Safe Havens: The Enduring Stability of Precious Metals in Turbulent Times

So, with all the market uncertainty we've been seeing around tariffs and geopolitical risks, um, in your role as director of key accounts, I'm sure you've been busy talking to clients and allocators.

Can you tell us a little bit about what those conversations have been going like?

Sure.

SPAT serves both individual investors as well as a institutional client base and I think what those two groups have in common is that there's a lack of certainty in the capital markets right now.

Broad allocators to US markets were richly rewarded in the past two years.

In 2023 and 2024, the S&P 500 returned over 20% in both years.

Um, but since Liberation Day, April 2nd of this year, the playbooks for 2025 have been scrambled a little bit.

So with the uncertainty of tariffs, heightened trade wars, inflation, and higher for longer rates, uh, investors of all kinds are looking for some stability and and looking for their next move.

Yeah, that makes sense.

I think gold is one of those um commodities that we typically don't talk about in with critical materials, but when you start thinking of silver and uh you know how that's both a precious metal and industrial metal, um we're seeing a lot of interest in the precious metal space, particularly for its ability to be able to kind of smooth out some of that volatility and in many cases actually outperform in those uh down periods.

Year to date, we see gold is actually up about 14%. through yesterday.

Well, the S&P is down about 15%.

Uh on the gold equity side, we actually see those up about 23% this year.

And silver, you know, somewhat less muted because it does have that industrial component with the precious metals component, uh also up about 3% this year.

So, I I think those two metals have been performing well as a hedge.

Um I think a lot of times people think of a hedge, it has to be, you know, the S&P is down, the hedge has to be up.

Um that happens to be the case in this moment. uh but we do see periods of time uh where you know they might move directly in the same you know what are you hearing from investors around uh gold and in particular silver as it relates to the volatility that you're seeing one of the enduring qualities of gold is that it's actually an uncorrelated asset investors of all kinds are looking for low correlation so that in times of volatility like we're in right now they have smoother returns for their overall portfolio And gold has proven once again that it is an uncorrelated asset.

Silver which sometimes lives in gold's long shadow.

So silver has has two drivers of protection both as a monetary tool and also has significant demand demands from its industrial components.

So we also see it as a vital component of a precious metals allocation.

Yeah, I think that's a great point.

When you start looking at gold and silver, there are some similarities. they have a a low to moderate correlation to the S&P 500 and you know broader based uh indexes whether it's bonds or negative correlation to the US dollar.

Um you know when you look at at gold specifically in the gold equity side typically what you see on a relative basis they have higher dividend yields and more profitable than what you see from the S&P 500.

Uh silver is a little different in that case because it does have the precious metals attributes and then it also has the industrial component where um not only do we see uh the ability to potentially ride out some of that volatility from the precious metals side.

But on the industrial side uh we see that growth characteristic that we see common in other critical materials.

Um when you start looking at the production of silver, it's estimated uh that we've been in deficit now for six straight years um for you know not pulling enough silver out of the ground.

Um you know it's very similar to what we see with other commodities.

Uranium is a great example of that.

Just kind of interested in your thoughts what you're hearing from advisers and investors about uranium.

Uh it has been a little soft as of of late, but just wondering what those conversations have looked like for you.

As a firm, SPRAT has been extremely bullish on uranium since 2018.

And as of today, we're the largest manager of physically backed and also equity related uranium mining strategy.

So it's something we're very proud of.

What you're seeing as the middle class comes online in a significant way buying more goods for their home and more uh more consumptive class the demand for electricity not only in this country but around the world is increasing.

The demand for AI is increasing.

The demand for fiber optic cable and internetbased services are needed.

And so as the demand for electricity goes up, so does a clean, reliable resource to drive that demand.

Yeah.

And I think when you start looking at the broader critical material space, it I think you've hit the nail on the head.

It really is about electricity growth.

Um going out through 2050, you know, estimates are up around 160% or so on uh expected electricity growth.

All of that is very very much in our view very supportive of the longer term notion for uranium and invest in uranium.

Uh we expect to see as we continue through this decade that the market flips into a deficit deficit and stays there for a prolonged period of time.

