peter Grosskopf: Sprott has been around for 40 years, which puts us as one of the longest-serving asset managers in the gold sector. In context, 50 years ago is when Nixon took the U.S. dollar off the gold standard. Over this time, we have built an amazing team of people. We've had access to the best DNA in the mining business, including folks like John Hathaway and Whitney George, who are well-known and currently serve as part of our gold investment team.

JD: Since the 2020 gold high of $2,075, gold had been softening until recently. What's changed since then and is it sustainable?

PG: The softening that you're referring to was somewhat expected as people focused on the economic and market recovery, which experienced very strong conditions and other financial markets, such as the bond market, saw a very large move in yields to the upside. Understandably, investors were less than thrilled with gold during that time. Also, stock markets were strong and people were generally focused on the recovery.

Gold then found a substantial base around the high $1,700s, and since then it's been well protected and well bought in the market. Now, investors seem focused on the long term again, showing more willingness to hedge equity and credit positions given concerns over the effectiveness of Fed tapering. As such, I think it's a very healthy environment for gold and we believe it is likely to do well going forward.

JD: How about silver? Why is the "other metal" gaining so much attention?

PG: Silver is an exciting market. It's a small market, so when investment demand increases, it may overwhelm the market. This dynamic is happening since silver is a proxy for gold and is certainly a precious metal that can be used as insurance for inflation and poor market conditions. We are seeing a lot of smaller silver investors buying physical silver today. The story unfolding is that the silver trade is now becoming a longer-term investment. Smaller investors are buying physical silver and chasing that market right now. We also see demand coming from all quadrants and it could easily overwhelm the market. Naturally, the price action in silver could really be more explosive than gold.

JD: Clearly, you like both gold and silver.

PG: Yes.

JD: What about gold miners? Why should investors consider them in this kind of environment?

PG: The miners are more of a value story at this time. Many gold mining companies have done a good job changing the way they do business, becoming more efficient and more environmentally sensitive. After years of investing in their businesses, they're making great margins and are more willing to expand. Gold companies haven't been cheaper than this in a long time versus the gold price. They've become a value sector and have tremendous operating leverage to the gold price, giving them potential upside. We see their downside being somewhat protected but with high upside potential, especially with higher gold prices.

JD: Finally, can you give us a glimpse of what the coming quarters or years might look like for precious metals?

PG: In terms of a long-term framework, over the next decade, we may have mounting risks associated with monetary and fiscal policy and increasing money supply often associated with modern monetary theory. There may be significant risks of modern monetary theory not working and if it doesn't, we could see unanticipated inflation or rocky market conditions.

The long-term physical accumulation phase is just getting started for gold. We may have an extended period where gold is likely to enjoy advantages over other assets. We, at Sprott, are looking at a very busy time with many investors interested in gold, pointing to a very positive five- to 10-year story.

JD: Peter, we'll have to have you back on at some point soon. Thanks so much for joining us.

PG: Thanks for having me, Jenna.

JD: Thank you for watching. Once again, that was Sprott Chief Executive Officer Peter Grosskopf. I'm Jenna Dagenhart with Asset TV.

Peter Grosskopf 
Peter Grosskopf
Chief Executive Officer, Sprott Inc.;
Managing Director, Sprott Resource Lending
Read Full Bio

Sign-Up Now: 
Insights from Sprott

More Insights from Sprott

Important Disclosure

Past performance is no guarantee of future results. You cannot invest directly in an index. Investments, commentary and statements are unique and may not be reflective of investments and commentary in other strategies managed by Sprott Asset Management USA, Inc., Sprott Asset Management LP, Sprott Inc., or any other Sprott entity or affiliate. Opinions expressed in this commentary are those of the presenter and may vary widely from opinions of other Sprott affiliated Portfolio Managers or investment professionals.

This content may not be reproduced in any form, or referred to in any other publication, without acknowledgment that it was produced by Sprott Asset Management LP and a reference to sprott.com. The opinions, estimates and projections (“information”) contained within this content are solely those of Sprott Asset Management LP (“SAM LP”) and are subject to change without notice. SAM LP makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, SAM LP assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. SAM LP is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Please contact your own personal advisor on your particular circumstances. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Sprott Asset Management LP. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell. SAM LP and/or its affiliates may collectively beneficially own/control 1% or more of any class of the equity securities of the issuers mentioned in this report. SAM LP and/or its affiliates may hold short position in any class of the equity securities of the issuers mentioned in this report. During the preceding 12 months, SAM LP and/or its affiliates may have received remuneration other than normal course investment advisory or trade execution services from the issuers mentioned in this report.

