News Release
Sprott Thought Leaders Discuss Real Assets To Watch In 2025: Gold, Silver, Copper, Uranium
Benzinga
By Kyle Anthony, Benzinga A supercycle refers to an extended period of economic growth, driven by various factors, but characterized by increased demand for commodities and higher asset prices, often lasting several years (or decades). In a recent Sprott Masterclass Video, Edward C. Coyne, Senior Managing Partner, Global Sales, Steve Schoffstall, Director, ETF Product Management and Ryan McIntyre, Managing Partner and Senior Portfolio Manager, shared their insights and outlook on the importance of real assets within the global economy whether as a hedge against macroeconomic uncertainty or an essential resource needed to actualize technological advancements that they believe will benefit much of humanity. Below, we dive into the commodity aspects of real assets, specifically highlighting the market opportunities for gold, silver, uranium and copper through a review of the discussion with direct insights from Sprott thought leaders interspersed throughout. Demand Outlook For Critical Materials As society moves toward decarbonization and electrification, critical materials are becoming more essential to the global energy transition. The mass adoption of sustainable energy sources such as nuclear, solar, wind, hydro and geothermal energy is driving the supply and demand pressure for the raw minerals necessary to create and maintain clean-energy technologies. Globally, electricity demand is rising. In developing economies, increasing urbanization and industrialization are the impetus for more power generation. At the same time, the rise of artificial intelligence, data centers and reshoring is causing more power consumption in Western economies. In quantifying the depth of the demand, Steve Schoffstall stated, “If you were to look at it globally between 2020 and 2050, we expect a 165% [169%] increase in electricity demand.” The growing global demand for energy and the need to move away from fossil fuels seem to be setting the stage for nuclear power. Essential to nuclear energy is uranium, a heavy metal that can be used as an abundant source of concentrated energy for nuclear reactors. Globally, acceptance regarding using nuclear as a viable energy source is growing. For example, China plans to build an estimated 440 nuclear reactors. Furthermore, more than 30 nations agreed to triple nuclear energy capacity out through 2050 in last November’s COP29 conference. “If you were to look at China, they're the only country that's stockpiling uranium in any sort of meaningful way. The U.S. utilities haven't gotten there yet,” said Schoffstall,” What this is going to cause, in our view, is that there's going to be this catch-up where we're going to see Western utilities try to catch up and source more uranium.” If demand for nuclear power continues to grow, investors may have an opportunity, as having material exposure to uranium could allow them to benefit from any gradual price appreciation that may occur. As global economies accelerate their clean energy activities, the importance of copper has become even more apparent against a backdrop of constrained copper supply, with no viable substitutes. Edward Coyne noted that copper has historically been associated with the Chinese economy, with at least 50% of all copper consumption stemming from the nation. However, with the growing demand for copper globally, it is anticipated that the supply of copper will fail to keep up with its demand. With much of the easy copper having already been mined, the availability of new copper coming to the market will be long-tenured, as it takes approximately 16.5 years to get a new copper mine up and running from discovery to production. Earlier this year, research by Sprott suggested copper may be entering a supercycle, defined as a sustained period of expansion, usually driven by robust growth in demand for products and services. Economic supercycles tend to produce strong, sustained demand for raw and manufactured materials, such as metals and plastic, that exceeds what commodity producers can supply. Supercycles, which are also good for stock prices, are often associated with long-term periods of growth for the commodity markets. With the growing demand for copper, significant price appreciation could occur if producers cannot provide sufficient supply in the medium to long term. Copper miners could also see long-term growth potential. Demand Growth For Gold And Silver Though inflation in many global economies has been significantly reduced, the demand for precious metals, such as gold and silver, Sprott believes it is still at the top of many people's minds due to uncertainty in the broader socio-economic environment, and the price of gold hit multiple all-time highs in 2024. As noted by Ryan McIntyre regarding these metals, “The one thing consistent with gold or silver is its monetary properties in terms of “protection” against the devaluing of the currency in terms of debasement, printing of money, and so forth.” With growing macroeconomic uncertainty and rising geopolitical tensions, these precious metals have become “protection” assets for many investors. In speaking about this value proposition for these metals, Mr. McIntyre stated, “It feels like these divisions are getting wider and wider in terms of the trust factor, I would say, between the Eastern and the Western parts of the world. And I think that is very likely to continue as well, which should also be beneficial for both monetary metals, so gold and silver, just because I think that they'll be used more in the diversification mix of trade investment as a safe haven because I think trust factor is probably, to me, one of the biggest things that's been eroding within the U.S. and external to the U.S. as well. One of the few things that can protect against that, which is completely independent as an asset, is gold and silver, given that they also