John Hathaway: Gold Price Can Double, This Factor Isn't Priced In
Summary
Gold Market Dynamics: John Hathaway discusses the multiple factors supporting the high gold prices, including fiscal issues in the U.S., geopolitical tensions, and a gradual shift away from the U.S. dollar as a reserve asset.
Equity Market Concerns: Hathaway highlights the risk of a major decline in equities, drawing parallels to past market exuberance and concentration, which could trigger a significant move into gold.
Gold Price Potential: He suggests that if market conditions align, the gold price could more than double, reaching $7,000 to $8,000 per ounce, driven by increased investor interest and underownership.
Gold Mining Stocks: Despite strong performance, gold mining stocks remain underowned, with potential for significant gains if investor sentiment shifts, particularly in midcap and smaller cap producers.
Interest Rate Impact: Lower interest rates, especially if perceived as a result of pressure on the Federal Reserve, could serve as a tailwind for gold prices and mining stocks.
Silver Market Outlook: Hathaway describes silver as a "smoldering volcano," with production deficits and potential for higher percentage gains compared to gold, driven by similar market dynamics.
Investment Strategy: He advises investors to remain open-minded, question current market positioning, and consider diversifying into gold and silver as part of a broader strategy to mitigate risks in a potentially volatile market environment.
Transcript
[Music] I'm Charlotte Mloud with investingnews.com and here today with me is John Hathaway. He is managing partner at SPAT and senior portfolio manager at SPAT Asset Management USA. Thank you so much for being here. Great to have you. >> Thank you, Charlotte. really good to be catching up with you and we're going to spend some time today getting into some of the points in one of your recent pieces. It's called a cure for financial dementia. So, I'll add the link in the video description as well in case people want to check it out. But, lots of directions to go. I thought we could start with gold. So, definitely a historic year for gold. It reached the 3500 per ounce level. Of course, right now we're in a little bit of a pullback, but I wanted to begin by asking what factors you think are supporting gold right now? >> Well, there are almost too many to mention, but I think uh first and foremost is the um fiscal issues facing the United States. um the overupp of new Treasury issuance and you know the questions around whether u the market can absorb them at these prices without the Fed stepping in to um manipulate interest rates as they they tend to do. Um, you have all of this badgering of the Fed by the Trump administration where people are fretting about uh whether the Fed is will remain independent uh or is it going to come more and more under the control of the administration which definitely would um move in the direction of yield curve control um fiscal dominance and so forth. So that's two. Three would be the everpresent uh concerns over the geopolitical situation and there's not enough time to go into all of that and I'm certainly not an expert on it um and any one of them but uh you only have to look at the papers to see um you know what those are. And then uh the other thing that comes to mind is just the gradual movement away from the US dollar as a as an international reserve asset. Um and conversely the movement in the direction of uh certainly for um central banks to own more physical gold to replace the dollar. So, that's kind of a slow slowly progressing uh factor that uh it isn't a day-to-day thing, but it's a it it underpins uh the gold price, and I've probably forgotten a couple. Well, those are the main things. Well, I think it's very fair to say that there's almost too many factors to name and definitely there's not enough time to go into every single one right now, but I find I find that people have gotten used to this this high price level very quickly. And right now, what I'm seeing a lot of questions about from our audience is what will be the trigger to drive the gold price into its next leg higher. And in your piece, you mentioned that a major decline in equities is something that might not be being priced in right now. So, I'm wondering if you could go into that and talk about what that would look like. >> Well, if you remember um what happened in 2007 when we had a a meltdown in the basically the entire financial system and I'm not calling for that. I'm not expecting it. I and again this isn't my expertise but um I do feel like we're in the top quartortile maybe the top desile in terms of um exuberance as Greenspan once called it um of overvaluation. So, we're in a danger zone and um uh and in my in my uh in my um paper I talked about a bunch of them. You have valuations certainly where at the extreme levels of valuation valuation can stay high for a long time. So, it's not necessarily a timing. It's not an aid to timing. Um you have um uh heavy retail participation which is again it's not necessarily by itself