Sprott Precious Metals Watch

Palladium prices continued their relentless charge uphill Wednesday, shattering their old record high in a market that remains tight due to strong auto-related demand, analysts said.

Having surpassed the key $1,600 mark, gold prices were flirting with a seven-year high on Wednesday, as investors continue to shore up their positions amid the coronavirus outbreak.

The Silver Institute believes that macroeconomic and geopolitical conditions will remain broadly supportive for precious metals, encouraging investors to stay net buyers of silver overall, a development that should lift silver prices higher this year. Additionally, we see continued growth in physical silver investment, and forecast silver’s use as an industrial metal will rise in 2020.

U.S. authorities that accused six JPMorgan Chase & Co. employees of rigging precious-metals futures are building a criminal case against the bank itself, two people familiar with the situation said.

This is a revised version of the speech delivered by James at the annual LBMA/ LPPM Precious Metals Conference in Shenzhen, 13-15 October, 2019.

My presentation asks the question: is there a place for gold equities in a gold allocation? The reason I have posed this question is because, in absolute terms and, particularly disappointingly, relative to the gold price, investors have had very difficult experiences holding gold equities over the last 10 or even 20 years.

Gold is poised to perform strongly in 2020, with geopolitical risk set to remain elevated, metals and mining research and consultancy group Wood Mackenzie said Tuesday. Miners are set to enjoy bumper margins and the trade-off between investing for the long-term and returning money to shareholders will be acutely apparent. 

Stocks have returned to rally mode, but three defensive plays could be undermining the bull case. Treasurys, utilities and gold — typically safe havens — have surged this month and outperformed the S&P 500.

Palladium prices are likely to remain strong despite news that Russian producer Norilsk Nickel will release three metric tons of palladium ingots from its stockpiles, traders and analysts said.

As palladium’s record-breaking rally makes guessing the size of stockpiles more important than ever, one thing at least is clear — they’re getting a lot smaller.

The bull market in gold and silver began in the early 2000s. After rising to highs of $1920.70 and $49.82 in 2011, both precious metals pulled back to lows of $1046.20 and $13.635 in December 2015. Gold and silver have been consolidating since reaching those lows.

“You have to have balance ... and I think you have to have a certain amount of gold in your portfolio,” Dalio said, reiterating his call last year that the precious metal will be a top investment in the years to come

Gold could spike 30% to a record high of over $2,000 an ounce as central banks allow inflation and political fears mount, Bridgewater Associates boss Greg Jensen told the Financial Times. The Federal Reserve and other central banks won't clamp down on inflation or raise interest rates in the near term, supporting a higher gold price, said Ray Dalio's co-chief at the world's largest hedge fund. "That's a big deal."

As busy as the mining sector was dealing with mergers and acquisitions in 2019, that was only the start as one mining financing CEO sees a lot more activity in the new year. In a recent telephone interview with Kitco News, Peter Grosskopf, CEO of Sprott Inc., said that with gold prices expected to continue to rise through 2020, he sees a lot more consolidation in the mining space. He added that Sprott is making a big push to invest in down-cap mining companies.

Two related landmarks were easy to miss amid Monday’s continuing excitement about the tension between Iran and the U.S., but they matter. The first was a comeback: In April 2013, gold staged a sudden and dramatic crash, dropping 13.5% in two trading days.

The last few months have seen a major improvement in investor sentiment towards silver, according to Philip Newman, Director at Metals Focus, who recently presented the Metals Focus / Silver Institute Interim Silver Market Review. The silver price benefited in 2019 from a host of factors, including global economic and political concerns, as some investors sought safe haven investments, such as silver.

2019 marked the best performance for the precious metals complex in nearly a decade. Gold bullion closed the year at $1,517 (gaining 18.31% for the 12 months). Silver bullion ended the year at $17.85 (up 15.23% in 2019). Platinum climbed 21.56% in 2019, and palladium soared 54.24%. Gold mining equities showed notable strength, finishing 2019 up 43.49% as measured by Sprott Gold Miners ETF (SGDM).

Gold and silver are again in an upswing, and one of the smartest ways to own the precious metals might be to purchase shares in a closed-end fund (CEF) trading at a discount to its net asset value, and invested in the physical assets—not mining stocks, futures contracts or options.

