If investors are mining for opportunities, the Sprott Gold Miners ETF (SGDM) should be on their list. The fund’s focus is primarily the largest names in the gold mining industry, following the current potential upside in large-cap names.
For a full list of SGDM’s current holdings, please click here. Fund holdings are subject to change.
SGDM's Potential Gains
Gold is up more than 28% so far this year. Further upside may benefit miners as demand for the precious metal continues. As UBS noted earlier this year, miners have the potential to benefit from “operational upside,” leveraging the price gains of the precious metal. Should gold’s current trajectory sustain, it’s still an opportune time to get exposure to miners.
Demand Drivers
Despite the latent move gold miners can make relative to the spot price of gold, the same demand drivers exist. Thus, that will determine if miners can sustain their current upside.
Central banks’ thirst for gold continues, and it may not be quenched anytime soon. Increasing de-dollarization is seeing central banks stock up their gold reserves as opposed to currency reserves (namely the greenback). That should continue to help sustain gold prices in the future.
The fundamental drivers of increasing gold exposure also remain. Geopolitical tensions and tariff risks swirling in the markets could continue to induce a sense of uncertainty in the markets. That said, gold will continue to remain an option as a safe haven asset to potentially counter volatility that could arise from these factors. This is where gold’s defensive stance in a portfolio comes into play.
The anticipation of easing monetary policy may apply downward pressure on the dollar. In turn, this could help boost the case for gold exposure, and in turn, drive gold mining demand.
“The precious metals rally reflects not only a flight to traditional safe havens, but also growing concerns about persistent inflation, currency debasement and central banks approaching the limits of policy normalization amid burgeoning levels of debt both domestically and globally,” said Shree Kargutkar, managing partner, Sprott Inc. & senior portfolio manager, Sprott Asset Management. “With real interest rates stabilizing and fiat currency credibility under pressure, we believe investor appetite for hard assets has further room to grow.”
Combining Growth Potential
An additional option to consider is the Sprott Junior Gold Miners ETF (SGDJ). While today’s market has been dominated by large-cap growth names, just like gold miners relative to gold, small-cap equities can also make a later move to the upside. With that, investors can combine the growth potential inherent in small-cap companies and combine that with gold mining exposure with SGDJ.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Content Hub.
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.
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.
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): GBUG, SLVR, SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