bad but you look at the amount of day trading that's taking place in these uh zero uh day expiration options which are I think I in my piece I mentioned 62% of options uh activity um you have um you have uh extreme um emotional um uh support for a very few kind the market I guess what I'm trying to say is market the market is heavily concentrated um and the averages are supported by a very small number of names and I I can go back to when I was just starting in this business in in the 1970s, we had something called the Nifty50 and it was just it's like a replay of today or today is like a replay of the 70s where all the institutions were heavily crowded into a few favorite names. They called them the Nifty50 back in the 70s and today it's uh you know AI related and similar. So so market concentration is another thing. So, I don't want to go on too long about this, but I do think that um if when the tables turn, and I think we're, you know, maybe within a year, maybe a year and a half, I'm not a timing expert by any stretch of the imagination, but um it it seems to me that you uh if you look history and there are other times when you've had, you know, 2000 was a similar kind of thing. um you had this mania in 2007 with um mortgage back securities. So every mania is different except the common is that you have market concentration and then leverage on top of that. We just saw I just saw today that the um that um margin debt topped one trillion for the first time. I mean, yeah, okay, market values are higher, so you know, the the growth is bigger, so the leverage could be bigger, but it's still a milestone. Anyway, not to go on about it, but in a downturn, as we had in ' 07, as we had in 2000, as we had in the mid70s, gold tends to get a bid. And it gets a bid from people that are incorrectly positioned in the market. And I would say that would be most investors. And we do als we can also say that gold is underowned. Um and and therefore flows out of the favorite names, favorite positions into gold um could substantially move the gold price. And and again, when I look at sellside research, when I look at the um um what comes out of the strategy gurus on Wall Street, I I don't think they have a clue as to what a reversal or what an in new inflows into gold and more importantly gold stocks, at least for us, could do to the price of both um gold is um relatively illquid compared to the flows that could come into it um in a and again I'm not calling about a 10% pullback um or anything like that and again I I'm just maybe overly stressing that I'm not a market market timing expert but when the when the psychology turns less favorable and mainstream positioning uh comes more and more into question. One of the things that historically investors have gone to is are defensive positions in in in gold shares and um in my in my view that process which which needs to take more than six months. It needs to take three or four, five years so that people get kind of um worn out uh by not making money in their favorite names. Um and when that happens uh flows into gold and gold stocks, first take gold. I in in my opinion gold the gold price could more than double. So we're at 35 3,400 today. So I, you know, I would not be surprised if my thinking about where the market is is half right, uh, we could see a gold price that is 7 $8,000. And for the gold miners uh which are very very cheap and underowned uh I didn't mention earlier in my rant that um um money has flown out of uh gold stocks all year long. Uh I'm using GDX which is the VANC gold mining ETF as an example. money has has net net year to date um drifted out of GDX and yet GDX with with money going out is up almost 75%. I'm just winging that number but it's up a heck of a lot more than uh the S&P. So, I'm just thinking that gee, no, nobody's on board or very few are on board. Um and when um money starts to look for a different place to be and they think of gold stocks as a good place to be and if the gold price does half of half of what I'm thinking the the the the earnings of the of these producers these especially the midcap and smaller cap producers will be bigger than their market caps are today. So, you know, why is that not an interesting proposition? Um, I keep scratching my head, but you know, in the meantime, gold stocks have been doing great. They've been better than any other sector in the S&P. And yet, very few people are even thinking about it. >> I think that's that's very true. And I want to go a little bit deeper on gold price and gold stocks. But before we go over there, I want to mention one other factor I've been hearing when it comes to people talking about what could be the trigger for this next leg in the gold price. I'm starting to hear more talk about interest rate cuts from the Federal Reserve, especially after last week's speech from Jerome Powell. So, I'm curious as to where you would put that in terms of your thinking. >> Well, that is I I didn't mention it, but thank you for bringing it up. Um yeah, lower interest rates uh especially if it comes about with some sense