Gold registered its biggest weekly advance in more than four months, with a decline in the dollar boosting demand for the metal as an alternative asset. The greenback slipped versus all of its Group-of-10 peers, on track to erase its 2019 gains.

We caution our clients that 2019’s uniquely favorable market conditions are unlikely to be sustainable.... Gold performed extremely well in the face of this year’s market jubilee, which transpired amid supportive conditions including a stable U.S. dollar and benign inflation. For twilight surfers, however, we believe gold’s role as a lifeguard has never been more important.

As 2019 comes to an end and 2020 begins, we believe that:

• Financial and geopolitical uncertainty combined with low interest rates will likely continue supporting gold investment demand
• Net gold purchases by central banks will likely remain robust even if they are lower than the record highs seen in recent quarters
• Momentum and speculative positioning may keep gold price volatility high

Gold prices look to end the year more than 15% higher, on track to post their biggest annual climb in nine years. “Gold has seen considerable safe haven buying from investors concerned [over] low and negative yields in the bond market and fearing a possible downturn in equities,” said George Milling-Stanley, chief gold strategist at State Street Global Advisors.

Get ready for a fast and sizable pop in gold prices. The cost of buying one troy ounce of the metal will likely rise by around 15% over the next couple of months, analysts say.

Peter Grosskopf, CEO of Sprott, joins BNN Bloomberg for a look at M&A activity within the Canadian gold sector. Grosskopf says that while big-name gold miners like Barrick and Newmont have gone through notable acquisitions this year, we are likely to see a significant number of junior miner acquisitions in 2020.

Gold held its own on Friday as investors weighed bullion’s merits heading into 2020 after the U.S. and China managed a breakthrough in their bitter and drawn out trade dispute, with the commodity’s initial losses driven by weaker haven demand offset by a slump in the dollar. Bullion fluctuated after President Donald Trump signed off on a phase-one deal with China, averting the introduction of more U.S. tariffs, according to people familiar with the matter.

In a note to clients published over the weekend, analysts at Goldman Sachs outlined why the strategic case for owning gold remains strong. The firm cites political uncertainty and recession fears that are unlikely to abate as primary catalysts, among other worries among the global elite like wealth taxes and increasing talk about MMT and central bank effectiveness.

Gold’s impressive advance in 2019 -- aided by trade war frictions, easier monetary policy across the world’s leading economies and sustained central-bank buying -- may be set to spill into the new decade.

Gold miners look set to extend a deal spree after notching transactions worth a record $30.5 billion this year, according to data, the biggest M&A binge since bullion prices peaked nearly a decade ago.

November marked the third month of consolidation for gold bullion and gold equities. We see this as a pause in a long-term bullish trend: YTD gold bullion has gained 12.69% and gold equities are up 33.35% as of 11/30.

Mergers & acquisitions have increased in the gold mining space since 2018 as miners are competing amid dwindling supply of easy-to-find gold. The latest to jump on the bandwagon is Kirkland Lake Gold KL, which agreed to acquire smaller Canadian rival Detour Gold for $3.7 billion (C$4.9 billion) in an all-stock deal.

Gold, known as the safe haven asset, historically becomes more valuable during times of geopolitical turmoil. Approximately 20% of the above ground stock of gold reserves is held by central banks and international monetary organizations.

Global jewellery gold purchases fell 16 per cent year on year in the third quarter to 460.9 tonnes, the lowest since the second quarter of 2010. Overall investment demand jumped 110 per cent to 408.6 tonnes, as net inflows into ETFs amounted to 258.2 tonnes.

Gold is all that nationalist leaders in Europe’s east can talk about these days. Just this week, Poland’s government touted its economic might after completing the repatriation of 100 tons of the metal. Over in Hungary, anti-immigrant Prime Minister Viktor Orban has been ramping up holdings of the safe-haven asset to boost the security of his reserves.

Mergers & acquisitions have increased in the gold mining space since 2018 as miners are competing amid dwindling supply of easy-to-find gold. The latest to jump on the bandwagon is Kirkland Lake Gold KL, which agreed to acquire smaller Canadian rival Detour Gold for $3.7 billion (C$4.9 billion) in an all-stock deal.

