ETF Edge - Uranium, platinum and private credit… oh, my! 6/11/25

Episode Date: June 11, 2025

It’s not just a yellow-brick road investors have been running down… with global uncertainty still high money has been piling into non-traditional and traditional alternative assets alike. But which are best for your portfolio? We’ll help you decide.   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The ETF Edge podcast is sponsored by InvescoQQQ. Let's rethink possibility. Investco Distributors, Inc. Welcome to ETF Edge, the podcast. If you're looking to learn the latest insights on all things, exchange-traded funds, you're in the right place. Every week, we're bringing you compelling interviews, thoughtful market analysis, and breaking down what it all means for you, the investor.

I'm your host, Dominic Chu. Global economic uncertainty is pushing investors to diversify into alternative assets, both new and old. We're talking everything from private credit to uranium. So here's my conversation with Vanek and associate CEO, Jan Vanek, as well as Sprott asset management CEO, John Chompalia. Jan, maybe I just want to start with you first. This week, you launched a fund targeting alternative asset managers. And viewers, we should reiterate that this is brand new. It's a fund that has just launched. I guess maybe what we want to talk about first is why alternative asset managers

and how do you find the demand profile right now among investors and investment advisors for a fund that tracks alternative asset managers? Sure. Well, John, what's happened in the world is that a lot of the financial markets now are not public. They're not visible with stocks that are private, that are venture-backed, are not trading on the stock market and they're not going IPO. So they're about 1,200 what's called unicorns beating private venture-back companies worth over a billion dollars.

So these are companies. They're going to make it. They're profitable, but they're staying private for a super long period of time. SpaceX is probably one of the most famous ones of those. So the people that manage those private equity funds or private growth funds, those money managers are public themselves. So this is a play on that. The other part is the private credit market.

So since the financial crisis, the regulars told banks to stop risky lending, right? We want the banks to stop blowing up every 10 years. So a lot of lending to corporate America actually happens privately offering really attractive yields, you know, 10 or 12 percent. And that's grown a lot. We actually offer a version of that in our BDC ETF called BizD, and that yields 8.8 percent today. So anyway, that alternative credit world, so private lending is another.

part. So it's private stocks, effectively, and private loans or bonds. And the managers of those, everyone's kind of wanting to get into it. People expect allocations to private assets to grow from about 2% of wealth to 10% of wealth. And if that happens, these managers will do really well. And the ETF is GP because the managers are called general partners. All right. So one of the other things that we want to take a look at is the reason why you are turning towards the managers themselves, when even today there are a slate of certain types of products exchange traded and whatnot that actually tracks some of the private markets themselves. I can think of ETFs or one ETF in particular right now that has a huge tilt towards the

private credit side of things. And we can talk about some of the other asset managers out there who have private equity investments themselves. What exactly is the use case and how exactly should investors and the maybe investment advisors out there who are thinking about possibly allocating towards this type of space, what types of things should they think about as they look towards investment on an ETF side for the asset managers themselves as a portfolio? Yeah, that's a great question.

I mean, I think you have to believe that this is a secular trend and that these companies will grow at a higher rate than normal money managers, right? So you have normal money managers called mutual fund managers, mutual fund assets have not grown very much. And there's ETF managers like ourselves, but there are very few ETF companies, maybe Wisdom Tree that are public peer plays. But there are enough private asset managers. And these private asset managers have grown from being boutiques to being really large,

you know, professional services firms managing almost half a trillion dollars each, the Apollos, the Ares. And they're involved in both the private credit and the private equity size. So they're just super impressive firms. and if you believe that they'll continue to grow and be part of the ecosystem, then you want to have access to that. I will grant you they are a little bit more volatile than the overall market, right? So it's a way, it's a little of a high beta play on stocks overall.