Forward-Looking Statements

Certain statements in this content contain forward-looking information and forward-looking statements (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable Canadian and U.S. securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify Forward-Looking Statements. In particular, but without limiting the forgoing, this press release contains Forward-Looking Statements pertaining to: (i) the declaration, payment and designation of dividends and confidence that our business will support the dividend level without impacting our ability to fund future growth initiatives; (ii) the expected benefits of the UPC transaction, including with respect to global profile, trading liquidity and asset base growth; and (iii) the satisfaction of closing conditions for the UPC transaction, including, but not limited to, required shareholder approval and other customary conditions to closing.

Although the Company believes that the Forward-Looking Statements are reasonable, they are not guarantees of future results, performance or achievements. A number of factors or assumptions have been used to develop the Forward-Looking Statements, including, without limitation: (i) the impact of increasing competition in each business in which the Company operates will not be material; (ii) quality management will be available; (iii) the effects of regulation and tax laws of governmental agencies will be consistent with the current environment; and (iv) the impact of COVID-19; and (v) those assumptions disclosed under the heading "Critical Accounting Estimates, Judgments and Changes in Accounting Policies" in the Company’s MD&A for the period ended March 31, 2021. Actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking Statements should assumptions underlying the Forward-Looking Statements prove incorrect or should one or more risks or other factors materialize, including: (i) difficult market conditions; (ii) poor investment performance; (iii) failure to continue to retain and attract quality staff; (iv) employee errors or misconduct resulting in regulatory sanctions or reputational harm; (v) performance fee fluctuations; (vi) a business segment or another counterparty failing to pay its financial obligation; (vii) failure of the Company to meet its demand for cash or fund obligations as they come due; (viii) changes in the investment management industry; (ix) failure to implement effective information security policies, procedures and capabilities; (x) lack of investment opportunities; (xi) risks related to regulatory compliance; (xii) failure to manage risks appropriately; (xiii) failure to deal appropriately with conflicts of interest; (xiv) competitive pressures; (xv) corporate growth which may be difficult to sustain and may place significant demands on existing administrative, operational and financial resources; (xvi) failure to comply with privacy laws; (xvii) failure to successfully implement succession planning; (xviii) foreign exchange risk relating to the relative value of the U.S. dollar; (xix) litigation risk; (xx) failure to develop effective business resiliency plans; (xxi) failure to obtain or maintain sufficient insurance coverage on favorable economic terms; (xxii) historical financial information being not necessarily indicative of future performance; (xxiii) the market price of common shares of the Company may fluctuate widely and rapidly; (xxiv) risks relating to the Company’s investment products; (xxv) risks relating to the Company's proprietary investments; (xxvi) risks relating to the Company's lending business; (xxvii) risks relating to the Company’s brokerage business; (xxviii) failure to, in a timely manner, or at all, obtain the necessary court and other approvals for the UPC transaction; (xxix) failure to receive any required regulatory, securities commission or stock exchange approvals for the UPC transaction; (xxx) failure to otherwise satisfy the conditions to complete the UPC transaction; (xxxi) the possibility that the UPC board could receive an acquisition proposal and approve a superior proposal; (xxxii) the effect of the announcement of the UPC transaction on UPC’s strategic relationships, operating results and business generally; (xxxiii) significant transaction costs associated with the UPC transaction; (xxxiv) other customary risks associated with transactions of this nature; (xxxv) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 25, 2021; and (xxxvi) those risks described under the headings "Managing financial risks " and "Managing non-financial risks" in the Company’s MD&A for the period ended March 31, 2021. In addition, the payment of dividends is not guaranteed and the amount and timing of any dividends payable by the Company will be at the discretion of the Board of Directors of the Company and will be established on the basis of the Company’s earnings, the satisfaction of solvency tests imposed by applicable corporate law for the declaration and payment of dividends, and other relevant factors. The Forward-Looking Statements speak only as of the date hereof, unless otherwise specifically noted, and the Company does not assume any obligation to publicly update any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

© 2021 Sprott Inc. All rights reserved.

Sprott uses cookies to understand how you use our website and to improve your experience. This includes personalizing content on our website and third-party websites. To learn more and to manage your advertising preferences, see our Cookie Policy

Close

Important Message

You are now leaving Sprott.com and entering a linked website. Sprott has partnered with ALPS in offering Sprott ETFs. For fact sheets, marketing materials, prospectuses, performance, expense information and other details about the ETFs, you will be directed to the ALPS/Sprott website at SprottETFs.com.

Continue to Sprott Exchange Traded Funds

Important Message

You are now leaving Sprott.com and entering a linked website. Sprott Asset Management is a sub-advisor for several mutual funds on behalf of Ninepoint Partners. For details on these funds, you will be directed to the Ninepoint Partners website at ninepoint.com.

Continue to Ninepoint Partners

Important Message

You are now leaving sprott.com and linking to a third-party website. Sprott assumes no liability for the content of this linked site and the material it presents, including without limitation, the accuracy, subject matter, quality or timeliness of the content. The fact that this link has been provided does not constitute an endorsement, authorization, sponsorship by or affiliation with Sprott with respect to the linked site or the material.

Continue