Gold mining stocks have soared approximately 30% so far in 2019, based on the performance of the NYSE Arca Gold Miners Index (GDM) as of November 15. Over the last 12 months, the sector is up nearly 50%. Some investors may assume that gold stocks have run their course. On the contrary, we think that the gold mining equities still have a great deal of upside to offer.

Gold-backed cryptocurrencies have been making a comeback, with more companies and government mints launching digital tokens backed by the precious metal. Gold investor John Hathaway says the move will make the commodity more transactional than it is today, and also explains why the precious metal and crypto make good “fellow travelers.”

Serbia’s central bank bought nine tons of gold in October, raising its reserves of the precious metal on the advice of President Aleksandar Vucic.

Globally, there are clear perceptions of gold as a safe, durable, traditional store of value. As an investment, it plays to these strengths – retail investors buy it to protect wealth and create long term returns. Jewellery buyers treasure it for sentimental reasons and as a reward for success.

Gold bullion has seen a double-digit YTD advance in 2019, and gold mining equities have also posted notable returns. Tocqueville Asset Management's John Hathaway and Ryan McIntyre join Ed Coyne, Senior Managing Director at Sprott Asset Management, to discuss their outlooks and suggest the optimal gold portfolio allocation for most investors.

Central banks have shifted to a new regime of easy monetary policy, thus reducing expected bond returns. As negative yielding debt increases alongside stock-to-yield valuations1 to all-time highs, gold may become an attractive and more effective diversifier than bonds, justifying a higher portfolio allocation than historical performance suggests.

We believe gold should continue to benefit from decreasing real interest rates and the increasing geopolitical uncertainty. Furthermore, financial asset valuations are stretched and permeate the landscape of “alternatives.” 

University of Vermont scientists claim to have produced the strongest silver ever -- 42 percent stronger than the previous record -- without losing silver’s high electrical conductivity.

Gold bullion consolidated in October, closing the month at $1,513, a 2.75% gain; YTD gold is up 17.97% as of 10/31/19. Silver bullion rose 6.55% for the month and has gained 16.86% YTD. As gold companies report Q3 earnings in the coming weeks, we expect robust earnings results to lift gold equity prices. The timing may be favorable as we are also heading into the best consecutive four-month seasonality pattern for gold mining equities.

Global light vehicle sales in 2019 are 4.2% lower* than in 2018; which some see as a reason for rising PGM prices to pull back.

The U.S. dollar has been the world’s major reserve currency for decades, but that status could come under threat as “very powerful countries” seek to undermine its importance, warned Anne Korin, from the Institute for the Analysis of Global Security.

Central banks have shifted to a new regime of easy monetary policy, thus reducing expected bond returns. As negative yielding debt increases alongside stock-to-yield valuations to all-time highs, gold may become an attractive and more effective diversifier than bonds, justifying a higher portfolio allocation than historical performance suggests.

Palladium surged to a record, topping $1,800 as stricter air-quality rules boost demand for the metal used in vehicle pollution-control devices.

This Real Vision video features John Hathaway, Senior Portfolio Manager of Tocqueville Asset Management, being interviewed by Dan Tapiero of DTAP Capital. They take a closer look at gold’s recent breakout and explore why gold equities are so attractive right now.

Silver prices have fallen 9% from this year’s highs—an opportunity for investors to buy the metal that has outperformed gold so far this month.

Rick Rule, President and CEO of Sprott U.S. Holdings Inc., shares how the worldwide explosion of negative yielding debt shapes his bullish outlook on gold. He examines the impact that a “war on savers” has on the global financial system and on precious metals. Rule explains his outlook for the future of the monetary system by analyzing the evolving relationship between cryptocurrencies, precious metals and fiat currencies.

Gold headed for a weekly gain as investors prepare for another round of central bank action, with weaker-than-expected U.S. data reinforcing expectations that the Federal Reserve will cut borrowing costs next week.

CEO Peter Grosskopf: Gold has been on a tear in 2019. The gold price recently breached $1,500, a remarkable performance since June, when it smashed through the ceiling of its long-term range under the $1,370 level. This is especially impressive when considered in the context of a reasonable economy, a strong U.S. dollar and resilient equity markets throughout 2019. So, what gives?

