A Closer Look at Gold and Silver, Metals and Miners

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March 26, 2025 | (65 mins 54 secs)

For the latest standardized performance, please visit the individual website pages: GBUG and SLVR. Past performance is no guarantee of future results.

Webcast Overview

Gold and silver provide a powerful blend of potential wealth preservation, inflation mitigation and portfolio diversification. During times of geopolitical uncertainty and market volatility, investors have turned to gold and silver as safe-haven assets. Unlike stocks or bonds, gold and silver are tangible, resilient to corporate failures and sovereign defaults, and may offer security and liquidity in uncertain economic climates.

This exclusive webcast covers:

• Insights into the key technical drivers influencing gold, silver and precious metals mining equities.
• The ongoing bull market has seen gold bullion surge and gold mining stocks.
• How gold mining equities have historically outperformed gold prices, offering attractive opportunities for investors.
• How silver’s unique role as both a precious and industrial metal are fueling its rise.
• Why silver is underpriced relative to gold, and what this means for potential silver price gains.
• Options for investors looking to enter the space.

Webcast Transcript

Gil Marder, RIA Database: I'm pleased to introduce our first speaker today, Edward C. Coyne, Senior Managing Partner of Global Sales at Sprott. I will now turn over the webcast to Edward to get us started. Welcome, Edward, the floor is yours.

Ed Coyne: Slides 2-5, Introduction

Edward Coyne, Sprott: Today, we will talk about gold and silver. And I've asked John to start off talking about gold. As many of you know, gold has broken out to all-time highs of over $3,000 an ounce. We think that could continue as more Western investors or U.S. and North American investors start to notice. With that, I'd like to turn it to John Hathaway to talk about gold and gold mining stocks. John.

John Hathaway: Slides 6-18, Gold and Gold Mining Equities

John Hathaway, Sprott: Thanks, Edward. We are in a new environment for gold and precious metals. And as Edward noted, gold has broken out above $3,000. It has been a top-performing asset for many, many years. And now we have some help from the Administration. As you can see here, Scott Bessent, the Treasury Secretary, has held gold in his own account and that of his clients, and he regards gold as his top investment position.

Year to date, gold is up almost 15%. Last year was up 27%. I would say that these numbers indicate that the slope of gold's advance has ramped up from what it was just a few years ago, and there are many reasons for that. We know that, and as Ed already mentioned, there is a lot of buying from central banks. This has all happened without participation from Western investors, and by that, I mean North America and Europe. The evidence of that can be seen in the gold-backed ETFs, which lost assets last year and over the last five years.

If, for whatever reason, Western investors decide they want to participate here, and add to the allocation among financial advisors (FAs), and the latest number I have is 1%, that's the lowest in five years. Just changing that to 2% would create a tremendous inflow of capital into the gold space, and I think it would take gold several thousand dollars higher.

We love to show this chart. And I think a lot of people would be surprised. Gold has outperformed equities and bonds and obviously the US dollar, which is the bottom on the green line. Obviously, there have been periods where gold has gone dormant and we're talking over 25 years, but still, this is a very impressive chart, and obviously smart investors who had the ability to trade selectively may have outperformed gold. But I think for the average investor, this says that not having gold in a portfolio has diminished returns.

This is just a depiction of Central Bank Buying, and you can see from this that, it remains at a very high level, it's been there since 2022. One of the things that has activated central bank buying is the weaponization of the U.S. dollar in the aftermath of the Russian invasion of Ukraine. And the investment in gold by central banks is really at the expense of U.S. Treasuries, that has potential implications at a time when the issuance of US treasuries is going up dramatically because of ongoing deficits.

And the fact that central banks are allocating more to gold and less to U.S. Treasuries has to make you wonder about whether we'll soon see a resumption of yield curve control by the Central Bank, the Fed, to basically orchestrate the market for Treasuries and keep interest rates down, which is what they were doing throughout the previous decade from 2011 to 2020. We've gotten a little bit away from that, and interest rates have gone up. The Fed has obviously kept rates higher.

But if the issuance of Treasuries continues at this record pace, I think this will lead to renewed yield curve control, which could add to another leg upwards for gold as Western investors seek its safe-haven status.

