gold news

 [Music] [Music] I'm Charlotte McLoud with investing news.com and here today with me is Maria spova senior portfolio manager and chief investment officer at Sprout Asset Management thank you so much for being here great to have you good morning Charlotte and thank you for having me really good to be meeting you in person for the first time here at VC and it's it's been a little while since we had the chance to talk so lots to catch up on today I thought we can start with the gold price so of course we're coming off

a record setting here for gold and many investors are wondering are we going to see a Repeat Performance in 2025 so what are your thoughts certainly I think last year was a really good year uh gold was up 27% I believe and silver was up about 21% and even the equities the equities actually were up as well so we had a pretty good year last year now looking forward to this year and Beyond the drivers that we see for both gold and silver that were in place last year are still there things haven't changed from

last year to this year so even if we don't see such a strong price performance for example in Gold you know 27% that's pretty hard to beat I would say that we should still have a good year this year yeah so we'll have those those same driver staying in place can you talk about the main ones that that you're keeping an eye on okay certainly and for gold um um one of the big drivers that people talked about last year was of course Central Bank buying but also buying out of the East buying

in China both retail and institutional you know both medals actually both silver and gold uh oftentimes traded at a premium in Shanghai which told us that of course there was strong demand in the East or specifically in China and for silver as you know silver is of two metal of two heads um again in investor demand um and then there's the industrial demand um for silver the silver was in deficit again because demand was stronger than Supply again the drivers that were there last year I would expect to remain in

place this year and again we're expecting silver to be in deficit inventories to decline which will ultimately lead to a strong price I hope yeah and so silver of course as you're mentioning has many of the same price drivers as gold but as you also said it's got its indust industrial side and and the precious side so which one do you think might take the lead in 2025 well again I I don't know if it's as important for me to dissect which specific sector or which specific driver

will be um driving the bus but um for me what's important is what's the overall picture right demand I expect to grow still this year Supply expect to be flat this year in fact I I've been saying that silver supply has remained stagnant and even declined about 50 million ounces in the last 10 years that's very significant that's telling us that miners just have not been able to increase production um actually scrap supply has been stagnant as well so that really speaks volumes to where the

strength will come from in terms of the price because we're just not able to provide enough metal to the market that we are requ you know that we need and that has led as I mentioned to inventories declines so we're seeing we've lost about close to 500 million ounces in the last few years since 2022 that's very significant in this market the market is about you know we produce about a billion ounces a year so to lose half a billion ounces almost in a in a few years two three years that's very

significant and again we're expecting deficits to lead to sign to declines again going forward okay okay I'm going to come back to that deficit for silver in just a minute because I think that's important I think we know the the price of silver is known to lie behind gold and then it outperforms but I know our audience has a lot of questions about why we haven't seen more of a move yet so will that happen in 2025 or do we just need to be a little bit more patient with silver well unfortunately

my crystal ball is still broken um but again um I don't know if it's going to be this year we would expect you know the other data point I will give you is we're actually mining um you know the silver the gold to Silver ratio is about 90 to1 right now 80 or 90 to1 we mine about 10 to one so that's how undervalued silver is there's a huge Delta now in the last few decades you could use different averages of the ratio to measure how undervalued it is but let's say even if we go back to 50 to one that's a huge

catchup on the silver um and again in terms of timing it it's hard but what would lead to a catch up in this a price and that is a squeeze on those inventories right we need to continue to see the inventory decline we need to see strong investor demand we need to see if if and you know um somebody at the conference actually called uh called it a GI and good meaning if price goes up there's more demand actually so it's potentially price and elastic but also if we see some momentum in the price

that starts feeding on itself so to time that it's very hard we've seen periods of time you know in 2020 we had a great year um so it kind of goes in stops starts and stops and you know so I don't know how to predict timing to be honest with you yeah well I think I think most people don't so so thank you for going into it though and making making the attempt to explain I think just going back to the whole silver deficit I think one reason people get frustrated with what's going on with the price is

because they see this deficit that's persisted I think we're going into the fourth year of deficit for 2024 for the market so we've talked about that a little bit I guess it sounds like why isn't that moving the price that we just need to see a little bit more on that side right we need to see a continuation of those Trends and again the big knock on Silver has been oh there's so much silver above ground stocks you know billions of ounces well we're we're starting to see the deficits leading to

eating through those inventories that's why I keep coming back to that argument um that's where the argument could change right and that's where that push back could could fall away basically yeah yeah I think that that makes sense so we'll we'll continue to be a little patient on Silver and I guess looking over to the gold and silver stocks where are you seeing the most opportunity right now I know previously this was a while back you'd mentioned the small to midcap space was most interesting is

that still how you're feeling absolutely we're definitely small to midcap managers um in fact you if you look at the two Bell Weathers in the space Newmont and baric their stock prices have not done well recently but v the midcaps or the smaller companies have done much better last year we saw very strong Returns on a bunch of our Holdings and that was very encouraging to see um so that's kind of still our strength uh we're seeing valuations you know still at bottom levels especially

