Sprott putting clients in gold and silver ahead of prolonged global uncertainty
The Canadian asset management firm expects a period of prolonged global economic uncertainty and believes precious metals will be the primary winners as safeguards of value
Posted: Thursday , 24 Mar 2011
TORONTO (Reuters) -
Canadian asset manager Sprott Inc (SII.TO) is positioning itself for prolonged global economic uncertainty and the possibility of a double-dip recession, believing precious metals will benefit the most.
"We are still positioning our clients and our firm in general for a very uncertain environment and we still believe that precious metals are the primary beneficiary of the safeguard of value in uncertain times," Sprott Chief Executive Peter Grosskopf said on Wednesday.
"We are nervous about a second economic shock here and we are positioning ourselves accordingly," Grosskopf said at the Reuters Global Mining and Steel Summit.
Charles Oliver, a senior portfolio manager with the Toronto-based firm, said global economic uncertainty - fueled by huge government budget deficits and liquidity injections into financial systems - will keep pushing precious metals prices to new heights.
Oliver sees gold prices at $1,800 an ounce by the end of the year and over $2,000 an ounce in early 2011. Gold prices are currently trading near record highs of $1,437 an ounce.
The company sees silver prices, already trading at a 31-year peak of $37 an ounce, rising to more than $50 in the next 12 months, and trending toward $100.
Sprott, probably Canada's best known resource investment firm, has had a strong run over the past two years thanks to its bets on precious metals and the public companies that mine them.
Assets under management are more than C$9 billion, up from some C$200 million a decade ago. Managed assets are already within reach of the C$10 billion mark Grosskopf pledged to reach within five years of being named chief executive officer last September.
"We look like we're on track to achieve growth surpassing our expectations," he said.
Part of that growth, some C$500 million, is thanks to its acquisition of three U.S.-based resource investment companies soon after he took office.
The Global Resources acquisition, completed last month, is also seen driving more growth this year as it assesses several product lines in the U.S. market.
"The feeling among their clientele is that there's a lot of U.S. high-net-worth investors that are nervous about having all of their money in U.S. currency and U.S. accounts and we believe we are in a prime spot to access new customer accounts by giving them the opportunity to invest outside of the United States," said Grosskopf.
Grosskopf also said his company is ramping up investment products for clients across its four business units, including an offshore banking type of product for U.S. investors.
He said further acquisitions were possible for the group this year, with Sprott Consulting, its direct investing business, looking at a number of different growth opportunities.
"We're looking at a lot," he said. "Whether or not we do anything this year is an open question. I would say over time there are definitely going to be more M&A opportunities across our range of activities."
(Additional reporting by Euan Rocha, Julie Gordon, Cameron French in Toronto and Matt Daily in New York; Editing by Frank McGurty)