To me, this is one of the most important charts of my part of the presentation, and that is that the growth of financial assets and government debt, far outstrip the increased supply of gold, and we're talking about over a 40-year interval here. The supply of gold increases very, very slowly, just slightly less than 2% a year. Whereas financial assets and government debt have increased by nearly 9%. And if you look at a 40-plus year stretch, that means there's a tremendous amount of assets that are held in the form of dollars that could, at any given moment and for several different reasons, decide to migrate into gold. The point of this is that the amount of gold available to absorb flows from financial assets is extremely small.

And it's understandable that investors could say, "Well, gold has had a good run. Maybe it's too late." And I would say that gold is in a different regime today, in a different world, a new paradigm, however, you want to put it, and once investors in our part of the world decide that they may want to have a bigger allocation to gold, there just isn't a lot of gold to absorb those flows, and that's why to me, the price potential here has to be measured in the thousands of dollars.

My friend, Doug Pollitt, made a great point, actually it was his dad, Murray, who said "When there is no liquidity, there's value, and where there's liquidity, there's no value." So, there's liquidity in financial assets, and there's no liquidity in gold. It is worth speculating for a second on why investors would want to own more gold.

And I would just list a couple of things. One would be that we could be entering a bear market, that's a matter of speculation. But if conventional positioning in equities turns out to be disappointing because of a bear market, that would be one reason that money could flow into gold.

Another reason would be disappointment in Bitcoin. Bitcoin and I'll go on a limb here and say that Bitcoin is a speculative asset and very correlated with Nasdaq. So, I think if Nasdaq has a comeuppance, and again, this is my point of view, it's a speculation, but if that were to take place and Bitcoin and crypto were to be in some way impaired, I think that would lead to flows into gold. 

Again, it's a matter of speculation, but the point of this chart is that there's a huge amount of wealth that is contained in dollar-denominated assets. And if for any reason, and I've just suggested a couple, there is disappointment in the performance of dollar-denominated financial assets, one of the most liquid off-ramps, would be precious metals, and that would be gold. So, again, I would say this is the most important slide in my part of the presentation.

Gold is hard to find, and these slides speak to that. It's getting increasingly difficult to find large new ore bodies that are going to move the needle in terms of annual gold production. Equally important, a lot of geology is in parts of the world that are not safe political jurisdictions. There have been headlines about the jailing of gold mining executives in Mali, which is an important gold-producing country in Africa.

And new gold mines require lots of capital, measured in the billions. So, if the rule of law is in question, which it is in many, many parts of the world where gold can be found, then capital will not flow in to build those mines. So, that's another constraint in addition to just the secular decline in the grade of gold that's being found. So, the supply and demand side for gold is very much in favor of restricted production, limited production, and limited supply. And again, going back to the previous chart, that one or 2% annual growth rate may decline even further.

One of the ways to get a connection to gold, and again, I would say, if one is positively inclined to the thesis of gold, gold mining stocks offer leverage to that point of view. Now, last year, gold mining stocks using the VanEck Gold Mining, ETFGDX, did not really perform that well. However, there's a huge disparity between them. I'm not sure we have this in this presentation, but the top quartile of gold mining stocks gained substantially more than the 10.6% rise of 2024. And you can see, again, from this bullet point that this year, gold mining stocks have started to come alive. And again, this does not tell the full story because the top-performing stocks have done better than the numbers in this first bullet point.

Notwithstanding the fact that gold stocks are starting to perk up, they're still undervalued, because they're trading at very low multiples of cash flow, and many of the companies are generating free cash flow yields of 10% or more. The surplus cash that they're generating is going to increase dividends and share buybacks. So, we're beginning to see a return of capital to investors after a period of investment in new mines. So, the industry is able to generate free cash flow, again making the stocks an attractive way to get that connection to gold.

Maria Smirnova: Slides 19-31, Silver and Silver Mining Equities

Maria Smirnova: Okay, well, thank you for that. Thank you for tuning in today. I will talk about how the firm uses silver. I wanted to talk about the attributes of silver contrasted to gold, look at the supply demand picture for silver, why we are bullish on the metal. And then, I will jump to silver equities and highlight why we are bullish on silver equities. So, you will hear a lot of similar things to what John discussed with gold, but with a bit of a twist.

So, let's start with the basics. When we look at silver as a physical metal or something that is consumed that comes out of the ground and consumed, it really has two sides to it. And the first one is similar to gold. It is a monetary asset. And I would like to say it's the oldest currency in the world. So, when we think about the monetary aspects of silver, we think about consumption and points, bars, ETFs, jewelry, those types of things, and that constitutes about 40% of the market.