that is that the Fed is being browbeaten and central bank independence is being threatened. um you know just puts a bad look on the whole fiscal monetary discipline uh argument and um so um I I don't know whether that's priced in or not but but it it's it's it's a helpful uh tailwind for uh for gold and and and and mining stocks. >> Thanks for going into that one. And so let's talk a little bit more about what's going on with the gold mining companies. You mentioned even though the gold price is is so high right now, the miners are starting to put out these very strong results, there's still a lack of interest from the the general public. So I know I know it's a tough question, but what what do you think would bring investors back in? Why do you think they're not interested right now? And I know I know there's a lot of things we can go into there, but thoughts from you. >> Yeah. No, I think again this is why you know all the catalysts we talked about earlier u geopolitics fiscal issues all of that ddollarization they're there they're they're not going away and that that's probably why gold is trading effort in appear appearing appear with the appearance of effort effortlessness in this range of 3200 to 3400 So, and any one of them could uh without warning uh come to the forefront and and and and and get more investors to look at gold and and the miners. Um but the one thing that and I and people articulate that I mean it's not as if it hasn't been talked about. So, but they're real. I mean, I'm not saying they're they're there's any way to dismiss them, but the one thing that's missing in this again and and going back to the theme of my um uh cure for financial dementia is is the market the tables being turned in the market so that investors broadly speaking and I'm talking all the way from retail to institutional and official institutions. Um if their if their if their expectations for the returns they can get in the in the standard menu of holdings that they have and we all know what they are. If that if that sour and and you know believe me I'm I I think it will. I just can't couldn't tell you the exact date, but I think within two years is a reasonable bet. That is a catalyst for gold and for gold miners that has not been priced in. And so, you know, what's going to, you know, it could be a lot of things, but we're at a valuation where we're we're basically priced for perfection with the S&P trading at a record level of u enterprise value to sales just to pick one. I mean, that's the Buffett indicator. um you know just look at history and respect history and say you know maybe maybe I should have some exposure here where where I don't have any and most people you know would say oh we have a you know we have 1% position well that's that's a ca type of answer that's like you know I' I'd basically answer that question tick that box but there's no conviction it's just like I'm there if they're there at all which most people aren't. Um, so if that changes and we go from, let's pretend it's 1% and that's probably more than it really is in terms of global AUM, you know, we figure 500 trillion. You know, if it if it if it's 1% of that, I'd be surprised. If it goes to 2%, you know, you're going to see uh things happen to the gold price and to the mining stocks along the lines of what I said earlier. >> Well, and looking a little bit more closely at the gold mining stocks. So mentioned the last quarters have been very strong and I'm curious about what you think we're going to see moving forward into the future. Are we going to continue to see this this level of results? Because I know in in the previous gold bull market, some of the big companies were criticized for ultimately making poor investments, some bad decisions there and and that might be now even why some people are a little bit wary of of getting into the sector. So thoughts on their future performance? >> Well, you know, in in my in my article, I quoted uh Galbrath who said it takes 20 years for people to in in this business to forget the mistakes of 20 years ago. And that's probably that's probably right. I mean, if you look at the cycles in the market, you know, there's a there's a new brand of idiocy every 20 years. And that's the inverse of that is that the the the stupid things that the mining companies did 20 years ago, and they did a lot of bad things. Um, I think I referred to them as juvenile. Um, well, I think maybe they've learned their lesson at least for a while. and and what you're seeing now is more and more talk of u increasing dividends. We're seeing a lot of share buybacks. Um we are seeing M&A but um so far from what I what we can tell our our investment team uh that manages the active portfolios and gold mining shares at Sprat. We think most of these acquisitions have been sensible devestatures uh uh streamlining um portfolios, companies like Numont for example doing that kind of thing. So you know for now it looks to me like what's taking place is sensible. And by the way, um, you know, in a rising gold price environment, a lot of people look smart in