Sprott Physical Gold Trust · AMEX:PHYS
Sprott Physical Gold Trust — Sprott — Investor Presentation (February 2020)
35 slides from Sprott Physical Gold Trust's investor presentation, Feb 19, 2020
Slide 1: Sprott's 20/20 Vision on Gold & Gold Stocks
Sprott’s 20/20 Vision on Gold & Gold Stocks Webcast February 19, 2020
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: Sprott Group Overview
Sprott Group Overview With US$11B in AUM(1), Sprott is one of the largest investment firms focused on the mining sector • Sprott’s sector breadth provides it with a competitive advantage in precious metals and mining investments • Sprott’s extensive reach in the sector provides unparalleled access t
Slide 4: Invested Across the Metals & Mining Spectrum
Invested Across the Metals & Mining Spectrum US$11B in AUM(1) Public Investments Private Investments Exchange Managed Private Private Private Listed Equities Equity Lending Streaming • 4 Physical Bullion • Managing public • Diversified portfolio • Bespoke credit • Long dated streams Trusts resource
Slide 5: Sprott and Tocqueville Gold Team Create an Industry Leader
Sprott and Tocqueville Gold Team Create an Industry Leader • Sprott acquired the Tocqueville Gold Strategies in January 2020 • The combination of Sprott and Tocqueville gold investment team creates an industry leader in gold equity investments • Senior portfolio managers John Hathaway and Douglas Gr
Slide 6: Sprott Gold Team
Sprott Gold Team INVESTMENT TEAM TECHNICAL ADVISORS EXECUTIVE TEAM Tenure* Tenure* Tenure* Team (Years) Team (Years) Team (Years) John Hathaway Whitney George Neil Adshead President, Sprott Inc.; Chief Investment Senior Portfolio 50 Portfolio Manager 16 Officer, Sprott Asset Management; 40 Manager C
Slide 7: Sprott Gold Equity Strategies
Sprott Gold Equity Strategies(1) Strategy AUM • $1.8 Billion as of 12/31/2019 Inception • 1998 • Mutual Funds Portfolios • Separately Managed Accounts • Private Funds (1) Represents the AUM of the Tocqueville Gold Strategies acquired by Sprott Asset Management on 1/17/2020. Webcast: Sprott’s 20/20 V
Slide 8: Market Opportunity
Market Opportunity
Slide 9: Gold Lagged for Most of the Past Decade…
Gold Lagged for Most of the Past Decade… Average Annual Total Return Performance (2011-2019) 350 Gold 13.39% S&P 500 TR 300 US Agg Bond Index U.S. Dollar 250 200 3.44% 150 2.23% 100 0.73% 50 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Source: Bloomberg. Period from 01/01/2011-12/3
Slide 10: After Outperforming for 10 Years Through the GFC
After Outperforming for 10 Years Through the GFC* Average Annual Total Return Performance (1999-2010) 600 Gold Gold 15.60% S&P 500 TR average annual 500 return U.S. Agg. Bond Index U.S. Dollar 400 300 6.34% 200 0.41% 100 -2.28% 0 Source: Bloomberg. Period from 12/31/1999-12/31/2010. Gold is measured
Slide 11: The Modern Era of Gold (Take the Long View)
The Modern Era of Gold (Take the Long View) Average Annual Total Returns (1999-2019) 700 Gold US Agg Bond Index Gold 600 8.66% S&P 500 TR average annual return U.S. Dollar 500 Index (Base = 100) 400 6.06% 300 5.03% 200 100 -0.28% 0 Source: Bloomberg. Period from 12/31/1999-12/31/2019. Gold is measur
Slide 12: Gold Outpaced Bonds in 2019…
Gold Outpaced Bonds in 2019… Cumulative Total Returns 2019 20.00% Gold Spot Gold 18.31% 18.00% 16.00% US Agg Bond Index 14.00% 12.00% Bonds 10.00% 8.72% 8.00% 6.00% 4.00% 2.00% 0.00% Source: Bloomberg. Period from 12/31/2018-12/31/2019. The spot price of gold refers to the price of one ounce of gold
Slide 13: …and Over the Past Four Years
…and Over the Past Four Years Cumulative Total Return Performance (2015-2019) 50% Spot Gold Gold 45% 42.99% 40% US Agg Bond Index 35% 30% 25% 20% Bonds 15.56% 15% 10% 5% 0% Source: Bloomberg. Period from 12/31/2018-12/31/2019. The spot price of gold refers to the price of one ounce of gold. US Agg B
Slide 14: Even with a Strong S&P 500, Gold Delivered in 2019
Even with a Strong S&P 500, Gold Delivered in 2019 Cumulative Total Returns 2019 35% Spot Gold 30% S&P 500 TR S&P 500 TR 31.49% 25% Gold 20% 18.31% 15% 10% 5% 0% -5% Source: Bloomberg. Period from 12/31/2018-12/31/2019. The spot price of gold refers to the price of one ounce of gold, and the S&P 500
Slide 15: Webcast Overview
Webcast Overview Making the case for allocating to gold bullion and gold equities in a well diversified modern portfolio Gold as a Core Allocation • An evergreen asset in both periods of stress and prosperity • Provides liquidity with no credit risk • Serves as a true alternative investment over mul
Slide 16: Gold as a CORE Allocation
Gold as a CORE Allocation John Hathaway, Senior Portfolio Manager, Sprott Asset Management LP Webcast: Sprott’s 20/20 Vision on Gold & Gold Stocks Sprott Asset Management | 16
Slide 17: Gold Price Breakout
Gold Price Breakout • Gold had a breakout year in 2019, surpassing $1,500 in August 2019 • Gold has continued to perform well in 2020, reaching a six-year high in January $2,000 $1,800 $1,585 LAST MAJOR RESISTANCE BEFORE $1,600-$1,800 TRADING RANGE OPENS $1,600 $1,400 $1,200 $1,350 MAJOR BULLISH BRE
Slide 18: Gold Thrives When Real Interest Rates are Low