And when we think about the other side, the industrial side, that's about 60% of the market, and that's a lot in electronics, medicine, photography and catalysts it's used in the industry a lot. And it's used in a lot of various and very different end products. And I like to say it's used in small amounts and never to be seen or recovered. So, silver does differ from gold in that sense. It has two heads. It's not just a monetary vehicle. 

So, the second point I wanted to make, and I will discuss this more, is silver has been in a structural line demand deficit. And like I said, I will expand on that quite a bit in presentation.

The third point I would make is that silver has higher volatility than gold. The reason for that is that the silver market is much smaller than the gold market. John also talked about how small the gold market is. So, imagine silver is even smaller. So, it's about a billion ounces of supply here. Multiply that by about $34 an ounce right now, so that's about $34 billion. It's not a big market, so it is easy to push the price around. Now, that has benefits and drawbacks. In Bull markets, silver outperforms gold by a big margin. Because, again, it's silver catching up to gold. If there's interest in the metal, it's like a smaller funnel, it takes fewer dollars to move, right?

So, let me go and expand on a bunch of these points. This is a chart like the one John showed with the prices of various markets going back to 2000. You can see silver, the gray line. It's been much more volatile. It hasn't performed quite as well as this S&P 500, going back to 2000, but it's kept up. And what I would say year to date, things are changing. And it's an interesting change because silver is up about 16% year to date, while the general market is down about 13%, and more importantly, the silver equities are up 30%. So, there's a divergence happening this year starting to happen where the metals are the mining equities are outperforming the general market and other investment type vehicles.

So again, to summarize our case for silver bullion specifically, silver's already doing okay. It's been up in the last couple of years. It is up again 15% this year as I mentioned. And it is benefiting from that duality of being a precious and industrial metal. And it is in deficit, and that's a very important point.

It is used in new technologies, so green technologies that is used in solar, 5G networks, Artificial Intelligence, and automotive electronics. Think about a car having various electric components. Silver is used in greater quantities, the more electrification there is. If you think about AI also, that's all electronics as well. So, we'll need more and more silver going forward as these trends gain acceptance and pick up steam. 

Again, I'll talk more about this, but solar represents a very large component of the industrial demand for silver. It's about 16% of total silver demand versus 6% 10 years ago. And silver has lagged gold, as I mentioned. So, it does have a bit of a catch up to do.

Okay. So, this slide shows the gold to silver ratio going back to 1990. And you can see that this is something we look at just to see whether silver is overpriced or underpriced relative to gold. And it has fluctuated between about 40 to 1 to 100 to 1. Recently, it's trading around 92 to 1. Now, that just tells me right away, we're trading at a point in time where silver is relatively cheaper than gold by a far margin. And in fact, we know also that silver is mined only seven to one. So, silver has a lot of explosive power behind it. And I will talk about why we think where the time where we can see that explosive power come to fruition very soon.

So, in the next slide, I will talk to the fact that silver is a monetary asset. And silver does do very well when we are in a period where the Fed and other central banks are lowering interest rates, in other words, when we're easing monetary cycle. You can see periods of 2000, 2007, 2008, most recently, last year, silver does well in those time periods. And we're starting to see silver perform well, but we're not there yet. I don't think. We are watching a certain level of price, very careful, and that is $35 an ounce, and we think that if silver does break out, it already tried by the way in October to break out, if it breaks out 35 bucks, you know, we're off to the races, hopefully.

Looking at the industrial use of silver closer. The industrial demand of silver has been growing robustly, I would say in the last four to five years. In 2003, it grew 11%, and last year it was expected to grow another 9%. That's very important because prior to 2000, you can see that silver industrial demand was pretty flat, it wasn't growing so fast. And so, something changed. Again, I think the adoption of silver in electric vehicles, solar panels and explosion of alternative energies, all those things are contributing to and, speeding up of adoption of silver and this growth in industrial demand.

Looking closer at the solar market. So, solar demand contributed to about 200 million ounces of silver in 2023. That's 20% of the supply that was taken up just by solar in silver. That's a very big number. And we do know, and projections are this is the chart I'm showing here, that solar installations are projected to grow quite quickly going forward as well. Global solar industry additions grew 76% in 2023. Their forecast is 35% in 2024. And longer term, you know, closer to 30%, those are the kinds of growth rates we are looking at for solar.