retrospect because they bought XYZ asset thinking the gold price was going to be 2500 and it's 3500. Well, everybody looks smart in that environment, but that's kind of where we are. So I think it's going to be a ways before we see the kind of um derangement that we're seeing in in in large parts of the stock market. >> Well, I think I think that's reassuring to hear. And then I think the other thing that investors are wondering right now is where to focus when it comes to the gold stocks. So the larger companies are delivering these these strong returns and people are maybe wondering is it time to move down the food chain and of course each person is different depending on what they're trying to accomplish with their portfolio but any thoughts you would share there. >> Sure. I mean um we are um kind of we kind of favor the midcap um mid to smaller cap. We do have representation in the familiar names agont and so forth. Wheat and precious would be three of our top holdings. Alamos would be another that have already done very well and are doing well and will continue to do well. But because there is so little research coverage of some of these midcap names, I've got to be careful with my compliance team. Not to mention a bunch of them, but I would say just look at our look you anybody can look at our um holdings um uh and you can see a lot of these midcap names where where what I said earlier where you're going to see potential earnings that exceed the today's market caps and that's what we are looking for. That's what we're favoring. So I would I should mention while I while I have the floor here and thank you for inviting me. Um we did start an an ETF this year, an actively managed ETF. The ticker is GBU GBUG GBug. Um and it's grown very quickly. Um I think assets are now over 60 million from a standing start in February. Um, and you can look at that. Just go to Bloomberg and see what we hold there. And I' I'd say um, you know, that also would be a good answer to your question. >> Well, thank you for that. And I'll I'll find the links and I'll include those links in the video description as well, so people can go check that out. And so, this gives us a pretty good look, I think, at what's going on with gold and the gold stocks. I did want to ask you about silver. So, given your outlook for gold, what do you see coming for the silver price? Well, um not to get too dramatic, but I think it's a smoldering volcano. Um how's that for exaggeration? Um but it's sort of hanging out below 40. Um we talked about it this morning on our daily call and u silver production mining is less than consumption. Um and so the market is in deficit. Um so uh you've got structural things that favor higher prices. Um and um you know if all of these other things that I think will take gold higher fall into place uh silver will get a bit and it's it it tends to be more volatile than than gold itself. It's a smaller market doesn't take as much money to move it. So I think um you know I kind of played around with potential price targets on gold and they didn't give a date so you can't hold me to to that. Uh but I would say you know order of magnitude I think silver could do more in terms of percentage gains. >> Well I think that's definitely significant and I feel like I I almost don't need to ask this question but I will. I was going to ask about the silver equities and the opportunity there, which sounds like it would also be quite significant, but maybe any advice on how to approach the silver stocks given that the universe is is quite a bit smaller than it is for gold, for example. >> It it's much smaller and you know, many of our holdings have been taken over. So the population of silver stocks that an investor could look at and I don't have a number off the top of my head in terms of the aggregate market cap of the silver names but it's it's quite small. Um so uh uh again I think that the that the dynamics and Maria Smnova who's you know a key member of our portfolio management team is is the real expert on silver and she's written a lot and it's on our website. Um but uh uh those stocks I think again silver is a little bit more aggressive uh but it tends to be in the slipstream of gold as far as dynamics because it it is a monetary metal and the population of silver stocks is has shrunken because of all these takeovers many of which we've participated in. So, um, Slim Pickins, but the the names that are out there, I think will be, uh, very, very good performers. >> I think very, very fair assessment there. And so, I will let you go unless you had any final thoughts that you would leave investors with. I know it's kind of a a complex, tricky environment right now. >> Well, I would just, you know, I would just say uh, this is to the generalist. Um uh I think u be open-minded, pay attention to the space, uh avoid complacency in um you know, your existing positioning and question it. Um and you know, gold stocks and gold and silver are an answer. They're not the only answer. Maybe higher levels of cash would be appropriate. Maybe fixed income. there are, you know, you know, maybe the long-term longdated treasuries or but I this is not I guess my I guess the quick answer to your question would be to question current positioning and and if uh and I think that that is not being done but I think those who do and land some of their exposure into this space will be very happy two or three years from now. Well, I think that's a very nice way to wrap it up. So, thank you so much for coming on to go over what's happening in Gold and Silver. This was really great. >> Well, thank you for inviting me, >> of course, and we'll hope to have you back soon. For now, I'm Charlotte Mloud with investingnews.com and this is John Hathaway. 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]