Estimates have that deficit being a cumulative 1 billion pounds or more out through 2040.

Um I I think the important thing uh and I'm sure you've come across this as through your conversations is trying to get investors to remain focused on the the longer term allocation and why they entered trades in the first place and and what the the long-term expected benefits are.

Could you talk a little bit about how um you know you're hearing advisers think about maybe allocations that they put on it six months or a year ago and and maybe they're not performing uh in line with what the fundamentals are showing.

Sure.

There's a lot of noise in the market right now about volatility and concerns about our our direction.

But as it relates to gold, there's a significant story that I don't think gets enough attention and that's around central bank buying.

Over the last decade, central banks have been net sellers of gold and they've reversed that trend.

They're now buyers.

So, if you're from a country that is looking to decouple their currency from something like the US dollar, it only makes sense that you'd be adding gold to your reserves.

Historically, gold attracts inflows when the faith in traditional asset classes has been shaken.

And in a period like we are in right now, we're seeing a lot of that both in exchange traded vehicles as well as physically backed assets as well.

Yeah.

And gold's one of those things that's a little bit different than what we see with other commodities.

It does have that that reserve currency status, right?

And and when you look at the geopolitical uncertainty that we we're seeing at the moment.

Um you know, countries are using as a way to kind of move away from the dollar.

They can move away from US bonds. uh they can they can get physical possession of that gold, you know, patriot repatriate that back uh to their home country and not have to worry about things like sanctions or asset asset seizures.

Uh in those cases, it's a little bit different than what we see with some of the other commodities.

If you start thinking about uranium, that's not um you know something where central banks are out there or um governments in mass are actually stockpiling uranium.

We we do see China is kind of preparing for the future in that regard, but but by and large most countries aren't doing that.

Um what we see from a longer term perspective as it relates to uranium is you have an asset class like if you look at more recently where it's not um being restricted by tariffs.

There's no tariffs currently on uranium or or precious metals for that matter.

Um but it also not only gives you um you know a tariffree uh commodity in certain uh extents but once you start looking through and and look at the attributes it's it's really something that's uncorrelated to the market uh the demands inelastic to the overall economy because these utilities that need to produce electricity and if they're in the business of producing it from nuclear energy have to buy uranium.

So we see even in the shorter term as we've seen some some softness in areas of the market um fundamentally the uranium market is one that is is uh you know in our view still set up and structured well uh going into the medium to longer term to benefit from or shift not only to as it relates to the energy transition but also technological advances that you discussed along those same lines.

Uh just switching gears to to silver for a moment.

Um similar thing there.

We don't have the central bank buying.

Can you talk a little bit about how investors are thinking about silver and its role in a portfolio in these times?

Sure.

One of the obvious things to point out about silver is that as an entry point for a new precious metals investor.

It's priced quite a bit lower than gold.

So it seems like a natural place to start.

Um as a firm, we also focus on physical first.

So if it's a new allocation for you, start with maybe a coin or a physically backed asset class.

And that has to do with the volatility profile that you'd expect in the equities.

So you're going to get a higher torque to the physical price if you go to a silver mining equity.

U this year year to date, we've seen tremendous flows into both gold and silver, both physical and the equity space.

Yeah.

I think the interesting component of silver is that industrial use case.

It's, you know, got over 10,000 uses.

It's it's highly conductive. we see it being used in solar panels which are expected to see significant growth not only through the rest of this decade but into the foreseeable future.

So from that standpoint um you know the dual quality dual quality as a precious metal and also an industrial metal I think is um something that's resonating with investors. uh we've re recently launched our uh silver miners a physical silver ETF Tiger SLVR as you're aware and that's um you know been investors have really taken to that portfolio I believe one because not only is it pure play strategy so we're focusing on those companies that are you know deriving a majority of the revenue from silver or physical silver uh but also when you start looking under the hood it's it's vastly different than what we see from other silver mining ETFs in particular it gives about twice the silver exposure relative to competing ETF strategies Can I ask a question about that about some of the differentiators that that this fund offers versus some of the existing products particularly in the ETF vehicle?

Yeah.

So the the one the first and foremost it's a the pure play allocation.