China, of course, plays a big role in that. China produces a lot of the solar panels, and China has a lot of solar installed, but of course, it exports a lot of panels. But China is taking up a lot of silver for the solar industry. And you know, I will mention that silver does trade at a premium in China on the Shanghai Exchange, it's between 6% and 10%.

On the other side of the silver supply demand situation, the supply side, supply has been stagnant. Just like in gold, we have had a dire lack of new discoveries of silver deposit, mining rates are coming down, which means the richness of the rates has declined over the last decade. We are getting more countries that have longer permitting timelines, which means that it takes longer to explore and permit and build the mine. You know, an average mine takes over 15 years to discover and build. And that's all translated to a very flat to declining production profile for silver. You can see in this chart, we lost about 3%, or about, I think 30, 50 million ounces since 2015. And projections are for a slight increase in silver supply, but not really a big pick up. So, all of this has led to these supply demand deficits. 

So, in the last six years, silver has been in a fundamental supply demand deficit. And you can see that, you know, 2021, 2022, 2023, so on average of about 150-million-ounce shortage per year, those are big numbers. So, rising demand, and stagnant supply has led to a deficit.

So, the next slide is my key point with silver. This has all led to a decline in above-ground inventories for stockpiles for silver. And in the past, the pushback on silver has been, "Oh, well, there's a lot of silver sitting around in inventory." Well, that is changing fast. In the last five years, we've lost about 400 million ounces of silver out of inventory. So, you can see this chart measures stockpiles sitting in London, Comex and Shanghai, and definitely you can see a clear drop.

And what's happened in the last couple of months with Trump talking about tariffs, we are seeing a movement of stocks from London to the Comex. So, London is blue, Comex is gray, people are shipping metal from London to New York, and already about to the tune of 150 million ounces in the last three months. So, that's just moving of supplies. But I think, and I believe that these continuous deficits will draw down more of these inventories to the point where we will not be able to ignore the deficits anymore, and the price will start reacting. These things don't happen overnight, of course, but I think that this will happen very soon.

So, to summarize the case for silver, I would say that, watch the supply demand function, watch the deficits, watch the inventories. Again, like I said, the price reaction has a bit of a delay. I will also stress that again, while we haven't seen a lot of interest in the West, just like with gold, we have not seen a lot of, too much investment demand. In fact, you know, ETFs have been declining up until recently, we're seeing now a reversal of that. We are seeing some nascent western interest, both from the macro trading funds and from ETFs. So, plus still, we're seeing strong demand out of India and China, so all of this will translate to potentially very exciting moves with silver price.

So, let's talk about silver mining equities now. This is a simple chart. The silver line measures the price to NAV. This chart is provided by BMO Bank here in Toronto. So, the silver line is the price to NAV and the blue line is the silver price. And you can see, even though the silver price is increasing, the price to NAV has not kept up with the silver price. That's a very interesting phenomenon to think that, you know, these miners would become more expensive with a higher silver price, but it's exactly the opposite. So, I think there's just, again, that kind of lack of buy-in by the investing public and into the fact that it's a real bull market and these equities have good fundamentals. 

And interestingly, we are starting to see more and more free cash flow out of these companies. We're seeing companies do capital return programs such as share buybacks and dividends. So, we're seeing a lot of positive signs that fundamentals of the companies are improving, making us optimistic about the prospects for the sector.

And I have one more slide, stress this point of the fundamentals improving in the sector. If you look back to 2020, the silver price was less than $15 an ounce, then it averaged about $20 an ounce. So, the profitability of the company was not very high. This chart shows exactly that, the profitability per ounce of the sector. So, it was about $4 profit per ounce, not very good, right? 

But if you kind of fast forward to this year, and we're sitting with $34 an ounce silver, and the costs are, let's say $20, your profit marginal, all of a sudden goes to $14, and that demonstrates the leverage, the financial leverage of the miners to the silver price. So, I think, the outlook for the silver equities is quite good. I'm optimistic that this sector is poised for a comeback of a sort and for a good rally. So, with that, I will turn it back to Edward. Thank you very much.

Edward Coyne: Thank you, Maria. And before we go into how to think about precious metals from both physical and mining allocation perspectives, I do want to go back to John Hathaway's comments on supply demand and physical versus miners. I know John you had some similar pages to Maria as it related to both physical versus the equities as well as opportunities there. So, if you don't mind picking back up where we left off also on Gold versus Gold Equities. I think that would be helpful for our listeners.