John Hathaway: Gold Price Can Double, This Factor Isn't Priced In
Summary
Transcript
[Music] I'm Charlotte Mloud with investingnews.com and here today with me is John Hathaway. He is managing partner at SPAT and senior portfolio manager at SPAT Asset Management USA. Thank you so much for being here. Great to have you. >> Thank you, Charlotte. really good to be catching up with you and we're going to spend some time today getting into some of the points in one of your recent pieces. It's called a cure for financial dementia. So, I'll add the link in the video description as well in case people want to check it out. But, lots of directions to go. I thought we could start with gold. So, definitely a historic year for gold. It reached the 3500 per ounce level. Of course, right now we're in a little bit of a pullback, but I wanted to begin by asking what factors you think are supporting gold right now? >> Well, there are almost too many to mention, but I think uh first and foremost is the um fiscal issues facing the United States. um the overupp of new Treasury issuance and you know the questions around whether u the market can absorb them at these prices without the Fed stepping in to um manipulate interest rates as they they tend to do. Um, you have all of this badgering of the Fed by the Trump administration where people are fretting about uh whether the Fed is will remain independent uh or is it going to come more and more under the control of the administration which definitely would um move in the direction of yield curve control um fiscal dominance and so forth. So that's two. Three would be the everpresent uh concerns over the geopolitical situation and there's not enough time to go into all of that and I'm certainly not an expert on it um and any one of them but uh you only have to look at the papers to see um you know what those are. And then uh the other thing that comes to mind is just the gradual movement away from the US dollar as a as an international reserve asset. Um and conversely the movement in the direction of uh certainly for um central banks to own more physical gold to replace the dollar. So, that's kind of a slow slowly progressing uh factor that uh it isn't a day-to-day thing, but it's a it it underpins uh the gold price, and I've probably forgotten a couple. Well, those are the main things. Well, I think it's very fair to say that there's almost too many factors to name and definitely there's not enough time to go into every single one right now, but I find I find that people have gotten used to this this high price level very quickly. And right now, what I'm seeing a lot of questions about from our audience is what will be the trigger to drive the gold price into its next leg higher. And in your piece, you mentioned that a major decline in equities is something that might not be being priced in right now. So, I'm wondering if you could go into that and talk about what that would look like. >> Well, if you remember um what happened in 2007 when we had a a meltdown in the basically the entire financial system and I'm not calling for that. I'm not expecting it. I and again this isn't my expertise but um I do feel like we're in the top quartortile maybe the top desile in terms of um exuberance as Greenspan once called it um of overvaluation. So, we're in a danger zone and um uh and in my in my uh in my um paper I talked about a bunch of them. You have valuations certainly where at the extreme levels of valuation valuation can stay high for a long time. So, it's not necessarily a timing. It's not an aid to timing. Um you have um uh heavy retail participation which is again it's not necessarily by itself bad but you look at the amount of day trading that's taking place in these uh zero uh day expiration options which are I think I in my piece I mentioned 62% of options uh activity um you have um you have uh extreme um emotional um uh support for a very few kind the market I guess what I'm trying to say is market the market is heavily concentrated um and the averages are supported by a very small number of names and I I can go back to when I was just starting in this business in in the 1970s, we had something called the Nifty50 and it was just it's like a replay of today or today is like a replay of the 70s where all the institutions were heavily crowded into a few favorite names. They called them the Nifty50 