So, it is that um when you think about silver and the way it's mined, it's really different than what you might see with gold or uranium, which are great examples of it's easy for a minor to be a uranium miner or gold miner.

Uh silver's largely mined as a byproduct.

So, if you look at the 10 largest uh silver producing companies, none of them are primary silver miners.

So what that means is that they have, you know, things like iron ore or nickel or coal or whatever they're mining that could be drivers of their economic health or their decisions from an investment standpoint.

When you focus in on the pure play miners, that allows you to get more of that uh direct silver exposure uh through the miners and also through the physical component in this case.

Uh but it also cuts down on the amount of unintended exposure.

And I think when we're in times where we see turbulent markets and geopolitics playing out pretty much on a daily basis, I think what you're left with is uh those strategies that give more of that targeted exposure.

Uh I would expect those to rise to the top and investor interest as they're looking to get away from, you know, assets that might be moving toward toward a correlation of one.

Uh that low to moderate correlation, I think, is is something that investors are really latching on to.

As we mentioned tariffs, just flipping to copper for a moment.

Um I I know we have uh you know a physical copper strategy that we have, but we also have two copper mining ETFs.

Um copper was uh in the news for the better part of the first 3 months of this year.

Uh given the influx of metal we've been sent uh to the US, taking advantage of higher prices in the US relative to other parts in the globe.

I'm just interested to hear kind of feedback from what you're hearing from clients, how they're thinking about copper and what role that might play in portfolios.

Sure.

The advisory community is always interested in our view on the EV revolution.

How is electricity produced?

How is it transmitted?

How is it stored?

None of that can happen without copper.

So copper perhaps is the most critical material in this entire story.

Whether we're creating new clean energy or using traditional fossil fuel energy production, none of that happens, any of the energy consumption without copper.

Yeah.

One of the ways I think about copper is it's really the glue that holds pretty much all of society together, right?

It's got so many uses.

It's like a Swiss Army knife if we're going to keep throwing out analogies here.

Copper's pulled back a little bit with some of the volatility we've seen. uh typically what we see out of copper is you know it traditionally has been a gauge of global economic health and in the last you know 5 years or so uh we've really seen a shift uh because the spending that we do see coming from the energy transition uh particularly out of China and Europe and to a lesser extent North America uh is really supportive of kind of a a base level of copper production and consumption uh just last year two trillion dollars almost 2.1 trillion actually was invested in uh the energy transition globally and um you know it's put somewhat of a a demand floor I think on uh on copper and is helpful in these volatile times.

Um we do see with current events and you know tariffs and and potential trade wars uh some changes happening shorter term in the market.

Uh just reading last week how China has taken the the recent dip in copper prices as an opportunity to go out and start buying the physical metal. um that pricing dislocation that we saw for the first 3 months is has uh somewhat normalized though there there's still some opportunity there.

One of the things that we're seeing is directly being involved basically uh from the tariffs and liberation day is that we're starting to see production um move to the United States uh that you know Antifagasta which is a large copper miner um recently just within the last two days came out and said you know they're looking for the administration's help to speed along a project in Minnesota that will mine both copper and nickel.

Uh we see other firms Riointo in Arizona trying to get a copper mine up and running.

So, I do think that's very telling from a um an investor standpoint.

When you do have threats of trade wars, potential for global economy softening, these copper miners that typically would be very sensitive to global economic conditions are continuing to move forward with plans to invest and expand capacity and production.

I think a lot of what that bears out from is because we are seeing um you know this this base floor of demand and and really within the next you know one to three years or so uh we're expecting the copper market to flip into a deficit.

So I think not only are companies looking at the long-term view and uh institutions and hedge funds looking at the the longer term dynamics in copper um we're seeing investors start to take a look there.

Although these are all unique stories, is it fair to say that that's a common thread for the SPRAT solutions, we're resource capacity constrained in critical materials and we now have an administration that seems supportive of hard assets.

Yeah, I think think that's exactly the case.

And even if you were to take that a step further and look at precious metals, gold for example, production's not really um increased much uh in recent years.

I think we're actually down about 3% over the last five, five or 10 years.

Uh so production's leveled off.

We're seeing increased interest from central banks.