Doug Groh, Portfolio Manager, Tocqueville Asset Management at the 121 Mining Investment Conference in New York: "Someone made the point that gold is too expensive at $1,500 an ounce. And a counterpoint was made, which supports your observation that gold is really not a price-sensitive instrument. It's a monetary instrument. It's a precious metal monetary metal that really acts as a means of exchange."

Peter Grosskopf, CEO of Sprott, shares his outlook for gold and the economy with Bloomberg's Shery Ahn and Amanda Lang on Bloomberg Markets.

In his own words, we can thank gold bull and investor Eric Sprott for the recent retreat in the gold price below US$1,500 per ounce. These comments were made on September 26th at an industry conference hosted by Red Cloud Capital in Toronto. Mr. Sprott suggested that the bankers who are known to trade down the gold price affected this price drop knowing he would be talking up the price at this event, and to “piss him off”.

Currently, the geopolitical scenario is marked by escalating Sino-US trade tensions, Brexit uncertainty and slowing global growth, leading to a rise in the popularity of gold ETFs.

We believe the precious metals bull market is just in its early stages. Ed Coyne, Senior Managing Director, National Sales at Sprott Asset Management, joins special guests Doug Groh and Ryan McIntyre, Portfolio Managers at Tocqueville Asset Management, to discuss their outlooks for gold bullion and gold equities, and suggest the optimal gold portfolio allocation for most investors.

Investor sentiment has strengthened noticeably towards silver (as well as the wider precious metals complex). This is in sharp contrast to recent years’ activity, when many institutional investors had been skeptical towards the metal.

With volatility in mind, investors may consider alternative index-based gold miner ETFs like the Sprott Gold Miners ETF (NYSEArca: SGDM) and Sprott Junior Gold Miners ETF (NYSEArca: SGDJ). Unlike traditional market cap-weighted funds, SGDM and SGDJ follow a factor-based or smart-beta indexing methodology that can potentially enhance returns.

The Sprott Physical Gold Trust offers a number of advantages over other gold funds and is perhaps the next best thing to holding the actual metal. The fact that it is currently trading at a discount is a nice bonus. As such, it may be worthwhile taking a position in the fund.

In recent months, investor interest in both silver and gold has risen significantly. The catalyst for this has been growing macroeconomic uncertainty, due to the escalating US-China trade war, which has increased the risk of recession (as suggested by negative bond yields). This in turn has encouraged a move to safe haven assets.

Given gold’s sharp rise since May, September’s correction was not unexpected. We believe it is reflective of a new consolidation phase, and likely to be short term in nature. All factors that we consider to be significantly correlating to gold bullion indicate that we are still in the early stages of a major long-term advance.

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 a 28% long-term capital gains rate. 

Precious metals prices and ETF investment are having a stellar year as capital market uncertainty, including negative interest rates, and geopolitics combine to lift investor interest and ownership. Platinum investment demand has the highest growth rate with ETF holdings up 38% or 919 koz to a record 3.28 moz in 2019 to date.

Gold rose to a more than one-week high on Monday as weaker-than-expected economic data from Europe heightened fears of a slowdown in global growth, while palladium continued its record run driven by short supply of the auto-catalyst metal.

The gold market has calmed since reaching its most recent high at the beginning of September. December gold sitting at around the $1,500 per ounce level on September 17.

Speaking with Charlotte McLeod, Managing Editor, Investing News Network, Portfolio Manager Doug Groh describes the pending deal between Sprott and Tocqueville, in which Sprott will acquire the Tocqueville gold strategy and team. Groh also discussed the current gold rally, and explained that with a higher gold price, smaller-cap companies are looking at new opportunities.

U.S. authorities have charged three individuals over allegedly participating in market manipulation in the trade of precious metals including gold, silver, platinum and palladium between 2008 and 2016, the Department of Justice said on Monday.

Gold and silver prices jumped more than 1% on Monday as investors fled to safe-haven assets after an attack on Saudi oil facilities raised concerns over global energy supply and ratcheted tensions in the Middle East.

