Sprott Inc. · TSX:SII
Sprott — Gold's Value in the Post-COVID Recovery Webcast (June 2021)
30 slides from Sprott's conference presentation, Jun 14, 2021
Slide 1: Gold's Value in the Post-COVID Recovery
Gold’s Value in the Post-COVID Recovery Webcast: Monday, June 14, 2021 V5_6.13.2021
Slide 2: Featured Speakers
Featured Speakers John Hathaway, CFA, Senior Portfolio Manager John Hathaway joined Sprott Asset Management in January 2020. Mr. Hathaway is a Portfolio Manager of Sprott Hathaway Special Situations Strategy and Co-Portfolio Manager of the Sprott Gold Equity Fund. Previously, Mr. Hathaway joined Toc
Slide 3: A Global Leader in Precious Metals Investments
A Global Leader in Precious Metals Investments US$17.1B in AUM1 Sprott (SII) is publicly listed on the NYSE and TSX Exchange Listed Managed Products Equities Lending Brokerage ~$12.2B AUM ~$2.5B AUM ~$1.0B AUM • Physical Bullion Trusts • Flagship U.S. mutual fund • Bespoke credit investments • Capit
Slide 4: Sprott's 2021 Outlook on Gold and Gold Equities
Sprott’s 2021 Outlook on Gold and Gold Equities GOLD • Both gold and gold stocks are under-represented in both institutional and investor portfolios, and there is still plenty of upside potential for gold assets • In Q2, gold climbed back above $1,900, on renewed inflation fears and historically low
Slide 5: Quote on government spending and central banks
“It is dangerous to accept that government spending no matter how much and what for is the only solution and even more dangerous to believe that the shape of the recovery is only a function of the size of the stimulus package.” “Central banks do not manage risk, they disguise it.” - Daniel Lacalle,
Slide 6: The Case for Gold
The Case for Gold John Hathaway Senior Portfolio Manager Webcast: Gold's Value in the Post-COVID Recovery | 6
Slide 7: Performance Since 2000: Gold vs. Stocks, Bonds and USD
Gold Performance Since 2000 Gold vs. Stocks, Bonds and USD Returns for Period from 12/31/1999-5/31/2021 700 Current Average Bull Market 9.22% Annual Returns 600 Post GFC Precious Metals Bull 500 Market Index (Base = 100) 400 7.07% 300 4.93% 200 100 -0.59% 0 Gold S&P 500 TR BB US Agg Bond U.S. Dollar
Slide 8: Gold Has Thrived When Real Interest Rates are Low
Gold Has Thrived When Real Interest Rates are Low The gold price has risen more than 166% during the period, as real yields have fallen to -0.86% (5/31/2007 to 5/31/2012) U.S. Real Yields Below 0% in 2021 3.5 $2,500 3 2.5 $2,000 $1,907 2 LHS Interest Rate % 1.5 $1,500 RHS Gold Price 1 0.5 $1,000 0 -
Slide 9: Fundamentals Support a Long-Term Uptrend in Gold
Fundamentals Support a Long-Term Uptrend in Gold • Central bank balance sheets, government deficits and fiat M2 growth are all experiencing simultaneous explosive growth • Other financial markets are increasingly correlated and tied to this growth • The gold sector can provide valuable insurance and
Slide 10: Macro Consensus is Wrong
Macro Consensus is Wrong U.S. 10-Year Treasury Yields • to Click Bond editmarket Mastercould be discounting title style that economic recovery has peaked and that recession is around the corner • If so, equity market risk is high because earnings will fall short of expectations • Could mean that fut
Slide 11: The Case for Gold Equities
The Case for Gold Equities Douglas Groh Senior Portfolio Manager Webcast: Gold's Value in the Post-COVID Recovery | 11
Slide 12: Supply Factors: Discovery & Production
Gold Supply Factors: Discovery & Production • Despite record spending on exploration, new gold discoveries are less frequent • Gold production trending higher offset against declining discoveries means mining more marginal ore; there are not enough quality deposits to sustain future production witho
Slide 13: Miners EPS Outlook is Very Positive
Gold Miners EPS Outlook is Very Positive Earnings Per Share (EPS) estimates are up ~155% for gold miners and up ~2% for the S&P 500 S&P EPS: Represents ~2% Increase 24.00 3.00 23.40 22.84 2.80 23.00 2.60 22.00 2.61 2.40 Gold Miners EPS S&P 500 EPS 21.00 2.20 20.00 2.00 GOLD EPS: 1.80 19.00 Represent
Slide 14: Mining Equities vs. S&P Index: EV/EBITDA
Gold Mining Equities vs. S&P 500 Index: EV/EBITDA • Gold mining shares represent unprecedented value in comparison to conventional equity alternatives • Miners trade at EV/EBITDA* of 8.0x compared to the equal-weighted S&P 500 of 14.9x S&P 500 EV/EBITDA Gold Mining Stocks EV/EBITDA 18 16 14.9x 14 12
Slide 15: Miners: Favorable Profit Margins and Free Cash Flow
Gold Miners: Favorable Profit Margins and Free Cash Flow Profit Margins have Expanded Significantly More Miners are Now Realizing in Recent Years Free Cash Flow Click to edit Master title style All-in Sustaining Costs (bars) vs. Gold Spot Price (solid line) and Reserve Price (dash line) Source: Scot
