Advisor Perspective: How Gold, Silver and Critical Materials Shaped Portfolios in 2025

Steve Schoffstall: It's great to see you, Ed. Thanks for coming in.

Edward Coyne: Thanks for having me. I'm looking forward to our conversation today.

Steve Schoffstall: As you're aware, 2025 has been a great year for a lot of the metals markets. Examining Bloomberg data reveals that, out of the top 4,000 ETFs, 16 out of 17 are miners of precious metals or critical materials. From that standpoint, we've seen a lot of interest, not only from investors. It'd be great to spend some time discussing what you're seeing from an advisor's perspective.

Edward Coyne: Advisors are certainly taking notice. We've always had our core advisors at it; I suppose in the past, they were called goldbugs and, by extension, silverbugs as well. However, we are now seeing more advisors start to take this space seriously. Increasingly, investors are seeking alternative investment strategies. Gold is stepping into that spot. The old 60/40 model tends to break down when discussing advisors and big banks. Jamie Dimon is saying it's now really 60/20/20, with 20% being alternatives, and within that, gold is included; more advisors are starting to embrace this as well. It still feels like the early days, as far as advisors looking at gold as an alternative asset, not just as a currency. As more investors seek to diversify their portfolios, gold is definitely taking charge.

Steve Schoffstall: Gold mining is one of those sectors that's really been on the outside looking in for the better part of 15 years. Now they're among the best-performing sectors that we've seen. However, despite this, we're still seeing approximately $4.5 billion in outflows in the largest gold mining ETFs. What's been the reaction when you talk to clients around gold miners, and how are they viewing those as part of their portfolio?

Edward Coyne: The gold miners are really a hot topic right now. What's interesting about gold miners, and what you just mentioned about the outflows, is that many of the advisors and investors started buying the miners in 2009 or 2010, and the market peaked in 2011. There is a core group of investors who are finally getting back to even or, in some cases, back in the money. They're realizing that and saying, "this is a long time to get back to even. I'm going to move on to something else.” Having said that, though, with gold and silver doing so well and the miners doing so well with some of the best balance sheets out there, it's not just the returns. They have better dividend yields than the S&P 500, and the return on invested capital is more attractive. They're less leveraged than many of the companies out there today.

As a result, a new wave of investors is beginning to take notice of this. I think we're seeing that old capital is being replaced; they’ve broken even, but new capital is starting to emerge and participate in this space. Like gold and silver, it feels like the early days for advisors looking at mining stocks as a unique way to diversify their portfolios. And I think it's worth also mentioning that so often people think, well, if I'm going to invest in gold or I'm going to invest in silver, why not just do the miners? Because I can get torque to the trade.

I would like to point out that the physical market and the equity market are distinct types of investments. The physical market remains a risk-off diversification investment, while miners are considered a risk-on, opportunistic investment. And so that's how you really need to think about it. As we work with more advisors, we help them review their allocation and consider how much they should allocate to the physical market. And does it make sense, or is it appropriate for their clients to start looking at the miners as well? The answer is starting to become more “Yes, it is.” Advisors are now beginning to look at miners.

Steve Schoffstall: That's a great point you bring up about those investors that have been invested in miners for so long, and moving out of the gold trade, we do see that new money starting to come in. We launched GBUG earlier this year, which is our Sprott Active Gold and Silver Mining ETF. That's actually gotten a lot of traction. It's the only active strategy available on the market related to gold mining. With that value proposition, we tend to see a lot of dispersion of returns between different companies within the gold mining sector. An active strategy could help investors outperform the broader gold equity market. When you're having these conversations with investors, how do you choose between gold and passive and active strategies? How are advisors thinking about those options?

Edward Coyne: You said a key word: active. Sprott has offered a factor-based suite of ETFs for some time. We offer a senior mining ETF and a junior mining ETF. However, to your point, GBUG is a relatively new concept. And we're finding more investors are looking at the active side of this equation. As you move down to market cap and venture into the corners of the room, such as mining stocks, advisors want to take a more hands-on approach to allocating individual names in those portfolios. While a passive or even factor-based strategy may be appropriate for a core allocation for an advisor who is really looking to enter this, particularly for the first time, they want that additional umbrella of an active manager going out there and looking at the best names available. We're starting to see that as more investors consider miners, in some cases for the very first time, they are leaning more towards an active approach. It’s one of the few spaces today, particularly in the world of ETFs, where active management is gaining real traction.

