Sprott’s Coyne on the "Multi-Market Cycle Opportunity” in Metals

Ed Coyne, Senior Managing Partner at Sprott, took time from Future Proof Citywide to talk with Sumit Roy, Senior ETF Analyst at ETF.com, about growing metals popularity and metals investing. The conversation covered the current market environment as well as diving into the Sprott Silver Miners & Physical Silver ETF (SLVR), the Sprott Energy Transition Materials ETF (SETM), and the Sprott Active Metal & Miners ETF (METL). The following is a transcript of their conversation. 

The Rise of Metals 

Roy: Ed it's so nice to see you. How are you doing? 

Coyne: Doing well. Little warm, but doing well. 

Roy: Very hot. But you're the perfect guy to talk to. Because over the past several months, metals have been absolutely exploding. We talked about this a second ago. Everything from gold to silver to copper has been rising. Why have metals been rising so broadly over the past several months?

Coyne: Yeah, it's really been the last year, year and a half where the marketers are starting to wake up to the realities of what's going on. If you're talking about gold, you're talking about it as a monetary metal. And you look at how much debt we have both here and abroad, how much printing we're of doing up currencies.

I always say we're not in a gold bull, we're really in a fiat bear market. And so the world is kind of woken up to that reality. And when you think about things like stablecoin and other technologies out there that are looking for things like gold to back a part of the value of what they're creating, it's really getting a bigger chair at the table when it comes from a currency standpoint.

So I think that really speaks to the gold story. Think about things like silver—silver, yes, is still a precious metal, but it's really bridging the gap over to the critical material side of the equation. And the world is starting to wake up to that reality as well, that we need more and more silver and it's getting harder to get.

And then you go into the critical materials. The two we really like right now is uranium; it's kind of a supply demand dynamic. As more and more reactors are staying open and new reactors are coming online, the supply demand dynamics for the feedstock uranium is continuing to grow. And we love that story. And then the last one, and there's others, but the last one we really like is copper. 

None of this happens, including this video, without copper. And so we need more and more of it, and all the easy stuff's been had. So those are really the four metal. I think the world is kind of waking up to that reality and seeing it as a multi-market cycle opportunity.

The Diverse Use-Cases of Metals

Roy: So is each narrative for each metal different? You talked about gold. That's kind of the debasement trade. Silver—it's a hybrid. You've got copper tied to the electrification of the economy. Are they all different or are there certain threads that connect all of them like deglobalization?

Coyne: Yeah, there are some differences to each one of the stories, but the bottom base core is simple supply demand dynamics. Each one of these we need more of. Take silver, for example. Silver has had its fifth year, sixth year in a row where more has been consumed than has been produced. And so that supply demand dynamics not going away anytime soon unless we put a freeze on AI, and data centers, and printing of money, and taking on more debt. if we stop all that, maybe the supply demand gets rebalanced, but we don't see that happening anytime soon. 

And so the core like ecosystem is that we need more of all these metals. There's not enough of them. We think the price has to go higher to incentivize CapEx to incentivize investment. And so that's really the common theme. And then each individual metal—talking about gold for example, that's a monetary metal. Talking about silver—It's the bridge metal going into the criticals. Each one of them has its secondary story of why they're unique right now.

Roy: Gotcha. And of course, the age old question when it comes to investing in these stories when it comes to metals is do you buy the physical? Do you buy the miners? What do you think?

Coyne: Yeah, so I always tell people if they're new to the investment theme, physical first, right? You think about what are you trying to get. You're trying to get exposure to the space. The miners, the equities themselves, they're stocks, right? They go up, they go down, they have management. You look at it in mining—you've got property issues, you've got risk of jurisdiction, nationalization of mines potentially. So that's more of a risk-on allocation. So if you think about the physical market that's really risk-off diversification. If you think about the equity or mining market, that’s more risk-on, opportunistic allocation. 

So you really should think about them sort of as different trades in the market. But I always tell investors that you're looking at the space right now, start with the physical market first. Get comfortable with that, and then as you look to kind of diversify your portfolio within this universe, then you start thinking about the equities.

Under the Hood of the SLVR ETF

Roy: Gotcha. And Sprott of course is synonymous with metals. You've got so many metals ETFs out there. Let's talk about specific ETFs. You were even nominated and have won the Best New Commodities ETF¹ for your SLVR, silver ETF. Let’s talk about that one. And let's talk about some others that you might want to throw out there.

Coyne: Sure. I think SLVR or our silver ETF is really exciting. It was exciting to win that award today. But what's exciting about it is it's showing you that the world has woken up to this narrative. They understand that silver is not just gold's little brother or little sister. It really has its own personality. It has its own supply demand dynamics. It's really stepping out of gold's shadow. 