Gold Thrives When Real Interest Rates are Low • Interest rates are trending lower around the world • Federal Reserve has done a 180-degree turn and has resumed easing U.S. Yields Plummet and Real Yields Near 0% in 2019 Source: Bloomberg. Data as of 12/31/2019. Webcast: Sprott’s 20/20 Vision on Gold
Slide 19: Gold-Backed ETFs Reach All-Time High
Gold-Backed ETFs Reach All-Time High • Investors are returning to gold on a global basis • Gold-backed ETFs grew 14% in 2019, and reached all-time highs of ~2,900T ETF Flows Gold at $1,523 Gold at $1,187 Source: World Gold Council. This data set uses publicly available data. The main source is Bloom
Slide 20: Central Banks Purchased 650T of Gold in 2019
Central Banks Purchased 650T of Gold in 2019 • Central banks were net buyers of gold for a tenth consecutive year • Global reserves grew by 650T in 2019 – the second highest annual total • Central Banks are buying 20% of global mine output 700 656 650 629 601 600 569 580 500 481 395 400 379 Tonnes 3
Slide 21: Gold Equities As a Tactical Opportunity
Gold Equities As a Tactical Opportunity Doug Groh, Senior Portfolio Manager, Sprott Asset Management LP Webcast: Sprott’s 20/20 Vision on Gold & Gold Stocks Sprott Asset Management | 21
Slide 22: Gold Equities Investment Thesis
Gold Equities Investment Thesis Mining Stocks are “Episodically” Undervalued • Since the cycle peak in April 2011, gold mining companies have declined more than 70%(1) • In similar periods, mining stocks rebounded and significantly outperformed the broad market and other sectors (see next slide) Fav
Slide 23: Gold Equities Dislocation from S&P 500
Gold Equities Dislocation from S&P 500 History demonstrates that gold mining equities have the ability to generate portfolio alpha during significant corrections in U.S. equities. As shown below, since 1996 there have been only two periods of extended inverse performance between the GDM Index and th
Slide 24: Gold Equities Undervalued Relative to Bullion
Gold Equities Undervalued Relative to Bullion Since 2008, the relative valuation of gold equities to gold bullion has fallen 75% from the prior 25-year average. The ratio of the XAU Index to spot gold averaged 0.2497x for a quarter century through 2008. As of 12/31/2019, the ratio was 0.0705x. Ratio
Slide 25: What are the Catalysts for Gold Stocks?
What are the Catalysts for Gold Stocks? A Rising Gold Price Should • Translate into stronger operating results for miners, which has yet to be priced into the stocks • Fuel a new M&A cycle as miners look to replace reserves M&A Cycle is Expected to Last Several Years • Significant valuation gap betw
Slide 26: Gold Supply Continues to Decline
Gold Supply Continues to Decline Declining gold supply can drive gold prices higher and support M&A • Mine lives in the gold sector are at the • Major gold discoveries have declined lowest levels in more than 30 years significantly Average Mine Life versus Change in Supply Annual Gold Production 198
Slide 27: Cost per Ounce to Buy vs. Build
Cost per Ounce to Buy vs. “Build” • There is a 35% discount for buying ounces in the market (M&A) compared to discovering new ounces • Buying reserves eliminates the time and uncertainty associated with exploration Trend in Unit Discovery Cost: Gold World Enterprise Value per Ounce of Resource: (197
Slide 28: 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 extreme 80% 60% 40% 20% 0% -20% -40% Significant Valuation -60% Gap -80% -100% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Senior
Slide 29: Gold Equities: A New M&A Cycle Has Begun
Gold Equities: A New M&A Cycle Has Begun • In 2019, large-cap miners led the wave of M&A activity in the gold sector • In 2020, this activity is expected to shift to the small- to mid-cap miners 2019 M&A levels last seen in 2011 Value of completed deals Source: Bloomberg. Sample Transactions acquire
Slide 30: Outlook: Gold & Gold Stocks
Outlook: Gold & Gold Stocks The Right Conditions are in Place to Fuel the Gold Bull Market • The next major test for gold is $1,600; once achieved, $1,800 is within reach • Massive global and sovereign debt coupled with shrinking global GDP rates • Interest rates are trending lower around the world
Slide 31: Gold Portfolio Allocation
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 32: Sprott's Gold Investment Strategies
Sprott’s Gold Investment Strategies Sprott offers a range of investment options Physical Active Gold Equity Passive Precious Metals with Physical Gold Gold Equity • Sprott Physical Gold Trust • Sprott Gold Equity Fund • Sprott Gold Miners ETF (NYSE Arca: PHYS) SGDLX (NYSE Arca: SGDM) • Sprott Physic
Slide 33: Regional and National Sales Coverage
Regional and National Sales Coverage Webcast: Sprott’s 20/20 Vision on Gold & Gold Stocks Sprott Asset Management | 33
Slide 34: Important Disclosure
Important Disclosure This content is intended solely for the use of Sprott Asset Management USA, Inc. for use with investors and interested parties. Investments, commentary and statements are unique and may not be reflective of investments and commentary in other strategies managed by Sprott Asset M
Slide 35: 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