In our view, gold’s role as a non-correlating store of value has rarely offered more portfolio utility than it does today....The most troubling legacy of contemporary central banking has been the emergence of negative nominal interest rates. The fact that they actually exist, only highlights the dire nature of global financial imbalances.

Gold prices may rally to a record above $2,000 an ounce in the next two years, according to Citigroup Inc., which gave a laundry list of positive drivers including rising risks of a global recession and the likelihood that the Federal Reserve will reduce U.S. interest rates to zero.

Russia’s long-running bet on gold is looking better every month. The country quadrupled gold reserves in the past decade as it diversified away from U.S. assets, a move that has paid off recently as haven demand sent prices to a six-year high.

Gold has risen 18% since the start of the year, in part because China has been adding vast amounts of the metal to its reserves.

Mark Mobius, the founding partner of Mobius Capital Partners, recommends that investors hold 10% of their portfolios in physical gold, and invest the rest in dividend yielding equities.

During a CNBC interview, former Federal Reserve Chairman Alan Greenspan said gold prices are surging because investors are looking for hard assets that they know will have value in 20 or 30 years.

Gold-backed ETFs and similar products account for a significant part of the gold market, with institutional and individual investors using them to implement many of their investment strategies. Flows in ETFs often highlight short-term and long-term opinions and desires to holding gold

Gold added $110 in August to close the month at $1,524, gaining 7.8% for the month. YTD gold is up 18.6%, ahead of the S&P 500 Index's rise of 15.34%. Gold equities impressed even more, climbing 46.4% YTD as measured by Sprott Gold Miners ETF (SGDM).

Platinum may claim 2019 as a turning point year despite a volatile first eight months. YTD through Friday, August 30, platinum’s spot price has jumped 17.34%. Many indications point that platinum’s multi-year period of stagnation may finally be ending.

Precious metals are scoring impressive gains in August, with gold poised for a fourth consecutive monthly rise, though silver is steadily outpacing the price climb of its sister metal. Both have plenty of reasons to move even higher in the weeks to come, analysts said.

Investors holding “poor man’s gold’’ are suddenly a lot richer, and silver’s rally may still have room to run. Silver has surged 12% this month and touched a two-year high on Wednesday. The metal is benefiting as concerns over the global economic outlook bolster demand for haven assets, sending sister-metal gold to the highest since 2013.

Citigroup Inc. has raised the possibility gold may extend its impressive rally should it breach a technical level against a major U.S. equity market benchmark, adding to positive commentary around the metal.

Gold futures climbed to their highest finish since 2013 and silver rallied to a more than two-year high on Tuesday, with losses in U.S. stocks and a drop in Treasury yields providing a boost to the precious metals as investors hopes for progress on U.S.-China trade talks faded.

A major gold-buying spree by central banks is likely to persist in the coming years, according to Australia & New Zealand Banking Group Ltd., which flagged the potential for further purchases by nations including China.

China has partially lifted restrictions on imports of gold, bullion industry sources said, loosening curbs that had stopped an estimated 300-500 tonnes of the metal worth $15-25 billion at current prices from entering the country since May

Despite the growing hype around electric vehicles, conventional gas-powered vehicles are expected to be on the road well into the future. As a result, exhaust systems will continue to be a critical tool in reducing harmful air pollution. Palladium enables car manufacturers to meet stricter emission standards, making it a secret weapon for fighting pollution going forward.

After topping $100 billion in gold reserves in June, Russia purchased another 300,000 ounces or nine tons of gold in July, according to the latest data released by the Russian central bank.

Last November former JPMorgan precious-metals trader admitted he engaged in a six-year spoofing scheme that defrauded investors in gold, silver, platinum, and palladium futures contracts. John Edmonds, then 36, pled guilty under seal in the District of Connecticut to commodities fraud, conspiracy to commit wire fraud, commodities price manipulation, and spoofing. As FBI Assistant Director in Charge Sweeney explained that "with his guilty plea, Edmonds admitted he intended to introduce materially false and misleading information into the commodities markets."

Veteran investor Mark Mobius gave a blanket endorsement to buying gold, saying accumulating bullion will reap long-term rewards as leading central banks loosen monetary policy and the rise of cryptocurrencies serves only to reinforce demand for genuinely hard assets.