back in the 70s and today it's uh you know AI related and similar. So so market concentration is another thing. So, I don't want to go on too long about this, but I do think that um if when the tables turn, and I think we're, you know, maybe within a year, maybe a year and a half, I'm not a timing expert by any stretch of the imagination, but um it it seems to me that you uh if you look history and there are other times when you've had, you know, 2000 was a similar kind of thing. um you had this mania in 2007 with um mortgage back securities. So every mania is different except the common is that you have market concentration and then leverage on top of that. We just saw I just saw today that the um that um margin debt topped one trillion for the first time. I mean, yeah, okay, market values are higher, so you know, the the growth is bigger, so the leverage could be bigger, but it's still a milestone. Anyway, not to go on about it, but in a downturn, as we had in ' 07, as we had in 2000, as we had in the mid70s, gold tends to get a bid. And it gets a bid from people that are incorrectly positioned in the market. And I would say that would be most investors. And we do als we can also say that gold is underowned. Um and and therefore flows out of the favorite names, favorite positions into gold um could substantially move the gold price. And and again, when I look at sellside research, when I look at the um um what comes out of the strategy gurus on Wall Street, I I don't think they have a clue as to what a reversal or what an in new inflows into gold and more importantly gold stocks, at least for us, could do to the price of both um gold is um relatively illquid compared to the flows that could come into it um in a and again I'm not calling about a 10% pullback um or anything like that and again I I'm just maybe overly stressing that I'm not a market market timing expert but when the when the psychology turns less favorable and mainstream positioning uh comes more and more into question. One of the things that historically investors have gone to is are defensive positions in in in gold shares and um in my in my view that process which which needs to take more than six months. It needs to take three or four, five years so that people get kind of um worn out uh by not making money in their favorite names. Um and when that happens uh flows into gold and gold stocks, first take gold. I in in my opinion gold the gold price could more than double. So we're at 35 3,400 today. So I, you know, I would not be surprised if my thinking about where the market is is half right, uh, we could see a gold price that is 7 $8,000. And for the gold miners uh which are very very cheap and underowned uh I didn't mention earlier in my rant that um um money has flown out of uh gold stocks all year long. Uh I'm using GDX which is the VANC gold mining ETF as an example. money has has net net year to date um drifted out of GDX and yet GDX with with money going out is up almost 75%. I'm just winging that number but it's up a heck of a lot more than uh the S&P. So, I'm just thinking that gee, no, nobody's on board or very few are on board. Um and when um money starts to look for a different place to be and they think of gold stocks as a good place to be and if the gold price does half of half of what I'm thinking the the the the earnings of the of these producers these especially the midcap and smaller cap producers will be bigger than their market caps are today. So, you know, why is that not an interesting proposition? Um, I keep scratching my head, but you know, in the meantime, gold stocks have been doing great. They've been better than any other sector in the S&P. And yet, very few people are even thinking about it. >> I think that's that's very true. And I want to go a little bit deeper on gold price and gold stocks. But before we go over there, I want to mention one other factor I've been hearing when it comes to people talking about what could be the trigger for this next leg in the gold price. I'm starting to hear more talk about interest rate cuts from the Federal Reserve, especially after last week's speech from Jerome Powell. So, I'm curious as to where you would put that in terms of your thinking. >> Well, that is I I didn't mention it, but thank you for bringing it up. Um yeah, lower interest rates uh especially if it comes about with some sense that is that the Fed is being browbeaten and central bank independence is being threatened. um you know just puts a bad look on the whole fiscal monetary discipline uh argument and um so um I I don't know whether that's priced in or not but but it it's it's it's a helpful uh tailwind for uh for gold and and and and mining stocks. >> Thanks for going into that one. And so let's talk a little bit more about what's going on with the gold mining companies. You mentioned even though the gold price is is so high right now, the miners are starting to put out these very strong results, there's still a lack of interest from the the general public. So I know I know it's a tough question, but what what do you think would