Slide 16: Miners: Undervalued Cash Flows and Inexpensive Resource Ounces
Gold Miners: Undervalued Cash Flows and Inexpensive Resource Ounces Price-to-Cash-Flow: Scotiabank Universe of Adjusted Market Cap per Ounce of Coverage Average Resource/Gold Price Click to edit Master title style Source: Scotiabank; Bloomberg. Data as of 3/31/2021. Webcast: Gold's Value in the Post
Slide 17: Valuation Gap: Senior vs. Junior Gold Miners
Valuation Gap: Senior vs. Junior Gold Miners The valuation gap between North American junior and senior gold miners is at extremes. Junior mining stocks are trading at a significant discount to underlying NAVs vs. senior mining stocks. Senior Miners Junior Miners 80% 60% 40% Premium or Discount to N
Slide 18: Equities: M&A Cycle is Underway
Gold Equities: M&A Cycle is Underway • In 2019, large-cap miners led the wave of M&A activity in the gold sector • In 2020-2021, this activity shifted to include the small- to mid-cap miners, Sprott’s area of expertise Gold Miners M&A Activity (2000-2020) $40 $38 $38 $35 $35 $30 $25 Billions $25 $22
Slide 19: Gold as a Portfolio Allocation
Gold as a Portfolio Allocation Ed Coyne Senior Managing Director, Global Sales Webcast: Gold's Value in the Post-COVID Recovery | 19
Slide 20: Gold Can Provide Portfolio Protection
Gold Can Provide Portfolio Protection Gold versus S&P 500 and U.S. Treasuries During “Crisis” Periods (2007-2020) COVID-19 Pandemic S&P 500 TR Index % U.S. Treasuries Gold Bullion % 12/31/2019-12/31/2020 30% 26% 25% 18% 20% 16% 12% 10% 8% 8% 4% 5% 4% 4% 5% 2% 0% -10% -12% -12% -20% -15% -19% -30% -4
Slide 21: Gold is a Necessary Portfolio Asset
Gold is a Necessary Portfolio Asset Gold is an effective portfolio diversifier given its low historical correlation to traditional investments Correlation of Spot Gold to Traditional Financial Assets (December 31, 2000 – May 31, 2021) 1.00 1.00 • Low 0.90 correlation with most 0.80 asset classes 0.7
Slide 22: 5-10% Gold Can Enhance Returns and Reduce Volatility
5-10% Gold Can Enhance Returns and Reduce Volatility Adding 5-10% physical gold to a traditional 60/40 U.S. portfolio can enhance returns and reduce volatility. A 50/40/10 portfolio outperformed 60/40 by nearly 29 basis points per year for the past 20 years. Adding 5-10% Gold Enhances Traditional 60
Slide 23: A 5%-10% Portfolio Allocation to Gold
Gold Portfolio Allocation A 5%-10% Portfolio Allocation to Gold With a traditional 60/40 portfolio, equities(1) Adding 10% gold bullion to a portfolio, represents 98% of the total portfolio risk. reduces the equity risk contribution from 98% to 83%. Gold 10% Bonds(2) 40% Equities Equities(1) 50% 60%
Slide 24: Get More Out of Your Gold Allocation
Get More Out of Your Gold Allocation . Hypothetical performance may not reflect an investors actual performance. Performance may differ should different time periods be used. Should spot gold’s performance or the HUI Index performance not mirror the hypothetical time period used, performance may not
Slide 25: Sprott's Gold Investment Strategies
Sprott’s Gold Investment Strategies A Range of Investment Options Physical Active Gold Equities Passive Precious Metals with Physical Gold Gold Equities • Sprott Physical Gold Trust • Sprott Gold Equity Fund • Sprott Gold Miners ETF (NYSE Arca: PHYS) SGDLX (NYSE Arca: SGDM) • Sprott Physical Gold an
Slide 26: Sprott Gold Team
Sprott Gold Team INVESTMENT TEAM INVESTMENT TEAM EXECUTIVE TEAM Tenure Tenure Tenure Team (Years) Team (Years) Team (Years) John Hathaway, CFA Jason Mayer, CFA Whitney George President, Sprott Inc.; Chief Investment Senior Portfolio Manager. 51 Senior Portfolio Manager, 20 Officer, Sprott Asset Mana
Slide 27: Regional and National Sales Coverage
Regional and National Sales Coverage Webcast: Gold's Value in the Post-COVID Recovery | 27
Slide 28: Q&A/Contact Information
Q&A/Contact Information Ed Coyne Senior Managing Director, Global Sales Sprott Inc. Royal Bank Plaza, South Tower 200 Bay Street, Suite 2600 Toronto, Ontario M5J 2J1 [email protected] 888.622.1813 [email protected] Visit sprott.com Webcast: Gold's Value in the Post-COVID Recovery | 28
Slide 29: Important Disclosure
Important Disclosure Past performance is no guarantee of future results. You cannot invest directly in an index. Investments, commentary and statements are unique and may not be reflective of investments and commentary in other strategies managed by Sprott Asset Management USA, Inc., Sprott Asset Ma
Slide 30: Important Disclosure
Important Disclosure Sprott ETFs An investor should consider the investment objectives, risks, charges and expenses carefully before investing. To obtain a Statutory Prospectus, which contains this and other information please contact your financial professional, visit sprottetfs.com or call 888.622
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