CEO Peter Grosskopf: The debate over gold’s place in a modern investment portfolio has been well covered. Call it the “Pet Rock” versus the “End of Fiat Currency” grudge match. But the facts are not subject to such intense interpretation....An enormous transformation of the gold market can occur once digital gold attracts the volumes needed to make it a serious business.

Gold futures settled virtually unchanged Friday but marked the best weekly return in more than a month, amid Italian political jitters and another wrinkle in the U.S.-China trade talks.

Sprott Inc. (TSX: SII) and Tocqueville Asset Management today announced that Sprott Asset Management LP (“SAM”) and Tocqueville have entered into a definitive agreement regarding the acquisition by SAM of the Tocqueville gold strategies.

July was positive for both gold and silver, which were propelled by the Fed’s interest rate cut on July 31, its first cut in 11 years. Any hope that this is a "one and done" rate hike has quickly been dashed with the latest U.S.-China trade war salvo. The long-term picture remains firmly intact. Gold and silver continue to rise as the market adjusts to a new central bank easing cycle.

PM Maria Smirnova: "We predicted that 2019 could surprise to the upside. YTD, through the Friday, July 19 close, gold bullion was up 11.14% and silver bullion has gained 4.58%....The wind is now at our backs and we believe that both gold and silver will climb higher. Silver, in particular, has the potential to significantly outperform gold."

Last week, gold bullion continued its bullish consolidation ($1,380 support, $1,440 resistance), and gold equities recovered to touch new 52-week highs as Federal Reserve Chairman Jerome Powell reaffirmed the likelihood of a July 31 interest rate cut.

CEO Peter Grosskopf: Gold has moved above the critical $1,400 mark for the first time in nearly six years. We believe that gold may be decisively breaking out of a six-year cycle and that this may be the beginning of a powerful multi-year rally. It's an opportune moment for CEO Peter Grosskopf to share his guidance on gold investing.

Rick Rule, Senior Managing Director of Sprott, interviews Trevor Raymond, Director of Research at the World Platinum Investment Council, about promising signs for the platinum market, after several years of weakness.

A two month bitcoin rally has reignited the gold-versus-bitcoin debate. We view such either-or comparisons of gold and bitcoin as somewhat specious, because we see little commonality between the two assets. Gold continues to function as a reliable store of value and productive portfolio-diversifying asset. In contrast, bitcoin continues to augment its reputation as a highly erratic speculation. Bitcoin’s investment merits, at least to date, have proven distinctly different from gold’s portfolio utility.

CEO Peter Grosskopf: "Most investors do not realize that gold is one of the world’s most liquid currencies and assets, trading with volumes equivalent to those of the euro or U.S. Treasury bond benchmarks. Although similar in philosophy, gold blows Bitcoin away on any measure by which the two can be compared....Perhaps now is finally the time for investors to benefit from a 'life preserver' while others enjoy the card game on the decks of the central bank-piloted Titanic."

Many of the world’s elite investors turn to gold to hedge against the prospect of a bear market ― a prolonged downturn which sees stock prices fall by at least 20% over two months or more. Gold is considered the undisputed king of uncorrelated assets, and is a proven, safe haven investment that lets investors sleep at night.

Maria Smirnova, Senior Portfolio Manager, discusses silver's challenging investment environment. She writes: "With silver's price hovering at $15 per ounce, we see tremendous investment upside — with little downside — given what we view as very positive developments in the market."

Senior Portfolio Manager Trey Reik: "After a lot of late-March huffing and puffing in COMEX markets to achieve a month-end close for spot gold below $1,300, trading in physical gold markets proved especially robust during the first week of April.  To us, this suggests gold’s sub-$1,300 spot price is destined to be short lived."

Senior Portfolio Manager Trey Reik: "Trading in gold markets during the week of 3/25/19 seemed heavily influenced by calendar-related items."

Senior Portfolio Manager Trey Reik: "We suspect gold equities are poised for a span of significant nominal and relative performance. We have entered a new mergers and acquisitions (M&A) cycle which we believe will provide a strong catalyst for gold miners in 2019."