Steve Schoffstall: Related to gold is the silver mining industry. You can't talk about gold without talking about silver. Over the last several years, I believe many in the market have been waiting for this catch-up trade in silver to occur. We're starting to see that now. Physical silver has outperformed physical gold now by about 50% year to date. We're seeing a very strong performance out of silver. It's also a little more unique than what we see with gold, which is a precious metal allocation. Silver is a dual metal, where it has not only a precious metals allocation, but it also accounts for about 60% of its demand, which is coming from industrial uses. It's mined differently. Most miners aren't actively mining silver. In many cases, it's a byproduct with these different characteristics. How should investors think about allocating to silver and silver miners in relation to their overall portfolio?

Edward Coyne: Silver is a really fascinating metal. When you think about the history of gold and silver together, most advisors would talk about the gold-to-silver ratio. How many ounces of silver do I have to have to buy an ounce of gold? And that was traditionally in lockstep with each other. Silver is really stepping out of gold’s shadow today. Gold is still a truly monetary metal, whereas silver, as you mentioned, is transitioning from being a lesser monetary metal to a true industrial metal. It's getting consumed. And yes, it's still a precious metal, but more of its consumption is going on the industrial side of things.

In many cases, advisors who are looking at precious metals for the first time are more willing to embrace the silver story than the gold story. The one common criticism I hear from advisors about gold is that it doesn't do anything; it doesn't pay dividends, it doesn't have a purpose outside of potentially backing up paper currencies, and so forth. This shift of silver stepping out of gold's shadow and moving into industrial applications: advisors can get their minds around that. I see the purpose behind silver, and I can convey that to my clients. We understand how that works and what it looks like.

As the bid for silver continues to rise, and as you mentioned, it's now over $60 an ounce. It's doubled what gold has done year to date from a performance pattern standpoint. We think that's going to continue, as the easy stuff has largely been consumed at a higher rate, and things like solar panels, camera technologies, and all the other things that silver is being used for are continuing to grow. We really like the silver story today.

Steve Schoffstall: Silver is a great segue into critical materials because countries are increasingly considering silver a critical material. When you look at the options available to investors, within the last couple of years, we've launched a number of ETFs that provide individual exposure to mining companies. For example, if you want to access uranium miners, copper miners, lithium, nickel and so on, one of the funds that has performed well is our Sprott Critical Materials ETF, ticker SETM. This is a fund that provides broad-based exposure to pure-play mining companies of up to nine different critical materials. I know you've had a lot of conversations, as you're out in the field, what's drawing advisors to SETM?

Edward Coyne: You're asking me about my favorite child right now. SETM is a cool ETF because advisors understand the value of having some uranium, copper or battery metals in there. We also offer a comprehensive range of battery metal solutions.

The problem advisors face is that this is one of many themes they're trying to allocate capital to. Many times, I hear them say, 'I have one line item on my balance sheet to take advantage of the energy transition or the energy addition movement that we're experiencing out there.' How do I profit from that? Many of our advisors and investors have also participated as consumers, correct? They're getting electricity through solar panels. Or maybe they're buying an electric car. Perhaps they purchased their first Tesla, but they haven't actively participated as investors.

Our entire suite of ETFs enables investors to do that. And what's really cool about SETM is that it gives you exposure to approximately a third of the creation of energy, which is predominantly through uranium for nuclear and silver for solar. There are some rare earths in there as well, but that's really your exposure on the creation side. Then you have the movement or transmission of energy, which is predominantly copper. Then you have the storage of energy, which includes all the different battery metals that we offer. And so, for an advisor, they can say, 'I have one ticket, one ETF, and one line item, and I'm giving my client the full package, the full exposure and the full experience, really encapsulating everything that is happening in that space right now.' So, yes, SETM happens to be my favorite, just because it's a very eloquent solution for participating in this space today.

Steve Schoffstall: You mentioned rare earths and SETM, which has about a 15% allocation to the sector. We find that, given the news we've seen, many investors are gravitating to SETM for that reason, as it allows them broader-based exposure without having to pick winners and losers of each individual metal, which all react differently. They have different supply and demand dynamics. It's been a great story, I think. And, well, it's great having a chance to catch up with you today, and I'm sure we'll be back on here in no time.

Edward Coyne: Steve, this was fun. Thank you for the questions you had today. Hopefully, the advisors and investors who are watching this will learn a bit about who we are and what we're doing.