Yes, it still will trade a little bit lockstep with what gold's doing directionally. But as silver gets consumed more and more from a tech standpoint, you're seeing that demand start to really have its own driving forces behind it, and you're seeing that on the physical side, and you're also seeing it on the miners themselves. 

So I think SLVR and silver in general, both on the physical and the equities, is really getting its own personality and really stepping out of gold's shadow. And so I think that's why that's happening, why investors are looking at it, why their performance is happening.

Roy: And that's a unique fund, right?

Coyne: It's very unique.

Roy: Pure play, silver miners. Right? 

Coyne: That's correct. There's not that many of them out there. And so when you look at it from liquidity standpoint, when you look at it from a quality standpoint, you know, Sprott's got over four decades of experience in the mining space, in the metal space. And so if you're going to take a very specific allocation like silver miners, you'd better be doing it with someone like ourselves who knows what they're doing, they've been doing it for a long time. And it's part of a bigger ecosystem of all metals type products.

1. SLVR was awarded "Best New Commodities ETF" by etf.com.  Methodology: A qualitative and quantitative analysis measuring each fund's Merit, Position, Utility and Power in the Commodities category. The etf.com editorial board then narrows the funds to five finalists ultimately voted on by etf.com account users (learn more). Measurement period is 1/1/2025 - 12/31/2025.

From Core Allocations to Active Strategies

Roy: Yeah. And I'd love it if you could just lastly touch on this one very unique fund you have—it's the Strategic Metals this year. Tell us about that.

Coyne: Sure. That's SETM I think you're talking about. And we like that one because of a lot of advisors, the feedback we got is, “We love all the vehicles you have. We love the thematic approach to copper ,and uranium, and rare earth, and battery metals, and so forth. But I can only have so much room on my balance sheet for so many funds to represent what I want to do."

SETM is really unique in that it's a core allocation: about a third of the portfolio is giving you exposure to the creation of energy, which is predominantly uranium for nuclear and silver for solar. Then you've got about a third of the portfolio focused on the movement of energy, which is going to be predominantly copper. And then you have a third in the storage of energy, which is going to predominantly battery metals and rare earth. So in one-stop-shop, SETM gives you the entire ecosystem of critical materials in one fund. 

For those investors that want to have a more active approach to that, we have a fund called METL, Metal, which is going to be a more active approach to that in the same ecosystems. So for example, right now that has got more steel in it because we're having a more active conversation, more active allocation in that space. But that, we like those two ETFs right now because it really gives you the totality of that allocation and the totality of that narrative.

Roy: Fantastic. SETM and METL, everyone should check those out. Thanks so much, Ed, for your time. Really appreciate it.

Coyne: Yeah, thank you. 

Important Disclosures and Definitions

A bull market is one where prices are expected to rise, while a bear market is one where prices are expected to fall. Fiat is shorthand for state-backed currency, like the US dollar or British pound. CapEx stands for capital expenditure. A pure-play investment gives investors direct, concentrated exposure to one specific area, like silver miners and physical silver.

An investor should consider the investment objectives, risks, charges and expenses of each fund carefully before investing. To obtain a fund’s Prospectus, which contains this and other information, contact your financial professional, call 1.888.622.1813 or visit SprottETFs.com. Read the Prospectus carefully before investing.

Exchange Traded Funds (ETFs) are considered to have continuous liquidity because they allow for an individual to trade throughout the day, which may indicate higher transaction costs and result in higher taxes when fund shares are held in a taxable account.

Diversification does not protect against loss. The funds are non-diversified and can invest a greater portion of assets in securities of individual issuers, particularly those in the natural resources and/or precious metals industry, which may experience greater price volatility. Relative to other sectors, natural resources and precious metals investments have higher headline risk and are more sensitive to changes in economic data, political or regulatory events, and underlying commodity price fluctuations. Risks related to extraction, storage and liquidity should also be considered.

Shares are not individually redeemable. Investors buy and sell shares of the funds on a secondary market. Only “authorized participants” may trade directly with the fund, typically in blocks of 10,000 shares.

The Sprott Active Metals & Miners ETF (METL) is new and has limited operating history. METL is actively managed, and as such, the fund adviser’s judgments about the growth, value, or potential appreciation of an investment may prove to be incorrect or fail to have the intended results, which could adversely impact the fund’s performance relative to its benchmark.

Sprott Asset Management USA, Inc. is the Investment Adviser to the Sprott ETFs. ALPS Distributors, Inc. is the Distributor for the Sprott ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc.