The macro and microeconomic landscape favors gold miners. Their performance has yet to catch up with gold prices. But the precious metal’s rally is certainly teeing up opportunities for investors to get gold mining exposure.

“I think that we’re at a point right now where the miners have really underperformed the gold price over the past five years or so,” said Chris Mancini, associate portfolio manager at the Gabelli Gold Fund. “And they’re generating lots of free cash flow. So I think that even if the gold price stays here, the miners [may experience a]good run.”

As mentioned, an obvious driver for miners will be the ongoing rally for gold prices. Right now, a heavy dose of uncertainty is fueling gold prices. That’s because high inflation and geopolitical concerns remain on investors’ minds.

Econofact highlighted the role of gold during times of economic uncertainty in a chart captured below. When times of economic uncertainty rise, so does the price of gold. This gets reflected in times of high inflation. But it also occurs when an unforeseen market disruptor can occur, such as in 2020, with the pandemic.

“A good example is the 22 percent jump in gold prices during the first six months of the COVID pandemic,” Econofact noted. Econofact added that inflation at the time “remained below 1.5 [percent. But] there was a major loss of economic confidence and an associated drop in equity prices.”

1 ETF for Broad Mining Exposure

Given the prospects of rising gold prices, investors may want to consider adding exposure to miners. Investors can build their own portfolio of gold miners. But an easier option would be to consider the Sprott Gold Miners ETF (SGDM).

SGDM seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index. This index tracks the performance of large-cap gold companies that trade on Canadian and U.S. exchanges.

Potential Bullishness

When demand for gold rises, ancillary services in the gold industry like mining can also exhibit bullishness. SGDM’s focus on large-cap companies also means they don’t exhibit the heavier volatility that can come with small-cap companies. Furthermore, by concentrating exposure to a fund rather than building a portfolio of individual companies, investors avoid the overconcentration risk inherent in that strategy.

For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.

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.

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 and SGDJ
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.