It's kind of how I think about it. So you have to size it appropriately. All right. And, Jan, one kind of tie up at the end here. When we talk about the liquidity aspect for some of these names, they're not necessarily the most liquid out there in terms of the asset. managers that trade out there, I can think of some of the big private equity names that may be different. But when you take a look at your portfolio, how exactly should investors view the risk profile

when it comes to things like how this ETF functions with regard to premium and discount to NAV, given some of the types of names and products that you're talking about right now? I mean, these are larger cap companies. I mean, somewhere between 10 and, you know, several hundred billion. So I don't think liquidity is going to be an issue with this ETF. All right. Now, now interestingly, we're going to move toward another side of the alternative side of things, John, a very specific alternative, and that's uranium as a metal. Or metal, I guess, if you want to call it that element. We're having a moment right now, right? Today alone, the global ex-uranium ETF is hitting its highest level since 2014. And this, of course,

comes on the back of all of the artificial intelligence hype as it could be a major power source, nuclear power with uranium when it comes to data centers and the push towards artificial intelligence. John, the uranium trade, it's one that has gone parabolic just over the course of the last few months. Is this something that is catching your attention? Yeah, we've been talking about uranium and nuclear energy nonstop for four years at Sprott, And we've been incredibly bullish on the segment for a number of very, I think, powerful, secular long-term drivers that is moving the world back to nuclear power after largely ignoring it for the previous 30 odd years in most Western countries.

And those catalysts, I think, have been very profound. First of all, you had a severe energy crisis in Europe and Asia in 2022 when Russia natural gas supplies got cut off. That was a real wake-up call for a lot of European countries that they did not have energy security. And if you don't have energy security, that will undermine your competitiveness. Businesses will start to shut down and move away to lower-cost centers. So it was really about energy security. Obviously, there's been a push around more cleaner technologies. Nuclear energy is zero greenhouse gas emitting.

So it ticks the box in terms of low-carbon footprint. And it is incredibly energy dense, which means you can store. vast amounts of energy and very small amount of space in sharp contrast to things like oil, natural gas and coal. So it is really the backbone of the electrical grid. It provides 365, 24-7 base load power, which is really what you need versus highly variable intermittent energy that renewable sources of energy are providing today. And you're starting to see more and more issues around grid failures. We had one in Spain a couple weeks ago, which people believe was in part because of excess of solar and wind, providing electricity at the grid at one point in time.

So there's been a real shift. And with respect to the United States, two weeks ago, we had four executive orders come from the Trump administration that in our minds is very, very bullish and very, very well thought through in terms of taking a very holistic approach to the entire supply chain around nuclear energy, everything from mining, processing, permitting of new technologies and plants, and really kind of trying to kickstart a lot of these new technologies that the world is clamoring for, particularly the hyperscalers. No, John, when I think of uranium, I think of nuclear energy, I grew up at a time when Americans and even more broadly, folks around the world were a little bit more frightened about the aspect of having nuclear power, nuclear power pants,

I remember the NIMBY notion, right? Not in my backyard for many of these nuclear power plants. I wonder from an asset manager's standpoint, from a guy who runs money tied to putting portfolios together with some of these types of products and companies, do you feel as though there is actually a fundamental change afoot for us in America, in Canada, in North America, more broadly, and then globally, that nuclear power is here to stay

and that this is a secular trend for investing in things like not just uranium, but the power companies that go along with them. Yeah, absolutely. When I was talking about nuclear energy four years ago, the most common questions I would get were, is it a safe technology? What about the spent fuel? And now I think there is so much more understanding and education about this category. and I think it really validates the technology when you have governments around the world throughout Asia, Europe, and obviously in North America

flipping back to this technology. If you look at a lot of public opinion surveys, they have moved decisively back in favor. And I think it's very clear. It's a reliable form of energy. It has zero greenhouse gases. It has a very good long-term track record. And it provides a lot of electricity

in large scale. And that's right now what the grid is calling for. And it's something that the grid has not had to deal with for the last 20 years. Load growth, the United States has been very nominal. Now you have reshoring of industry. You have AI data centers, which are very electricity intensive, that want to scale up and win this race. And the hyperscalers have figured out that, yes,

well, renewable energy will be part of that energy solution as well as natural gas, that nuclear and both large scale and. small modular reactors, this is the next generation of reactors, are really going to provide a lot of the low growth that the market is looking for in the next five to 10 years. Yeah, just some political context around this because John touched on a lot of the major things, which is that energy demand the United States have been flat for decades. And what's really causing that to grow and the need for us to find more power sources are the hyperscalers. So we look at this as AI phase two, right? We had the