bring investors back in? Why do you think they're not interested right now? And I know I know there's a lot of things we can go into there, but thoughts from you. >> Yeah. No, I think again this is why you know all the catalysts we talked about earlier u geopolitics fiscal issues all of that ddollarization they're there they're they're not going away and that that's probably why gold is trading effort in appear appearing appear with the appearance of effort effortlessness in this range of 3200 to 3400 So, and any one of them could uh without warning uh come to the forefront and and and and and get more investors to look at gold and and the miners. Um but the one thing that and I and people articulate that I mean it's not as if it hasn't been talked about. So, but they're real. I mean, I'm not saying they're they're there's any way to dismiss them, but the one thing that's missing in this again and and going back to the theme of my um uh cure for financial dementia is is the market the tables being turned in the market so that investors broadly speaking and I'm talking all the way from retail to institutional and official institutions. Um if their if their if their expectations for the returns they can get in the in the standard menu of holdings that they have and we all know what they are. If that if that sour and and you know believe me I'm I I think it will. I just can't couldn't tell you the exact date, but I think within two years is a reasonable bet. That is a catalyst for gold and for gold miners that has not been priced in. And so, you know, what's going to, you know, it could be a lot of things, but we're at a valuation where we're we're basically priced for perfection with the S&P trading at a record level of u enterprise value to sales just to pick one. I mean, that's the Buffett indicator. um you know just look at history and respect history and say you know maybe maybe I should have some exposure here where where I don't have any and most people you know would say oh we have a you know we have 1% position well that's that's a ca type of answer that's like you know I' I'd basically answer that question tick that box but there's no conviction it's just like I'm there if they're there at all which most people aren't. Um, so if that changes and we go from, let's pretend it's 1% and that's probably more than it really is in terms of global AUM, you know, we figure 500 trillion. You know, if it if it if it's 1% of that, I'd be surprised. If it goes to 2%, you know, you're going to see uh things happen to the gold price and to the mining stocks along the lines of what I said earlier. >> Well, and looking a little bit more closely at the gold mining stocks. So mentioned the last quarters have been very strong and I'm curious about what you think we're going to see moving forward into the future. Are we going to continue to see this this level of results? Because I know in in the previous gold bull market, some of the big companies were criticized for ultimately making poor investments, some bad decisions there and and that might be now even why some people are a little bit wary of of getting into the sector. So thoughts on their future performance? >> Well, you know, in in my in my article, I quoted uh Galbrath who said it takes 20 years for people to in in this business to forget the mistakes of 20 years ago. And that's probably that's probably right. I mean, if you look at the cycles in the market, you know, there's a there's a new brand of idiocy every 20 years. And that's the inverse of that is that the the the stupid things that the mining companies did 20 years ago, and they did a lot of bad things. Um, I think I referred to them as juvenile. Um, well, I think maybe they've learned their lesson at least for a while. and and what you're seeing now is more and more talk of u increasing dividends. We're seeing a lot of share buybacks. Um we are seeing M&A but um so far from what I what we can tell our our investment team uh that manages the active portfolios and gold mining shares at Sprat. We think most of these acquisitions have been sensible devestatures uh uh streamlining um portfolios, companies like Numont for example doing that kind of thing. So you know for now it looks to me like what's taking place is sensible. And by the way, um, you know, in a rising gold price environment, a lot of people look smart in retrospect because they bought XYZ asset thinking the gold price was going to be 2500 and it's 3500. Well, everybody looks smart in that environment, but that's kind of where we are. So I think it's going to be a ways before we see the kind of um derangement that we're seeing in in in large parts of the stock market. >> Well, I think I think that's reassuring to hear. And then I think the other thing that investors are wondering right now is where to focus when it comes to the gold stocks. So the larger companies are delivering these these strong returns and people are maybe wondering is it time to move down the food chain and of course each person is different depending on what they're trying to accomplish with their