John Hathaway: Sure. Edward. So, slide number 14 suggests that there's mean reversion potential. And you don't have to get back to the ratios of 20 years ago. You could just go from the current 0.05 dislocation gap to twice that. 

But this shows we've been through a period of 15 years when gold stocks have been shunted aside because of all the excitement over the MAG 7 types of technology names, and I won't go harping on that. But it just seems to me that this sector, which has been neglected, in fact, the market cap of the entire sector is the same as Costco or Home Depot, so it's like $300 billion, which is in the spectrum of financial markets today is tiny. And so, it wouldn't take a lot of inflows into it to drive prices higher. So, valuations are compressed, fundamentals have turned very positive, and the stocks are very, very cheap. So, I think in my many decades of investing, that's a combination that's hard to beat. So, let's just wait and see whether that turns out to be the case.

So, I already talked about this, but substantial catchup potential to bullion, which has uncharacteristically outperformed the mining stocks. But you can see, if you go back to over a decade ago, the stocks, as the bull market in gold, that first leg of the Gold Bull market matured, the stocks began to outperform the metal by a substantial amount. So, we're behind where we were 15 years ago. And I think, again, this just underscores the compression valuation that the gold stocks represent, especially if the gold price, God forbid, goes another thousand or $2,000 higher, like I think it will. 

Again, this is just valuation. I mean, value very often is the formula for successful stock picking and stock performance, and these numbers speak for themselves. Particularly the first one which is the gold mining stocks, are less than half the valuation of the average S&P stock, not even thinking about the big names like Nvidia and all of those. So, just the average S&P stock is more than twice as expensive on many of these metrics. And again, and then Maria touched on the profit margins based on current gold prices, and she talked about it in terms of silver, but is true for gold as well, are dramatically favorable relative to the average S&P stock. And again, this means these companies are generating at these metal prices plenty of cash to buy back stock, increase dividends, and do other shareholder friendly actions which are not being priced into the sector. And I think that's it.

Edward Coyne: Yes, John, I think we'd skip over 18, which we covered and just maybe finalize, the point or hit the point home with gold miner valuations on page 17, not really reflecting the fundamental shifts, which I know Maria talked about as well. This is also a pretty eye-opening chart to express to our listeners.

John Hathaway: Yes, and I mean, again, this depicts what we've been talking about. I mean, the gold stocks, even though they're up 20 plus percent this year and last year a mixed bag that GDX doesn't really tell the true story, but there's still pariahs in the world of equities, very few people think about them. And yet, if you have a bullish view of the gold price, which I do, and I've hopefully conveyed to you some of the reasons why I like to use the term octane, they provide directional leverage to a positive gold price environment. They have barely woken up. In fact, there's still almost sound asleep relative to what they could do as investors decide, "Well, gee..."

And if investors start to move into physical gold, which they haven't really done yet, and the gold price reacts in the way that I think it will because of the very limited supply of gold, then the impact on the profitability of the gold mining stocks, which has already been very, very positive could be even greater. I guess I would have to be accused, and I plead guilty to being a table pounder for the gold stocks at this time. I think it's a great opportunity, the world could shift, the mag seven socks could do less well, crypto could do less well, investors might think, and FAs might think about repositioning more in the direction of gold. And I would say the door is wide open for very good returns if that all starts to happen. So, I'll stop there and hopefully we will have some time for questions.

Ed Coyne: Slides 32-44, Portfolio Allocation & Q&A

Edward Coyne: Great. Thank you, John. And thank you all for listening. Before we go to questions, I do want to just shift a little bit for you all who are listening to this webcast to think about "How can you now participate in this from an investment standpoint?"

And you know, when we're looking at both gold and silver miners, both the silver miners and the gold miners and the physical side have offered significant diversification relative to assets like the S&P 500, bonds, cash and other assets out there. And we have seen that through multiple market cycles. And to John's point, you're seeing this asset start to reawaken from an investment point of view, whether it's the physical side or the equity side.

And when looking at allocating to both gold and silver, the question has always been, "How much? How much should I allocate to this? Is it too much, not enough to have an impact?" And it really goes back to looking at your risk tolerance or your investment objectives as an investor. But we feel that allocating to both gold and silver may offer diversification, may offer an inflation hedge relative to the overall economy, may also offer the opportunity to participate in the growing demand, whether it's gold as an alternative asset to your overall portfolio from a low-cost liquid hedge to silver is a more opportunistic allocation to participate in silver's gradual, and not so gradual move to the industrial side of the equation. And finally, from a physical standpoint, continuing to look at silver and gold as ways to get exposure to both from a sense of security standpoint and the intrinsic value that both those metals offer.