semiconductors last year really benefiting and you need chips first, but now people are like, well, we also need power and you need reliable power. These data centers can't go down. They can't go down for like a fraction of a second, right? They need to be running all the time. The question was, what are the risks to this trade coming into the year? And no one wanted to see a repeat of alternative energy stocks. And so the negative on it was it's going to take five years to build a nuclear power plant. What's going to happen in the meantime? Investors are not patient, as we know, Dominic, right? And so I said, listen, I think the counter is the Trump administration is going to be so positive this source of energy that you're going to get a drip of positive news

and small steps, not just in the U.S., but elsewhere, that will support these stocks. And you saw that literally today. I think Aklo said that the Air Force is going to use the power. And of course, Trump controls federal land, right? So that's not a NIMBY kind of, you know, potential risk. It is elsewhere, but not on federal lands. And they're going to leverage that hard to start to show the safety of these newer, smaller technologies. And, John, one final point on this. If we talk about the Trump administration and its views towards trying to promote the energy independence of America, this is also, if you want to look at it from a medium to longer term side of things,

this is a type of philosophy or investing construct that needs to survive, not just a Trump administration, but future administrations as well, regardless of what their political tilt is going to be. Is this a trade, so to speak, that has enough runway where politics can be out of the issue with regard to why you invest in these types of companies? Yeah, it's a great question. And I'll start off by saying that energy policy in the U.S. under the previous administration and the current one has really been built and underpin on energy reality. And that is this growing low growth that many industries are calling for. And so we think that the trend is real. We think this is very similar to what happened in the 1970s and 80s when we

experienced an oil crisis. It was a real wake-up call for governments around the world that they needed to invest in this technology. That's when most of the plants were built. What you're seeing right now is life extensions of existing plants. You're seeing plants that were closed, restarting. And that's a very powerful signal because that is the path of least resistance to securing a lot of power with very low greenhouse gas emissions. So we think this trend is long-term and secular and durable. And with the exception of Germany, I think every country around the world has flipped back to nuclear power, which is a very powerful signal. Yeah, just I would underline something that John mentioned, which is it's really bipartisan. What really set the alarms off for us in the positive way was on Democratic governors in California, Michigan, and Delaware kind of were in favor of the extension of some of these plants. And so the Republicans have been for it. So that's really great to see parties working together in the United States. So I think for us, it's really one of the tactical trades, Dominic, that we like the most. I mean, if you look around the world,

I think AI is just this multi-year trend that you need to lean into. The other one is completely different, but it's the rise of India. But we see those trades, and we have them on in our portfolios. All right. So let's talk about another perhaps alternative asset that has become way more traditional these days, and that is the kind of gold and silver, the precious metal type trade. We're also seeing some sharper gains as of late in things like gold, silver, platinum, hitting highs over the course of the last couple of weeks as well.

And maybe, Jan, I'll turn to you for this one first. When it comes to the gold and silver trade, you run funds that are tied to the companies that actually have to engage in these types of mining activities. Have you seen the type of investor demand out there for some of these gold and first and second derivative plays on gold and silver that are going to have some staying power over the course of the next several quarters and years, despite the fact that we just hit record high, record high, record high. The show you guys says, no, I think we're very early innings in this trade, and I'll tell you why.

So we start pounding the table in 2023 on Bitcoin and gold. That was a long time ago and much lower prices. But even this year, last year you saw outflows out of gold bullion ETFs in the United States. And what we've seen with our gold mining ETFs this year is outflows. Now, get me, so that, to me, isn't money leaving the trade and taking profits. It's rather people that were short those ETFs covering their trades. And so the banks have to take money out. It's kind of a technical issue.

But we haven't seen a lot of money coming in. And when we do investor polls and client meetings, they barely know that gold has hit all-time highs. So I think a lot of this investor demand has come internationally from foreign central banks, people that are nervous, frankly, about to Trump tariff policy. That's been a big boon to gold. But I think in terms of Americans wanting this in their portfolios, really the risk they would be hedging is our big deficit issues and debt issues, which we haven't talked about yet today.

