January 8, 2024 | (3 mins 9 secs)
At the 2023 Schwab Impact conference, Sergio Lujan joined Keith Black of RIA Channel to discuss Sprott’s specialization in precious metals, the current state of the gold market, along with our outlook.
Keith Black: Hello, I'm Keith Black with RIA Channel, joined today by Sergio Lujan, Senior Investment Consultant for Sprott. Welcome, Sergio.
Sergio Lujan: Thank you.
Keith Black: For those who are new to Sprott, what should they know?
Sergio Lujan: Sprott is a publicly traded company with a track record of over four decades. Predominantly, we’ve provided investment solutions within precious metals. Most recently, we've added energy transition. We manage over 25 billion in assets and have clients globally.
Keith Black: Tell us a bit about the gold market. You said Sprott is a precious metal specialist. What's going on in the current market, and what's Sprott's outlook?
Sergio Lujan: Gold is currently hovering around the key psychological level of $2,000 an ounce. It's up over 8% year to date. This year, we've seen that gold reached new record highs in various global currencies. We do think that it could happen in US dollar terms as well.
What's been really interesting is that even in this rising rate and strong US dollar environment, gold has done exceptionally well on a relative basis. So, since the market peaked in '21 and rates bottomed, gold has outperformed both gold stocks and bonds by over double digits each. This is coming when the correlation between stocks and bonds has been stronger than usual. Gold has been a true diversifier in a traditional 60/40 portfolio, and we don't expect that to change anytime soon.
Keith Black: Is that gold's key attraction as a diversifier to stocks and bonds and maybe a hedge against inflation?
Sergio Lujan: Certainly. When we talk to advisors about how to use gold in a portfolio, we tend to talk about it in two different ways. One, as a risk-off trade via physical gold. Gold historically has been a store of value, a hedge against inflation, and a non-correlated asset. An 5% to 10% allocation has historically improved risk-adjusted returns over a full market cycle.
On the other side, we talk about gold as an opportunistic trade in a risk-on environment. This is typically done through the miners themselves. Miners have a leverage trade on the price of gold, typically 2x to 3x, whatever the price of gold does. In this current environment where the short-term to medium-term outlook is bullish for the price of gold, miners can provide that extra leverage.
When we look at them from a valuation perspective, they are at historic lows compared to gold itself and the stock markets in general. I believe they're an opportunistic trade and a leverage trade to the price of gold.
Keith Black: Thanks for sharing with us, Sergio.
Sergio Lujan: Thank you.
Past performance is no guarantee of future results. You cannot invest directly in an index. Investments, commentary and statements are that of the author 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 author 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 a 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.
The information contained herein does not constitute an offer or solicitation to anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not residents of Canada or the United States should contact their financial advisor to determine whether securities of the Funds may be lawfully sold in their jurisdiction.
The information provided is general in nature and is provided with the understanding that it may not be relied upon as, or considered to be, the rendering of tax, legal, accounting or professional advice. Readers should consult with their own accountants and/or lawyers for advice on their specific circumstances before taking any action.
© 2024 Sprott Inc. All rights reserved.
You are now leaving sprottus.com and entering a linked website.Continue
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
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