So, at Sprott over the years, we've continued to grow from an opportunistic standpoint and the way investors can participate in this space. And I am pleased to represent, from a gold mining standpoint, one of our newest ETFs in our extensive lineup, The Sprott Active Gold & Silver Mining ETF (GBUG), which is one of my favorite tickers these days. But effectively GBUG is looking to give you long-term capital appreciation by actively investing in shares of gold and silver mining companies.

And you know, we've been off to a great start, albeit, very short-term returns, the inception of this fund goes back to February 19th of this year, but year to date through yesterday, the fund's up a nice 8%. And we think these green shoots and into what we see is a long-term opportunity that John Hathaway talked about as relates to both gold and gold equities.

And much like gold, we also have a similar opportunity in the silver space, and for many of the same reasons that Maria talked about as it relates to both the physical market and the equity market.

And the Sprott Silver Miners & Physical Silver ETF (SLVR), which is currently the only ETF focused on providing pure play exposure to silver miners and physical silver. And we think this is also interesting as Maria mentioned, because we see an opportunity both in silver continuing to hitch its wagon to gold from a monetary metal standpoint, but also silver expanding its use and the way investors look at it from an industrial standpoint. So, we see tremendous opportunity in silver as well.

We find both newer ETFs to provide green shoots and do what we see as a larger thematic opportunity in both the physical market and the equity market. And this would be true both on the precious metal side, but also on the critical material side. We are seeing tremendous opportunity really across the board.

So, I encourage anyone on this webcast today who would like to learn more about Sprott as a firm and the full suite of offerings we have, whether it's on the physical side or the equity side, to reach out to our Sprott client service team, whether you're an individual investor, a financial advisor, or an institution. So, with that, I'd like to pause and turn it back to Gil before we open it up for some Q&A. 

Edward Coyne: Thank you, Gil. And I know we're running up on the top of the hour here in a few, so we'll try to get to as many questions as possible. What I will tell you in the interest of time is that we are going to be following up with everybody individually, whether it's through email or phone calls, and we can talk specifically about products and their structures at that time.

But for more general questions, I think the first one I'd like to hear from both John Hathaway and Maria Smirnova is really what you are both looking at when looking at underlining mining stocks. Is it the cost per ounce? Is it the size of the reserve? Is it the location of the particular mine site? What are some of the key factors, let's start with you, John, that you're looking at when you're looking at an underlining mining stock?

John Hathaway: Well, you mentioned a bunch of things, Edward. Certainly, location because of jurisdictional risk. We look at the quality of the assets, which would have to do with the mining economics, which has a lot to do with grade and costs. One of the most important things is management. Our team, Maria, me and the others, are very engaged with management through face-to-face meetings and periodic phone calls because management can make a difference, it does make a difference, and I would say that's one thing that distinguishes us in the sense that we have a large group of PMs and analysts that are able to engage with management from the very top at the board level, CEOs and mid-levels mine managers and that sort of things and geologists. So, it's a pretty holistic approach.

Edward Coyne: Thank you, John. And Maria, from a silver standpoint, is there anything in addition to what John had mentioned that's worth mentioning?

Maria Smirnova: Well, John captured it well. I would say that we also focus not just on a point in time; we track companies throughout time, meaning we also look for the trajectory. If it's an exploration company, we want to figure out "How big something can get. How good of a mine can it be? Is it a mine to begin with?" And with a producing company, we look for trends in production, "Is the company growing in production? Et cetera, all these factors. So, mining is a tough business to look at because you must look at many, many different variables.

Edward Coyne: Thank you. And John, let's go back to you for a moment. A couple of questions are coming in as they relate to the divergence between the physical market and the miners themselves. I know you talked about this a bit in the presentation already, but let's talk about the cost of extraction. The question effectively is, you know, "Is the cost continuing to go up? Is this going to continue to erode profitability? Or have we seen that cost start to flatline as price continues to go up." Effectively, the question is this, "What has you excited right now as it relates to margin expansion and gold equity stocks?" It was a long question. I was trying to summarize it for you.

John Hathaway: No, no, no. I get the gist. The rate of change in the gold price has been greater than the rate of change in the cost, so that's why margins are widening. Again, the dynamics of the physical gold market are such that a small shift in financial assets from equities from bonds into physical gold would lead to price increases of a significant order of magnitude different than the cost input. So, yes, there has been inflation; inflation is a fact of life. It’s everywhere in the gold mining industry; it's everywhere in our daily lives. So, there's no getting around it.