have monetary properties.” Given gold's low correlation to other asset classes, maintaining exposure to it can be beneficial to any portfolio, even as a way to diversify, particularly in this given period when many investors are concentrating their exposure on the investment themes of AI and semiconductors. Furthermore, the versatility of silver as an industrial metal has elevated its demand in recent years. Silver has grown in importance as the world moves toward electrification due to its use in solar panels and electric vehicles. As reported by the Silver Institute, industrial demand for silver rose in 2023 due to increasing investment in photovoltaics (PV), power grids and 5G networks, as well as increased use of automotive electronics and supporting infrastructure. Looking Ahead To 2025 The themes of macroeconomic uncertainty and electrification are likely to continue to be present in 2025. President-elect Trump's stated economic policies and the continuation of the trade war with China are examples of the intersection of both investment themes. A salient example of this is the recent report by Reuters that the incoming Trump Administration transition team is recommending sweeping changes to cut off support for electric vehicles and charging stations and to strengthen measures blocking cars, components and battery materials from China. In speaking to this potential outcome, Steve Schoffstall posited, "In actuality, assuming what he said in the past relates to electric vehicles, the Trump administration will likely look for a bottom-up approach regarding EV demand. So, let's get the government to pull back on the mandate side and let the market bear out how the EV train will move forward. With that, we expect to see plug-in hybrids play an increasingly important role as that's a great way to bridge consumers from an all-gasoline-powered car to an all-electric car. You get the plug-in hybrid approach that's very much supportive of critical materials because you'd still need a lot for that battery, a lot of copper, lithium, and nickel, in some cases. If you look at other aspects of the energy transition, another key piece is the drilling aspect related to natural gas, which supports our view.” The economic importance of real assets, particularly gold, silver, uranium and copper, seems to be increasing, given their essentialness to the technological advancement occurring in our modern economy. The World Gold Council also expects the advancement of AI to drive gold demand as manufacturers seek to enhance the performance and reliability of their AI-enabled devices. Though geopolitics is a determining factor among the market dynamics that influence the investment landscape for the stated real assets, as demand for them increases, investors exposed to investment solutions that reflect their value could potentially capitalize on the demand for these rare and economically important resources. Investing in Real Assets With Sprott For interested investors, Sprott offers investment solutions that provide pure-play exposure to a broad range of critical minerals and mining equities essential to electrification and power generation, including gold, silver, uranium and copper. For investors seeking exposure to gold, the Sprott Physical Gold Trust (NYSE Arca: PHYS) is a secure, convenient and exchange-traded investment alternative for investors who want to hold physical gold without the inconvenience that is typical of a direct investment in physical gold bullion The Sprott Gold Miners ETF (ARCA: SGDM) and Sprott Junior Gold Miners ETF (ARCA: SGDJ) provide exposure to companies involved in mining gold. The former reflects the performance of larger-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges, while the latter tracks the performance of small-capitalization gold companies whose stocks are listed on regulated exchanges. For investors interested in exposure to silver, the Sprott Physical Silver Trust (NYSE Arca: PSLV) is a closed-end trust that invests in unencumbered and fully allocated London Good Delivery silver bars. The fund currently holds 180,613,426 ounces of silver (as of December 18, 2024), which is held in custody by the Royal Canadian Mint, a Federal Crown Corporation of the Government of Canada. Sprott reports that there is no levered financial institution between the unitholders and the trust's physical bullion and no risk of financial loss in the event of bankruptcy or nationalization of the financial institution. Alternatively, for investors who want to have dual exposure to gold and silver in a single solution, the Sprott Physical Gold and Silver Trust (NYSE Arca: CEF) is a closed-end trust that invests in unencumbered and fully allocated physical gold and silver bullion in London Good Delivery bar form. For investors who desire exposure to uranium, the Sprott Uranium Miners ETF (NYSE Arca: URNM) provides investors with exposure to companies that devote at least 50% of their assets to the uranium mining industry – which may include mining, exploration, development and production of uranium, or holding physical uranium, owning uranium royalties or engaging in other, non-mining activities that support the uranium mining industry – by tracking the North Shore Global Uranium Mining Index. The Index is designed to track the performance of companies that devote at least 50% of their assets to the uranium mining industry, which may include mining, exploration, development and production of uranium, or holding physical uranium, owning uranium royalties or engaging in other non-mining activities that support the uranium mining industry. Similar in objective but different in scope, the Sprott Junior Uranium Miners ETF (Nasdaq: URNJ) is designed to track the performance of mid-, small- and micro-cap companies in uranium-mining-related businesses. Finally, for investors seeking exposure to copper, both the Sprott Copper Miners ETF (Nasdaq: COPP) and Sprott Junior Copper Miners ETF (Nasdaq: COPJ) provide pure-play exposure to a broad range of copper miners potentially positioned to capitalize on the increased demand for copper and its usage in electrification. Though both funds share a thematic focus on capitalizing on the growing demand for copper and its integral role in transitioning to a carbon-neutral society, COPP provides comprehensive exposure to mining companies across the large, mid- and small-capitalization spectrum. In contrast, COPJ predominately focuses on small copper miners, with the potential for significant revenue and asset growth. Featured photo by Dylan Leagh on Unsplash. Benzinga is a leading financial media and data provider, known for delivering accurate, timely, and actionable financial information to empower investors and traders. This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice. Relative to other sectors, precious metals and natural resources investments have higher headline risk and are more sensitive to changes in economic data, political or regulatory events, and underlying commodity price fluctuations. Risks related to extraction, storage, and liquidity should also be considered. Gold and precious metals are referred to with terms of art like store of value, safe haven and safe asset. These terms should not be construed to guarantee any form of investment safety. While âsafeâ assets like gold, Treasuries, money market funds and cash generally do not carry a high risk of loss relative to other asset classes, any asset may lose value, which may involve the complete loss of invested principal. Past performance is no guarantee of future results. You cannot invest directly in an index. Investments, commentary, and opinions are unique and may not be reflective of any other Sprott entity or affiliate. Forward-looking language should not be construed as predictive. While third-party sources are believed to be reliable, Sprott makes no guarantee as to their accuracy or timeliness. This information does not constitute an offer or solicitation and may not be relied upon or considered to be the rendering of tax, legal, accounting, or professional advice. Product-Specific Disclosures The Sprott Funds Trust is made up of the following ETFs (âFundsâ): Sprott Gold Miners ETF (SGDM), Sprott Junior Gold Miners ETF (SGDJ), Sprott Critical Materials ETF (SETM), Sprott Uranium Miners ETF (URNM), Sprott Junior Uranium Miners ETF (URNJ), Sprott Copper Miners ETF (COPP), Sprott Junior Copper Miners ETF (COPJ), Sprott Lithium Miners ETF (LITP) and Sprott Nickel Miners ETF (NIKL). Before investing, you should consider each Fundâs investment objectives, risks, charges and expenses. Each Fundâs prospectus contains this and other information about the Fund and should be read carefully before investing. A prospectus can be obtained by calling 888.622.1813 or by clicking these links: Sprott Gold Miners ETF Prospectus, Sprott Junior Gold Miners ETF Prospectus, Sprott Critical Materials ETF Prospectus, Sprott Uranium Miners ETF Prospectus, Sprott Junior Uranium Miners ETF Prospectus, Sprott Copper Miners ETF Prospectus, Sprott Junior Copper Miners ETF Prospectus, Sprott Lithium Miners ETF Prospectus, and Sprott Nickel Miners ETF Prospectus. The Funds are not suitable for all investors. There are risks involved with investing in ETFs, including the loss of money. The Funds are non-diversified and can invest a greater portion of assets in securities of individual issuers than a diversified fund. As a result, changes in the market value of a single investment could cause greater fluctuations in share price than would occur in a diversified fund. Exchange Traded Funds (ETFs) are bought and sold through exchange trading at market price (not NAV) and are not individually redeemed from the Fund. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns. "Authorized participants" may trade directly with the Fund, typically in blocks of 10,000 shares. Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of experiencing investment losses. ETFs are considered to have continuous liquidity because they allow for an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fundâs performance. Sprott Asset Management USA, Inc. is the Investment Adviser to the Sprott ETFs. ALPS Distributors, Inc. is the Distributor for the Sprott ETFs and is a registered broker-dealer and FINRA Member. Sprott Physical Gold Trust, Sprott Physical Silver Trust, and the Sprott Physical Gold and Silver Trust (the âTrustsâ) are closed-end funds established under the laws of the Province of Ontario in Canada. The Trusts are available to U.S. investors by way of a listing on the NYSE Arca pursuant to the U.S. Securities Exchange Act of 1934. The Trusts are not registered as investment companies under the U.S. Investment Company Act of 1940. The Trusts are generally exposed to the multiple risks that have been identified and described in the prospectuses. Please refer to each prospectus for a description of these risks. Relative to other sectors, precious metals and natural resources investments have higher headline risk and are more sensitive to changes in economic data, political or regulatory events, and underlying commodity price fluctuations. Risks related to extraction, storage and liquidity should also be considered. Defined Terms Inflation and currency devaluation "protection" implies a potential investment hedge against certain market environments and in no way indicates protection against risk of loss, including total loss of invested principal. The term "pure play " relates directly to the total universe of investable, publicly listed securities in the investment strategy. The spot market is a public financial market where commodities are traded for immediate delivery where the term market involves contracts that continue for a longer duration. Contact Details Benzinga +1 877-440-9464 info@benzinga.com Company Website http://www.benzinga.com
January 13, 2025 08:25 AM Eastern Standard Time
Image
News Release