But I think that demand is yet to come. And it's relatively well-behaved. So I think we've got a long ways to go. John, that's a great point here because we've been talking about, you know, we've seen stories even in mainstream news about the fact that Costco has, at one point run out of selling physical gold for many of those investors out there. How do you feel about the idea that the fiscal issues, this kind of safety trade idea against our deficits, against this idea that maybe our country is not as stable as it

once was, financially speaking, balance sheet wise? Is that a long-term reason why some traders and investors want to be allocated on a percentage basis to precious metals like gold, silver, and platinum. Yeah, sure. I mean, we like to think of gold as the original alternative asset, and it's obviously been a store of value and wealth for millennia. So it is time tested and proven. And, you know, to us, and we obviously manage tens of billions of dollars of precious metals. Last year was a real unusual year where gold went up over 25 percent and we're already at that mark year to date. So what is the signal that gold is flashing?

going up, you know, well below long-term trend. And it's exactly what you mentioned. People are starting to reallocate to gold, but it is still a very small number of the population. What we've seen the last three years is central banks being big buyers of physical gold. This is part of a de-dollarization strategy that China is really driving.

This is about diversifying away some of the FX risks in their portfolio and reducing exposure to US dollars and treasuries. The other phenomena that's happening this year that I think investors need to take note of as gold is up about 26% for the year, yet U.S. Treasuries are kind of meandering around and it's not really providing the same safe haven experience or behavior that treasuries and the U.S. dollar have traditionally played during previous periods of uncertainty or risk. And so you have the U.S. dollar down 9%, the DXY index, which is very unusual. and in a financial calamity because usually King Dollar kind of reigns. But this is part of a larger concern that's growing globally around obviously tariffs, trade wars, and deteriorating global relationships.

And so whether you're trying to, you know, hedge interest rate risk, default risk, currency risk, equity risk, gold has proven itself to be very effective. And at Sprott, our Sprott Physical Gold Trust, we've seen well over a billion dollars of net inflows. So while investors are not allocating to the equities yet in the mining sector to the same degree, we are definitely getting flows in the physical side. And more recently, our silver trust is also brought in about a half a billion dollars. So we're starting to see investors gravitating, as you said, to silver and more recently platinum. As gold has become very expensive, you're seeing some rotation and substitution by investors

that are looking for better value in those two white metals. Got to bring up digital gold. Come on, little Bitcoin, right? So we have a Bitcoin ETF, HODL. Interesting factoid for you. So about another money manager did a study, 37 million Americans own exposure to gold, 37 million. Guess how many own exposure to Bitcoin? It's got to be a fraction. No, 50. No. Even more. 50 million Americans through, you know, through their research, which I thought that makes a lot of sense to me. Because I think people look at both as a store of value. And over the last couple of years, a lot of the hot money because of the appreciation has gone into Bitcoin.

I do also think, though, again back to my prior theory, gold will have more of its day, right? So that's why I think we're still early. And, you know, we're seeing and flows into our gold bullion fund as well. But, you know, I think Bitcoin is right near all-time highs. I'm not sure where it is today. It's about 109,110,000 right now as things stand right now. Now it's time to round out the conversation with some thoughtful analysis and perspective to help you better understand ETFs with our Markets 102 portion of the podcast.

Sprott Asset Management CEO John Chompalia sticks around for us right now. John, thank you very much for taking the time to stick with us on this. I wonder if I might pick up where you kind of left off with your previous conversation with me, and that is that so-called catch-up trade that might or might not be happening. You mentioned gold at highs, but also the idea that silver and platinum are now catching up as well. Have they caught up enough for them to still be considered catch-up trades, or do you feel as though things are moving more in tandem right now with gold near those record highs? Yeah, I think for both of those metals, they're just getting out of the starting blocks.

