Sprott Inc. (NYSE: SII) is a global investment firm headquartered in Toronto, Canada, specializing in precious metals and real assets investing. Sprott offers a range of investment solutions, including physical bullion trusts, mining ETFs, equity-managed accounts, and debt and private equity strategies.

Sprott is well-known for its expertise in the precious metals sector, particularly in gold, silver, platinum, and palladium. The firm provides several investment vehicles that allow investors to gain exposure to physical bullion or shares in mining companies.

The firm offers a variety of investment products that cater to different investor needs, including mutual funds, ETFs (Exchange Traded Funds), and private equity funds focused on the natural resource sector. They also manage specialized investments like physical bullion trusts which are designed to hold physical gold and silver.

Beyond precious metals, Sprott also invests in other natural resources and real asset categories including energy, agriculture, and real estate, often focusing on resources that have a potential for high growth in response to economic and technological developments.

On 12 April 2024, John Ciampaglia, CEO of Sprott Asset Management, shared his optimistic perspective on gold during an interview on CNBC’s “Fast Money.”

Ciampaglia highlighted a significant trend in the gold market, where central banks globally have increased their gold purchases markedly over the past 18 months. He believes this movement is not just a mere diversification effort but part of a broader “de-dollarization” trend, with China at the forefront:

China is clearly leading the way there; they have a voracious appetite to add more gold. We think this is part of a dollarization trend that’s going on.

He said that besides China, other nations like Turkey, Singapore, and Poland have also been substantial buyers. He also mentioned that this robust demand from central banks underpins a fundamental support level for gold prices, suggesting a sustained upward pressure.

The conversation also touched on the performance disparity between physical gold and gold miners. Ciampaglia explained:

Gold miners provide a lot of operating leverage and optionality to a higher gold price, and historically, in bull markets, they have outperformed.

However, he pointed out that in recent years gold miners have lagged behind the price increases in physical gold. He attributed this lag to inflation impacting profitability and a lack of institutional and retail investor support for gold stocks. Recently, there has been a turnaround with gold stocks performing better, indicating renewed investor interest.

The interview also delved into the geographic disparities in gold investment. According to Ciampaglia, Eastern investors, particularly from China, have been pivotal in driving demand. In contrast, Western investors have apparently been more reticent during the current rally:

Western investors have largely ignored this rally, which we think, over time especially if we start to see some heightened geopolitical risks, we’re going to see a shift back to the safe haven.

Ciampaglia discussed the potential catalysts that might drive Western institutional investors back to gold. He noted that geopolitical tensions could play a significant role in this shift.

Discussing typical allocations, Ciampaglia mentioned that Western institutional investors currently have a significantly lower percentage of their portfolios in gold, well below historical peaks seen in past bull markets:

Right now, we think it’s somewhere in the sub 2% range in terms of their overall allocation… at the height of the last bull market, it was somewhere close to 8%.

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