Senior Portfolio Manager Trey Reik: "Given the seminal nature of catalysts now in play for precious metals, we felt the timing appropriate for a comprehensive review of factors driving the gold price. In this report, we have compiled our Top 10 List of fundamentals supporting a portfolio allocation to gold in 2019."

Get our positive outlook on gold and gold equities. Watch/listen to this webcast replay featuring Ed Coyne, EVP at Sprott Asset Management and special guest John Hathaway, Senior Portfolio Manager at Tocqueville Asset Management.

Financial Journalist Liz Claman interviews Ed Coyne, EVP at Sprott Asset Management, on his 2019 outlook for gold bullion and gold equities. Gold beat U.S. equities for the month of December, the fourth quarter, and the full calendar year of 2018. Sprott believes that precious metals are poised for a multi-year uptrend, and we advocate a 5-10% permanent portfolio allocation for most investors.

Senior Portfolio Manager Trey Reik: "We believe that gold bullion and gold mining equities may be poised for a multi-year uptrend. Gold bullion beat U.S. equities for the month of December, the fourth quarter, and the full calendar year of 2018. We suggested throughout 2018 that the catalyst for gold’s next important rally would be growing recognition that the Fed’s current tightening cycle was reaching a conclusion."

Palladium has been a standout performer, more than doubling in price in three years 2016 to 2018. YTD the white-hot metal is up more than 10% as of January 16, 2019. Palladium’s rise is best understood by analyzing its unique supply-demand dynamics. Russia and South Africa account for nearly 80% of the world's production, and a chronic supply deficit keeps pushing prices higher.

John Ciampaglia, CEO Sprott Asset Management: "Palladium is a key component for ICE autocatalysts. While the escalating U.S.-China trade war hurt many commodities in 2018, palladium continued to rise. Spot palladium gained 18.6% in 2018 and has climbed 124% since the beginning of 2016."

Ed Coyne, EVP National Sales at Sprott Asset Management, joins a panel of real assets experts to discuss whether it’s time to hunt for investments largely unconnected to financial markets, given the Dow Jones Industrial Average's flirtation with new highs in 2018.

Senior Portfolio Manager Trey Reik weighs in on why the Fed is likely to pause its rates hikes: "We have maintained that financial asset prices cannot sustain rising rates with this much debt in the global financial system.... To us, it seems pretty clear there are growing rumblings for at least a pause in rate hikes. Gold is likely to erupt if this transpires."

Got gold? We expect asset markets to come to terms with the Fed’s dual policy agenda of simultaneous rate hikes and balance sheet reduction — which amounts to little more than glorified brinkmanship. Recent market weakness supports our contention that Fed tightening is pinching global liquidity to a degree which threatens reigning valuations of traditional financial assets. 

We believe gold sentiment may be turning in our favor. For the first time in 17 years commercial participants in gold futures — generally regarded as the “smart money” — have flipped their COMEX positioning to net long.

Platinum is one of the rarest of metals but often flies under the radar. In Part 1, we provide a Platinum Primer and explain why we are bullish on this essential metal, which plays a critical role in the automotive, industrial and jewelry sectors. 

As investors flee the emerging markets and seek the safety of the U.S. dollar and U.S. equities, they've increased their short positions in commodities. Most surprisingly, and counterintuitively, bets against precious metals (gold, silver and platinum) have reached record levels.

It's been a frustrating summer for gold bugs. Senior PM Trey Reik discusses how "emerging markets dislocation and the stored force in collapsing EM currencies is funneling towards a strengthening U.S. dollar, and in turn reflexively pressuring the gold price.” In the face of this bearish sentiment, we are encouraging Sprott clients to exploit summer price movements in precious metals to their maximum advantage. 

Portfolio Manager Shree Kargutkar believes that “gold may prove to be the ultimate winner given the most recent trade conflicts.” Despite the U.S. dollar's recent strength Kargutkar argues that it is likely to be short-lived, and that all the elements are in place for a durable bull market for precious metals and precious metal equities.

Senior Portfolio Manager Trey Reik answers the question: Why isn’t gold doing better? After trading in a bullish consolidation pattern for 18 months, gold appears to have lost some of its mojo. Trump’s June 1 tariff announcements and the U.S. dollar's spring rally have hurt gold and other commodities. Reik counters by arguing that gold’s price stability has been fairly unique among asset classes, and that right now is a fortuitous entry point for portfolio allocations to gold.

