Gold and silver may have begun the new year on a positive note, but now advisors and investors are questioning which direction the metals will take next.
Last Friday, prices for gold and silver alike tumbled in response to President Trump nominating Kevin Warsh to be the next chair of the Federal Reserve. Some saw the nomination of Warsh as a potential signal in favor of an independent Federal Reserve, which would likely work in favor of the dollar.
This development led to a significant selloff for gold and silver that day. Silver futures dropped more than 30%, marking the metal’s worst single-day performance since 1980. Gold didn’t fare much better — gold futures dropped around 11% on the same day.
Ever since then, prices for both metals have been bouncing between drops and surges. Advisors and investors seem unsure how the metals will perform as the year goes on.
However, there’s still a fair argument to make that the fundamentals backing both of these precious metals remain relatively solid. Sure, the dollar is looking more favorable than before. However, geopolitical uncertainty and the potential for rate cuts could continue to curate demand for safe havens. Furthermore, gold demand from central banks remains high.
Meanwhile, silver’s price can also be buoyed by demand for practical application. Silver is utilized in the construction of electric vehicles and different forms of AI infrastructure, among other technological applications. Given that AI demand is growing, not slowing, silver could be a metal well-positioned to benefit from the trend.
In the near term, it could be beneficial to stay engaged with gold and silver in a manner that is not directly exposed to spot prices. One way to do so is via investing in gold and silver miners. Mining companies may benefit from long-term trends in the metal but may be less exposed to short-term volatility.
Riding Out the Volatility With GBUG’s Mining Stocks
Those looking to invest in gold and silver miners could do so via the Sprott Active Gold & Silver Miners ETF (GBUG). GBUG is an actively managed fund from Sprott that, as its title suggests, invests in a mix of miners engaged with the gold and silver industries.
Diversification, along with active management, could prove to be an effective vehicle in this instance of volatility. Since the Fund invests in both gold and silver miners, it is less exposed to negative performance in any single metal. Furthermore, GBUG’s active portfolio team can be more flexible in adapting to changing market conditions.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Content Hub.
Disclosure Information
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- and 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 trading 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, SGDJ, SLVR, GBUG, METL
Physical Bullion Funds: PHYS, PSLV, CEF, and SPPP.
Gold and precious metals are referred to with terms of art such as 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.