if you consider valuations for gold companies versus the S&P 500 much undervalued relative to the General market um so and I would add that gold and silver companies have been generating free cash flow um a lot of companies are actually increasing dividends or paying dividends buying back their stock accumulating cash I mean we're seeing a lot of signs that are pointing to the fact that these compan these stocks should do well and that's the type of companies we look for okay so really good to go over that but

we're we're here at VC in Vancouver and I want to talk a little bit about some of what you've been doing here so you were on a panel yesterday I believe called why cash is the most important resource in the mining business so very intriguing do you do you agree with that statement first of all um well I think we had a very good discussion yesterday about that and what I said in the panel uh was that I actually take a bit of a holistic approach when I look at companies and to me there are three uh

major kind of buckets that I look at the financials which would include cash and other things uh the team or the people so management CEOs etc etc and the resource so your location your geology your you know all of that great infrastructure all all of that great stuff so I I don't know if I favor one thing over the other I kind of look at it holistically but of course and at VC we have a lot of smaller companies companies that don't have production so for them I think it is a very key resource to have especially in in times

when times are tough uh when it's hard to raise money the other thing I think we kind of determined on the panel yesterday is that it's it's good to raise money money when the going is good so when the market is strong raise the money have a ca cash kind of cushion so that you can do the work that you'd like to do in the next year or in the next 18 months or whatever it is so that those kind of were our conclusions so it is very important I don't know if it's the most important thing but it's kind of

very important so I think I think often when when mining companies are raising money investors might look at it and they don't really understand what's going on so how how might somebody decide I want to participate in that okay so let's say there is an equity financing um first of all you need to determine whether you've analyzed the three things I said right the people the asset the financials you know and you realize okay this company may have good assets and good people but it just

doesn't have that cash that we're talking about right and all of a sudden you have an opportunity your broker calls you and says hey we have a an equity financing um so I think my first thing would be do I want to be a shareholder of this company and if the answer is yes um usually Equity financings usually are done at a discount to to market price or spot price and sometimes there's warrants or not and sometimes you have to hold the stock for four months after or sometimes you can sell the stock next week or

whatever so you can kind of look at those things and and you know then you have to think about again going back to do I want to own this company and if you're comfortable with the longer term prospects I would say you know maybe maybe then you you go ahead right but again it's a very individual U Case by case decision and I'm certainly not a financial adviser I would not advise people either way on anything so um it's a very kind of you have to kind of consider as part of your portfolio as

well right does this fit into my portfolio or not you know do I have a lot of exploration stocks already or maybe I need a couple to to kind of uh soup up my portfolio yeah this is this is one of the themes I think I've been hearing a lot this this weekend here is you know you have to know yourself before you start doing anything okay so so cash we know this is an important component for for all companies in the mining com uh industry across the Spectrum especially Juniors what is the financing environment like right now for

these these exploration companies well I think you'll hear different opinion on that question um what I say is I think if if if it's a good company with good assets uh they will find the money we've seen lots of financings get done a lot of them over subscribed and again it it's when people realize well first of all we do have a shortage of good deposits right now both in gold and silver and copper and other metals so when there's a good deposit people want to participate and and those

companies fight find find the cash so um and it is our job to weed out the Bad actors and and not the companies maybe shouldn't be around so those companies shouldn't be financed anyway right um so from that perspective I think kind of the money is there if if it's a good company I would say yeah yeah I think that's one of the reasons I like to ask that question is because you do get such a range of answers and I like that one where yeah of course if you're doing a good job you will you will get the money

okay so that's that's really good to go over and I think timely with all of those Juniors downstairs U maybe maybe a fun question I know you said the the crystal ball is is out of commission but 2025 any any thoughts on what might be our best performing commodity well I'm biased as you know of course um and and the truth be told I don't follow all Commodities closely but of course we're greatly involved in things like uranium and copper and and even lithium to a smaller extent um but

I guess for me if I if I had my pet my pet is silver and I really hope that it's as we discuss starts catching up to old this year because really we're in a situation where there's a shortage of it and there's no reason for it to be lagging yeah I think I think that would resonate with a lot of people okay really good to go over what's going on in gold and silver a little bit of the Juniors any final thoughts for investors that you would want to leave people with uh hang in there I know it can be frustrating

sometimes um certainly small companies have underperformed larger companies but there's a lot of value out there that I see um and just don't give up stick with it and that would be kind of my advice to people um but again look for good companies don't uh spread yourself too thin also you know just focus focus in on the ones you really understand you really can follow and have the time to follow and that would be kind of my unsolicited advice yeah well I did ask I did ask yeah so thank you I think that's

a great note to end on thank you so much for for going over these things um and as I said good to meet you in person hope to have you back again soon thank you very much Charlotte have a great day of course and and once again I'm Charlotte McLoud with investing news.com and this is Maria snova thank you for watching if you like this video make sure you hit the like button and subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below [Music]