In this report, we employ the analytical framework of periphery to core.  We have organized this letter around evidence that the Fed’s dual policy goals are straining financial conditions in peripheral components of four critical sectors:  emerging markets, global financial institutions, U.S. corporate credits and U.S. consumer credits. 

"Silver commands an established precious-metal pedigree, while simultaneously boasting a wide array of active economic functions,' writes Senior Portfolio Manager Trey Reik. This report explores silver's bullish supply/demand fundamentals and why this bodes well for higher silver prices ahead.

Senior Portfolio Manager Trey Reik responds to Warren Buffet’s distaste for gold, staunchly reconfirmed by Buffett at the May 5 Berkshire Hathaway Annual Shareholder Meeting. Reik finds Buffet’s gold-versus-stocks comparison self impeaching, and suggests that a prudent allocation to gold could improve the risk-adjusted returns even for Berkshire Hathaway.

Senior Portfolio Manager Trey Reik presents analysis suggesting the Fed’s dual agenda of rate hikes and QT balance-sheet reduction is already straining global liquidity to the peril of reigning financial asset valuations. In order to arrest deflationary forces, at least in part of their own making, we expect the Fed to scale back telegraphed FOMC policy by yearend.

Sprott Global Investment Executive Kenton Ralph Toews looks more closely at how commodities, relative to equities, are at their most undervalued in decades. Gold is especially inexpensive relative to the S&P 500. 

Sprott Asset Management CEO John Ciampaglia examines the relative merits of gold and cryptocurrencies as these two alternatives to traditional fiat currencies duke it out in the “monetary” boxing ring of investor sentiment.

The calm of equity markets across the world was rudely interrupted in February by a sudden spike in volatility which impacted virtually every asset class. Volatility across equities, bonds, currencies and commodities rose sharply during the month and remained elevated into March.

Senior Portfolio Manager Trey Reik looks beyond the short-term damage of the Feb. 5 market selloff, and explores why the current fed tightening cycle is likely to increase the stress on individual consumers and inflict damage across a broad spectrum on financial assets.

With the beginning of the new year, we have entered a seasonally strong period for gold bullion and gold equities. Gold bullion posted a strong gain of 3.23% in January, ending the month at $1,345.15 per ounce. While sentiment towards gold has improved from frigid to luke-warm, sentiment towards precious metals equities remains downright bearish.

Executive VP Ed Coyne discusses Sprott's acquisition of the Central Fund of Canada and launch of the Sprott Physical Gold and Silver Trust.

Gold bullion rose a respectable 13.09% in 2017, posting its strongest annual gain since 2010. Senior Portfolio Manager Trey Reik explores why gold's performance stacks up well against other alternative asset classes.

Senior Portfolio Manager Trey Reik takes a closer look at Trump's tax reform. Eager for the tax bill to pass, Trump boasts in a recent tweet, “It will be the BIGGEST TAX CUT and TAX REFORM in the HISTORY of our country!” We disagree. 

Portfolio Manager Shree Kargutkar says, "gold is likely to benefit in early 2018 from its traditional first quarter strength."  He also explains why gold mining equities are cheap right now, and why high-quality miners are positioned for strong earnings performances.

Maria Smirnova, Senior Portfolio Manager, discusses precious metals, and how it is getting much harder to find new deposits, given the drop-off in exploration budgets. She explains how an allocation to gold and silver in an investment portfolio can reduce volatility.

Maria Smirnova, Senior Portfolio Manager, shares key takeaways from the Silver Institute’s 3rd Silver Industrial Conference that focused on “Silver’s Evolving Role in Science and Technology.” Smirnova looks at silver’s expanding role given its use in solar, automotive, electronics and healthcare applications, and explains why we are bullish on the metal. 

Senior Portfolio Manager Trey Reik discusses why gold has spent the past seven months in a tight trading range between $1,200 and $1,300 per ounce. Given the stored force inherent in such a trading pattern, history suggests a breakout, whether up or down, is likely to be characterized by a steep slope. The question remains, which direction will gold follow?