But on the critical material space, it, you know, something like copper that's been mined for pretty much all of human existence, uranium's been mined for, you know, well over 100 years or about 100 years.

Um, you're you're seeing uh a shift in the way that these resources are being used and investors both institutional and at at the company level are realizing that we have to increase production.

Um, the difficulty with that is it takes time.

It's not something that we can make a large new discovery.

Uh we can't just and and if we do have a discovery, we can't just flip a switch and turn production on.

Um so we're really seeing investors really kind of lock onto that that mid to longer term.

I think um one of the things that is a benefit uh that we have at at Sprat is our investors tend to be very high conviction.

So while we see other investors might move money into or out of funds, our investors tend to have a much longer buy and hold type uh approach to their investing. they understand the story and the market dynamics and the opportunity there.

So, uh, from that standpoint, I I think, um, you know, our investor base understands the long-term opportunity.

I guess just one last question on the uranium space. um you know wi with prices that have come down recently uh over the last 8 to 12 months or so uh how should investors be thinking about potentially entering a uranium trade or if they already are invested in uranium how should they be thinking about it in their portfolios it's a good question Steve two of the largest uranium producers out there have given guidance this is Kamico and also Kazataprom they've provided guidance that going forward production will not have a a big surplus Now, concurrently, demand is increasing.

So, it doesn't take a deep amount of analysis to understand that with lower supply and higher demand, we're very positive on the price.

And investors should also understand that there's a difference between what's going on in the spot market and the term market.

Meaning, utilities are buying what they're using right now.

They've purchased years in the past, whereas the spot market is more of a current view on what's going on.

So, it's worth looking at those dynamics as well.

Yeah.

And I think a lot of investors are looking at the softening price over the last 12 months or so and they're using this as an opportunity to either add to a position that they've already had.

Uh and in many cases they feel like they missed that first leg up in what we believe to be a sustained bull market.

Uh and we see investors now using that as a buying opportunity uh as they're thinking of adding uranium to a portfolio.

Uh so it's a really interesting time for sure.

I think as we look at geopolitics and domestic politics and and potential trade wars.

Um, one of the things I've always appreciated about commodity investing, uh, is for me it's relatively black and white.

You have a supply and demand.

There's other aspects that go into that, but I think from an investment standpoint, um, once you start pulling back the covers a little bit and looking at the underlying markets and and, uh, kind of what's going on from a supply and demand perspective, makes a lot of intuitive sense for me.

One of the questions that we get from advisers often is, how much should I buy? in and what should I be buying?

And it's just worth noting that within the gold perspective, so start with physical and as your appetite goes up for increased returns, but also volatility, it may make sense to go into the equity based exposure as well.

Yeah.

And on the critical material space, we see a lot of investors that actually add that to their growth bucket or their energy bucket.

Um because, you know, it is very much thematic like or or um you know, an emerging industry.

Even though some of these metals have been mined for a long time, uh we do see some pockets of volatility that you know, if investors can stay focused on the the mid to long term, um you know, we think that the supply and demand uh picture really plays out uh quite nicely.

I know you and your team do a lot of work on on new product construction.

Is there a is there a solution that covers some of these strategies almost like an S&P 500 of of metals and precious materials that investors should consider?

Yeah, we have the SPRA critical materials ETF, ticker SETM.

Uh gives you exposure to up to nine different critical materials including silver, copper, and uranium.

Um that that's different than what you might see from other broaderbased critical material ETF strategies is that we do have a focus uh part of the portfolio on uranium.

Uh currently it's about 20 or 25% of the fund.

Um the other differentiator versus other broaderbased strategies is we do take that pure play approach and we apply that to all the underlying holdings.

So, we're looking for those companies that are, you know, if you say you're a silver miner, uh we're going to go through and and the index methodology is going to go through and flush out, you know, uh, you know, who's actually a silver miner versus maybe a majority copper miner, um, and take that into account, uh, through the selection process.

So in that regard, we've been very fortunate to partner with NASDAQ who's uh runs the indexes and we have a a great index relationship with them and um you know very uh you know really brings our background in the precious metals and critical material space with the indexing capabilities that you know NASDAQ's really built a reputation around