portfolio but any thoughts you would share there. >> Sure. I mean um we are um kind of we kind of favor the midcap um mid to smaller cap. We do have representation in the familiar names agont and so forth. Wheat and precious would be three of our top holdings. Alamos would be another that have already done very well and are doing well and will continue to do well. But because there is so little research coverage of some of these midcap names, I've got to be careful with my compliance team. Not to mention a bunch of them, but I would say just look at our look you anybody can look at our um holdings um uh and you can see a lot of these midcap names where where what I said earlier where you're going to see potential earnings that exceed the today's market caps and that's what we are looking for. That's what we're favoring. So I would I should mention while I while I have the floor here and thank you for inviting me. Um we did start an an ETF this year, an actively managed ETF. The ticker is GBU GBUG GBug. Um and it's grown very quickly. Um I think assets are now over 60 million from a standing start in February. Um, and you can look at that. Just go to Bloomberg and see what we hold there. And I' I'd say um, you know, that also would be a good answer to your question. >> Well, thank you for that. And I'll I'll find the links and I'll include those links in the video description as well, so people can go check that out. And so, this gives us a pretty good look, I think, at what's going on with gold and the gold stocks. I did want to ask you about silver. So, given your outlook for gold, what do you see coming for the silver price? Well, um not to get too dramatic, but I think it's a smoldering volcano. Um how's that for exaggeration? Um but it's sort of hanging out below 40. Um we talked about it this morning on our daily call and u silver production mining is less than consumption. Um and so the market is in deficit. Um so uh you've got structural things that favor higher prices. Um and um you know if all of these other things that I think will take gold higher fall into place uh silver will get a bit and it's it it tends to be more volatile than than gold itself. It's a smaller market doesn't take as much money to move it. So I think um you know I kind of played around with potential price targets on gold and they didn't give a date so you can't hold me to to that. Uh but I would say you know order of magnitude I think silver could do more in terms of percentage gains. >> Well I think that's definitely significant and I feel like I I almost don't need to ask this question but I will. I was going to ask about the silver equities and the opportunity there, which sounds like it would also be quite significant, but maybe any advice on how to approach the silver stocks given that the universe is is quite a bit smaller than it is for gold, for example. >> It it's much smaller and you know, many of our holdings have been taken over. So the population of silver stocks that an investor could look at and I don't have a number off the top of my head in terms of the aggregate market cap of the silver names but it's it's quite small. Um so uh uh again I think that the that the dynamics and Maria Smnova who's you know a key member of our portfolio management team is is the real expert on silver and she's written a lot and it's on our website. Um but uh uh those stocks I think again silver is a little bit more aggressive uh but it tends to be in the slipstream of gold as far as dynamics because it it is a monetary metal and the population of silver stocks is has shrunken because of all these takeovers many of which we've participated in. So, um, Slim Pickins, but the the names that are out there, I think will be, uh, very, very good performers. >> I think very, very fair assessment there. And so, I will let you go unless you had any final thoughts that you would leave investors with. I know it's kind of a a complex, tricky environment right now. >> Well, I would just, you know, I would just say uh, this is to the generalist. Um uh I think u be open-minded, pay attention to the space, uh avoid complacency in um you know, your existing positioning and question it. Um and you know, gold stocks and gold and silver are an answer. They're not the only answer. Maybe higher levels of cash would be appropriate. Maybe fixed income. there are, you know, you know, maybe the long-term longdated treasuries or but I this is not I guess my I guess the quick answer to your question would be to question current positioning and and if uh and I think that that is not being done but I think those who do and land some of their exposure into this space will be very happy two or three years from now. Well, I think that's a very nice way to wrap it up. So, thank you so much for coming on to go over what's happening in Gold and Silver. This was really great. >> Well, thank you for inviting me, >> of course, and we'll hope to have you back soon. For now, I'm Charlotte Mloud with investingnews.com and this is John Hathaway. 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