Timing the launch of a new ETF

When launching a new ETF, Schoffstall said it’s important to identify areas of the market with favorable long-term investment outlooks. The team at Sprott sees opportunity in gold and silver miners.

The gold price made new record highs numerous times in 2024 and has continued to do so in 2025.

The yellow metal's gains have largely been fueled by central bank buying from countries like China, Turkey and Saudi Arabia, which have been adding to their gold reserves. Likewise, retail investment in physical gold has been relatively strong in these regions, contributing to even more momentum in the market.

“Physical gold has eclipsed at least 1,000 metric tons each of the last three years,” explained Schoffstall. This interest has come as governments work to reduce their exposure to the US dollar.

Western investors have remained on the sidelines until recently. Now, the combination of conflicts in the Middle East and Europe, along with the broader chaos introduced into the global financial markets by the Trump administration, have started to push European and North American investors back into the market.

Gold is also suffering from supply-side problems, with declining grades and fewer discoveries. Schoffstall thinks that this could push gold into a situation where production is unable to sustain demand.

He sees a similar problem with silver. Industrial sectors now account for 55 percent of the market, largely due to demand from green energy, which drives an annual growth rate of 28 percent.

This increasing demand comes at a time when supply isn’t keeping up.

“The silver market has been in a deficit for each of the last six years,” Schoffstall said.

Stocks haven’t followed metals prices

Equities typically outperform metals, but in the current market, these gains have yet to materialize.

“Gold equities have underperformed spot gold for the last 13 to 14 years,” said Schoffstall, who suggested that investors have preferred to invest in bullion. He believes the situation could be set to change.

“The widening performance gap may provide the opportunity for a catch-up trade. Silver miners have recently outperformed silver amid an improving macro backdrop for the metal,” he said.

When it comes to gold, it's no secret that equities have fallen behind.

“Gold miners are trading multiples lower than the S&P 500 (INDEXSP:.INX) and with greater profitability and lower leverage, presenting a relative value opportunity for investors,” he said.

That isn’t to say all mining companies have underperformed; some have done quite well. Schoffstall explained that the average dispersion between the top and bottom securities is 171 percent; he added that there is significant underperformance in the bottom 50 percent of equities relative to the top 25 percent of performers.

“Given the operational complexities of mining operations, investors may benefit from an active strategy focused on long-term business fundamentals and/or growth potential,” he said.

Investor takeaway

In closing, Schoffstall emphasized that Sprott's goal is to take a “value-oriented and contrarian” approach to managing its new ETF, and aims to seek undervalued precious metals companies.

When considering any investment, it's key that investors weigh their appetite for risk. While fund managers want to see positive returns, the equity markets can be volatile, and so can ETFs. Having more products come to market means that investors can find a niche that works with their approach to investment and fits within their portfolio.