While gold has proved to be a hot commodity for the last few months, some naysayers have looked at March’s short-term volatility as a reason to stay away from the precious metal for now. However, there are a few underlying factors that suggest it may be far too early to back off from gold’s lustrous potential.
Key Takeaways:
- Gold may have encountered some rocky performance in March, but the long-term fundamentals backing the metal remain sound.
- In particular, exposure to gold miners may pay off down the line due to limited discoveries and increases in supply.
- Sprott offers multiple ETFs for engaging in the gold mining industry, be it the Sprott Gold Miners ETF (SGDM) or the Sprott Junior Gold Miners ETF (SGDJ).
Shree Kargutkar, managing partner and senior portfolio manager at Sprott Asset Management, recently appeared on BNN Bloomberg to discuss the opportunities presented with gold’s long-term outlook. He said that while the Iran war has caused some near-term volatility for gold, those who look past short-term troubles could be rewarded down the line.
See more: Why Geopolitical Disruptions May Work in Gold’s Favor
Among other favorable long-term factors, Kargutkar pointed out that thus far, despite the price of gold hitting the high $4k mark, the market has yet to see a meaningful response from the gold mining industry. This is not a coincidence; as Kargutkar noted, there have been very few major gold mines brought online recently. Furthermore, gold mines typically have a shorter life expectancy than other metal mines, such as copper.
“Gold is rare,” Kargutkar added. “The grades have been declining for many decades now. The amount of work and expenditures required to mine every ounce is not going down. Obviously, finding new gold is quite difficult. There’s a reason why gold is a rare metal.”
Given these factors, staying engaged with gold miners could prove rewarding. The strategy not only provides gold exposure, but also long-term return potential as prices rise and the supply-demand imbalance continues to grow.
Tackle Gold Miner Exposure Through Sprott’s ETF Lineup
Sprott offers a few different ways of gaining gold access through the ETF wrapper. One way is through the Sprott Gold Miners ETF (SGDM), which focuses on larger companies listed in Canada and the United States.
See more: Why Gold’s Liquidity Crunch Could Be a Buying Opportunity
Alternatively, one could look also look at the Sprott Junior Gold Miners ETF (SGDJ). This fund focuses on smaller gold miners, which could be particularly well-positioned if demand dynamics for gold continue to move the way they have.
Regardless, March’s underperformance may very well just end up being one small blip in gold’s broader tratejectory. For investors who still believe in the metal’s fundamentals, holding on to gold or gold miners for the long run could very well be a strategy that pays off down the line.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
Disclosures
Bullish is the expectation that prices will continue to rise.
An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below.
Past performance is no guarantee of future results. One cannot invest directly in an index.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow 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 Fund’s performance.
Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi.
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URN, COPP, COPJ, NIKL, SGDM, SGDJ, SLVR, GBUG, METL
Physical Bullion Funds:PHYS, PSLV, CEF, and SPPP.
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 “safe” 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.