However, the rate of change in inflation for producing an ounce of gold is not keeping up with the rate of change in the gold price. I mean, in a few words, that explains margin expansion, which is taking place. And prospectively, I would wager, again, because of the dynamics of financial assets versus physical gold, that that rate of change should continue to be greater than the rise in the cost of producing gold. So, I'll leave it there.

Edward Coyne: John, another question that came in, we'll stick with this for just a second. Speaking of the cost of production or cost of extraction, what is that bandwidth? What are we looking at right now? What does it typically cost to bring it outside of the ground?

John Hathaway: In terms of cash, it is probably, and the numbers vary from company to company, but I would say in the range of a thousand dollars an ounce. Maria, correct me if you disagree with that. But I would say the cash cost is $1,000 - $1,100. So, the margins these days is $2,000 on just cash.

Now, in addition to cash, there are other costs; we use all-in sustaining costs, which consider exploration, depreciation, depletion, ongoing capital expenditures, home office, and fully loaded kind of cash. And those numbers vary a lot from company to company, from mine to mine. But you're talking on average, again, Maria, you have a particularly good mind for numbers, but I would say $1,500, $1,600, so still fully loaded, a wide, wide margin of maybe $1,500 an ounce for the industry in general. Chime in, Maria, if you have any...

Maria Smirnova: No, I think $1,500 to $1,600 is a good number to use.

Edward Coyne: Great, thank you. And Maria, let's stick with you for a second. A couple of questions have come up regarding the silver price. What we've seen is that gold is hitting all-time highs, and silver clearly is a fair amount off its high, but it is stubbornly trying to break through $35. Any insight you can share with the listeners on what you think can move that further along?

Maria Smirnova: Well, as I said, the fundamental picture is the longer-term supply deficit, but in the shorter term, and you know, this is something I'm watching, which is emerging interest in the West. As I mentioned, we're seeing a turnaround in the trend of exchange traded funds. In other words, we're seeing inflows into the ETFs recently, which is very positive and encouraging.

And we are also hearing about macro trading funds, CTAs, as they call them, increasing positions in silver. So, those are the kinds of factors that could move the price in the short term and that breakthrough through 35, that can be driven by the shorter-term players in the market.

Edward Coyne: And we have one final question. This might be a subjective type of question, but I'm just looking at the volume of this coming in, and it's not going to ask you to dictate price or predict price going forward. But the question in general has been, you know, we see margins expanding, we see all-time highs in gold, we see silver continuing to march forward, and I'd like to hear from both of you on this. What would it take, in your view, with your experience, for the general market to start embracing this and allocating capital to this space? John, let's start with you. You've been doing this for four decades now, or three and a half decades now. What have you seen in the past that moves that needle?

John Hathaway: I would say, in a word, bear markets are adverse experiences in financial assets. And we know that can happen. We've had a terrific run in stocks for a bunch of years. If that stalls, reverses and turns negative, to me, that is a surefire formula for money finding its way into gold. And again, I would add crypto to that statement.

Edward Coyne: Thank you. And just for our listeners, we've seen more investors complimenting their crypto allocations with gold. So, they live in the same neighborhood for sure as it relates to an allocation. So, it's been interesting to watch that whole narrative evolve over the better part of a decade. Maria, on your side, silver, you know, you mentioned a lot about silver and the industrial side of the equation. What do you think is going to keep supporting it, moving it forward, and having more investors start to embrace it?

Maria Smirnova: Well, on the bullion side, as I mentioned, I'm watching the inventory, seeing how the deficits translate, stockpile, etc.

For the equities, I think if companies keep delivering and being consistent, and I use the word consistent a lot, consistently delivering on production, on free cash flow, on profitability, and not disappointing the market. If the generalist returns and those catalysts that John described, of course they would help, we need the generalist to embrace the sector and that'll take the valuations to a different level. 

Edward Coyne: Great, thank you. And we could do this for quite a bit longer. There's at the most recent count, we have 118 questions, not all specific to gold and silver, but in general. As I mentioned at the start of the Q&A, we will be following up with everyone via phone call and or email. So, I certainly appreciate everyone tuning in today. Thank you for your support, and we look forward to working with you all in the future. Thank you for your time.