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There Is Still Value In Gold As A Portfolio Diversifier - Sprott Asset Management

Kitco News

(Kitco News) - There is still lots of value in the gold market as prices hold near a four-month high, according to the manager of the third largest gold-backed investment firm in North America.

John Ciampaglia, CEO of Sprott Asset Management (SAM), said in an interview with Kitco News that he sees last year’s 12% rally in gold as the start of a bigger long-term move, adding that investors are starting to view gold as an important portfolio diversifier.

“If you asked people what gold has done in the last couple of years people probably would have said ‘it hasn’t done much,’’ he said. “But, I think gold has quietly done what it is supposed to do. We think the market is very constructive and we think it’s prudent to have some exposure to precious metals.”

Ciampaglia’s comments come as SAM secured its position as the third biggest gold-backed exchange traded product, after it finalized its takeover of the Central Fund of Canada, launching the Sprott Physical Gold and Silver Trust (NYSE: CEF) Jan. 16.

The new acquisition boosts the firm’s assets under management by almost C$4.3 billion dollars to C$11.5 billion. SPRD Gold Shares (NYSE: GLD) and Blackrock’s iShares Gold Trust (NYSE: IAU) are the only funds that are bigger than Sprott’s newest investment vehicle.

Given the headwinds from record equity valuations, higher interest rates and growing exposure of alternative investments like bitcoin, Ciampaglia said the gold market has been very constructive, seeing consistent returns, relatively to the investment risk.

“I don’t think it’s too late to get into the gold market, even after the gains we have seen,” he said. “We think gold prices are going up in a sustainable manner.”

The launch of the Sprott Physical Gold and Silver Trust ended what was a fairly long acquisition process. In June a special advisory committee from the Central Fund of Canada originally opposed the initial takeover bid. However, Sprott was eventually able to overcome the issues with Central Fund shareholders voting overwhelmingly in favor of the takeover.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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