With weakening labor data, the ongoing U.S. shutdown, and a softening dollar, gold demand seems poised to not slow down any time soon.
There are plenty of ways for advisors and investors to capitalize on the ongoing gold craze. Sure, they could take a more traditional approach and invest in gold futures, gold ETFs, or physical gold itself. However, investing in gold miners could offer a particularly potent use case as well.
As one might expect, gold miners are potentially positioned to benefit from the rising cost of gold. When the price of gold goes up, miners can potentially leverage this to ramp up revenue.
However, the price of gold has been on the upswing for the last few months now. As such, some advisors and investors wonder if it’s too late to capitalize on the gold mining opportunity.
“The lack of significant flows into gold mining ETFs suggests the trade isn’t overcrowded," noted Steven Schoffstall, director, ETF product management at Sprott Asset Management USA. “We haven’t seen substantial inflows over the past 18 months. Before last December, mining stocks were trading in strong consolidation patterns. This attracted deep-value contrarian investors, who aren’t mainstream and don’t represent the majority of investors. In our view, gold miners are returning to vogue as their balance sheets improve with higher gold prices. They’re operating much differently than they were in the past bull market.”
SGDM's Gold Miner Exposure
The Sprott Gold Miners ETF (SGDM ) can help advisors and investors gain focused access to the gold mining industry. To help do so, the fund is benchmarked to the Solactive Gold Miners Custom Factors Index. This index focuses on gaining exposure to larger gold miners with strong cash flow, revenue growth, and low debt to equity.
Focusing on gold miners with such strong fundamentals may help SGDM continue to capitalize on growing gold demand. These leading companies may be in pole position to drive portfolio returns as investors continue to flock to gold.
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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.
A bull market is one in prices are rising and investor sentiment is generally positive.
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.