If you think about where the price of silver is at $36 an ounce, the price was at $50 an ounce in 2011, and that was its all-time high. So we are a long way off from the 2011 highs. And one of the common metrics that investors like to think of is looking at the price of gold per ounce relative to the price of silver per ounce. And just a couple of weeks ago, when the price of silver was softer, we hit about 100 to 1. So you could basically buy 100 ounces of gold for every one ounce of gold. And that ratio right now is at 92.

It has improved somewhat. But the long term historical is somewhere in the mid-60s to give you a sense of how undervalued silver is right now to gold. And the reasons I think are pretty clear. One, it's not a metal that is held by central banks. So you don't have that buying tension going on in the market. Silver is a hybrid metal. It has a monetary role and it also has an industrial, a number of industrial applications. And some of that is being obviously weighed down by a lot of trade uncertainty and tariff noise.

But silver is a very important metal because it's highly conductive. It has many different applications, whether it's for electronics, solar panels, healthcare applications and the silver market in terms of the silver market, in terms of the supply and the demand, silver has been in a deficit for the last few years. So it feels to us like silver is starting to wake up. And historically in these bull markets for precious metals, gold is the first mover. It moves first. Usually it's on the back of some kind of a financial calamity. And then what you see historically is that silver kind of slingshots right by. And that is a scenario we could see play out for the balance of the year because silver, as I said,

is still 30% off the 2011 high. It remains very, very inexpensive to us. And on platinum, it has kind of a similar dynamic where the price of platinum has been very, very depressed for a long time. But in the last couple of months, it's broken out, in part because of supply deficits in the market that are persistent and structural.

And you're starting to see an interesting dynamic when the price of gold in some markets becomes very lofty. Think about in China, for example, where consumers are very big buyers of gold jewelry as a store of wealth. While with the price of gold being north of $3,300 an ounce, you're starting to see some substitution. People buying platinum jewelry, for example.

And so you're starting to see that deficit situation combined with a little bit increased of demand and in a very short period of time, we've seen the price of platinum pop around 20%. So how much is the, you mentioned kind of like the retail consumer case, for the demand profile in gold, many of the PGMs, the platinum group metals and whatnot. How much of that, when you look at the scale, how much more of that is there for the retail consumer

demand side of things versus some of the industrial applications and uses that you mentioned also as well? Because gold, silver, platinum, palladium, all of these have industrial uses as well. So how much of a tailwind can that be versus just, say, buying necklaces and bracelets and whatnot? Yeah, I mean, the number one driver of silver demand over the last few years has been an incredible deployment of solar capacity globally in China is obviously leading. And the reason why solar and silver are connected is going back to my earlier point. It's the most conductive metal. And it is used as a paste inside these photovoltaic panels to basically excite the electrons to make the panels more efficient.

And so we think that somewhere in the neighborhood of 20% of global supply of silver has actually been repurposed specifically for the solar industry. And China is really focused on all forms of energy addition. The price of solar panels have absolutely dropped like a rock the last few years as the industry has hit incredible scales and efficiencies. So a lot of silver is being used for not just silver, but a lot of clean tech applications. And we see this trend increasing over time. Platinum is very important for things like catalytic converters as well as palladium. And I think as some of the expectations have faded around EV adoption, it is, I think, recasting expectations that internal combustion engines, both gasoline and diesel,

are going to be around for longer than originally thought, and a lot of pladium and platinum are both consumed in those catalytic converters to improve the air quality of exhaust. All right. One final question for you with regard to all of this. If you at Sprott Asset Management had to kind of handicap the way that the price action is going to play out over the course of the next, say, six to 12 months, where would the bet for you be placed? Where do you think the outperformance is going to be?

I think silver is the one that is starting to show much better strength, both technically. You're starting to see shortages in the market having a knock-on effect, and you're starting to see investors finally allocating capital to the sector. You're seeing inflows of dollars into most of the silver ETFs, and that up until recently has been absent. So I think if you see continued buying pressure, both physical as well as through ETF form, as well as some normalization of some of these trade issues. Silver is the one that is poised to kind of spring, spring ahead in the next few months.

All right. Hi-ho, Silver away. All right. John Champalia at Sprott Asset Management. Thank you very much for taking the time for being with us today. We appreciate it. Thanks for having me. How does InvestcoQQQ rethink possibility?

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