Sprott Inc.: A Leveraged Play on Gold's Golden Run Amid Geopolitical Storms

The rising tide of geopolitical tensions and inflationary pressures is fueling a surge in demand for gold, and Sprott Inc. (SII.TO) stands at the forefront as a leveraged beneficiary of this trend. The Canadian asset manager's portfolio of gold-centric ETFs and trusts has positioned it to capitalize on both macroeconomic shifts and investor sentiment. Let's dissect the technical, fundamental, and macro drivers behind this opportunity.

Technical Momentum: A Bullish Uptrend with Cautionary Signals

Sprott's stock has been a standout performer, rising 56% year-to-date as of June 2025, far outpacing the broader market. Technical indicators paint a bullish picture:
- Moving Averages: The stock is trading above both its 50-day and 200-day moving averages, with the shorter-term average climbing above the longer-term one—a classic buy signal.
- MACD: The MACD line is above the signal line, reinforcing upward momentum.
- RSI (14-day): At 80, the stock is overbought, signaling a potential short-term correction. However, this does not negate the broader bullish trend.

Key Levels to Watch:
- Support: $80.49 (a breach could test $76.02).
- Resistance: Near-term resistance is minimal, with the next target likely around $100. Analysts project a 3-month price range of $109.63–$130.23.

Fundamental Catalysts: AUM Growth and Institutional Demand

Sprott's Assets Under Management (AUM) surged to $36.5 billion by May 2025, driven by inflows into its flagship Sprott Physical Gold Trust (PHYS), which now holds $10.7 billion in gold assets. This trust's 0.35% management fee structure ensures rising revenue as gold prices and investor interest climb.

Why Gold Dominates:
- Central Bank Buying: Institutions like China, India, and Turkey are diversifying reserves into gold, shifting away from U.S. Treasuries. China's central bank alone recycled $23 billion in dollar reserves into gold in 2024–2025.
- Inflation Hedge: With global fiscal deficits and trade wars exacerbating inflation, gold's role as a store of value is critical. CEO John Ciampaglia notes that gold's 25% price gain in 2024 outpaced most asset classes, yet institutional allocations remain low—creating room for further inflows.

Financial Strength:
- Net Income: Rose 3% QoQ to $12 million in Q1 2025, with Adjusted EBITDA up 11% to $21.9 million.
- Dividend: A $0.30 quarterly dividend was recently declared, signaling confidence in cash flows.

Macro Trends: Geopolitical Storms and the Gold Thesis

The confluence of geopolitical risks—from U.S.-China trade wars to resource nationalism in Africa—has turned gold into a “financial ballast” for portfolios. Here's why this trend is accelerating:
1. Currency Devaluation Fears: Countries like Turkey and India are buying gold to insulate against currency declines.
2. Equity Market Disconnect: While tech stocks dominate headlines, gold miners like Newmont underperform gold itself due to operational costs. This divergence highlights the superiority of physical gold exposure, which Sprott's trusts provide.
3. Institutional Reallocation: Sprott's data shows only 28% of investors hold gold, but allocations are rising as advisors seek diversification.

Risks and Considerations

• Overbought RSI: A short-term pullback is possible, but the trend remains intact.
• Volume Divergence: Falling trading volume amid rising prices could signal waning momentum.
• Critical Materials Drag: Sprott's uranium and copper trusts face headwinds, though gold's growth offsets these.

Investment Strategy: Buy with a Safety Net

The Case for SII:
- Long-Term Upside: The stock's 3-month target of $130+ suggests a 48% gain from current levels.
- Entry Point: Consider buying at $85–$87, with a stop-loss below $80.

Trade Idea:
- Buy: $85–$87, targeting $100 (10% gain).
- Aggressive Play: Hold for the $130+ 3-month target, using trailing stops.

Final Take

Sprott's leveraged exposure to gold makes it a top pick for investors betting on rising geopolitical tensions and inflation. While technical overbought conditions and volume dips warrant caution, the fundamental tailwinds—central bank buying, underpenetrated institutional demand, and macro instability—are too strong to ignore. This is a stock to buy and hold for the next 6–12 months, with stops in place to manage short-term volatility.

Gold's time is now—and Sprott is the lever.