Ninepoint Silver Strategy

Investment Team

Ninepoint Partners Sub Advised by Sprott Asset Management (SAM)

Ninepoint Partners Sub Advised by Sprott Asset Management (SAM)

Sprott Asset Management LP is an alternative asset manager and a global leader in precious metal and real asset investments. Through its subsidiaries in Canada, the US and Asia, the Corporation is dedicated to providing investors with best-in-class investment strategies that include Exchange Listed Products, Alternative Asset Management and Private Resource Investments. The Corporation also operates Merchant Banking and Brokerage businesses in both Canada and the US. Sprott is based in Toront...
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Key Takeaways

Global financial shifts and U.S. economic strain – The U.S. financial system is facing increasing challenges, with rising fiscal deficits and growing concerns over the sustainability of public debt. Markets are beginning to hedge against historical reliance on the U.S., which could lead to a restructuring of global financial power
Precious metals gaining momentum – Gold and silver continue to see strong institutional demand, with significant price increases and rising profitability for miners. Investors are shifting their focus to earnings and cash flows, with gold and silver equities outperforming broader market indices.

Silver Remains In a Structural Deficit for the Fourth Straight Year

The United States has anchored the global financial system since the end of World War II through a combination of military might, economic prowess, political stability, and institutional credibility. However, these pillars are beginning to show signs of strain. The on-again, off-again tariffs applied to friend and foe have created significant dysfunction in virtually every segment of the financial markets. This has also magnified the problem of internal dysfunction and fiscal imprudence. As a result, the global economy is beginning to hedge against its historic overreliance on the U.S. system. This reassessment, if it continues, could usher in a multipolar financial order and a rebalancing of global economic power.

The U.S. is running historically large fiscal deficits, even during periods of economic expansion—an unusual and concerning trend. In our previous commentaries, we have expounded on the perils of mounting debt and the associated interest cost. At the time of writing, the cost of servicing the Federal debt is now the largest expense item for the Federal government, having surpassed $1.1T in the first quarter of 2025. The Congressional Budget Office has repeatedly warned about the long-term unsustainability of U.S. public debt. Markets are beginning to price in concerns that such fiscal excess may lead to inflationary pressures or higher risk premiums on U.S. debt. This has continued to add strains on most investors' bond portfolios, thereby injecting an additional and unwanted level of volatility in people’s retirement accounts.

Cost of Servicing Federal Government Debt Continues to Rise Ever Higher

Source: U.S. Bureau of Economic Analysis via FRED

Traditionally, the U.S. dollar and Treasury securities have functioned as the cornerstone of global safe-haven assets. However, recent market behavior suggests growing investor unease regarding their reliability and status.

Since President Trump’s announcement of “reciprocal tariffs” on April 2, shifts in global trade dynamics and financial markets that normally unfold over years have occurred within days. This period may be remembered as pivotal, comparable to July 1944 (Bretton Woods), August 1971 (end of the gold standard), or September 2008 (global financial crisis).

Unlike prior episodes of market turmoil, such as September 2008 or early 2020, both U.S. Treasury bonds and the dollar depreciated amid a broader sell-off in risk assets. The 10-year Treasury yield rose sharply to 4.5%, while the dollar index declined 9.3% since mid-January. This unusual behavior indicates a potential shift in investor perception of U.S. assets as safe havens.

The divergence reflects concerns over erratic political leadership, rising fiscal deficits, and deteriorating international relations. As noted by Deutsche Bank strategist George Saravelos, markets appear to be reassessing the U.S. dollar's role as the global reserve currency, signalling an accelerated move toward de-dollarization.

While current volatility may prove transitory, these developments suggest the possibility of a structural reconfiguration in global financial markets, with potential long-term consequences for U.S. interest rates and fiscal policy.

Gold and silver continued their advance through the first quarter of this year, propelled by the strong institutional buying as well as commendable flows into ETFs. Pleasingly, precious metal equities are beginning to showcase their leverage to rising bullion prices. Strong gold and silver prices have been translating to strong earnings and cash flows for the miners. The GDX and the SIL (silver miners) rose by 35.56% and 24.17%, respectively. As worries of cost inflation have abated for the miners, investors are beginning to shift their on fundamentals for precious metal equities. Earnings and cash flow are about as fundamental as it gets for valuation purposes. Through the first quarter of 2025, we have seen earnings estimates for the NYSE Arca Gold Miners Index (GDM) rise by nearly 43%, and these estimates are likely to continue rising into year-end as the street remains well behind on the pricing curve. We expect this number to increase further as analysts begin using spot prices rather than their forecast prices. It is important to note that the precious metal miners are seeing their profits rise at a much faster clip than the widely followed S&P 500.

The Silver Institute published its report on supply and demand for 2024, which saw silver demand outpace supply for the fourth consecutive year. The silver market, which remained in a structural deficit and the market in 2024, was undersupplied by 148.9M oz according to the Silver Institute.

Silver Remains in a Structural Deficit

Source: Silver Institute, Metals Focus

Looking ahead, the Silver Institute believes that U.S. tariffs represent a significant downside risk to silver demand in the current year. A prolonged period of elevated tariffs or an escalation in global trade tensions could disrupt supply chains and substantially dampen global GDP growth. These developments are likely to negatively affect industrial, jewelry, and silverware demand for silver, although physical investment may increase as investors seek safe-haven assets amid heightened economic uncertainty.

The strength in precious metal equities has remained unwavering through the first quarter of 2025. Like we saw in 2024, the moves we have seen in precious metal equities have come on the back of rising earnings and profitability and the upside has come despite negative asset flows. We expect further upside to earnings should current prices hold or strengthen.

Maria Smirnova and Shree Kargutkar
Sprott Asset Management
Sub-advisor to the Ninepoint Silver Equities Fund and the Ninepoint Silver Bullion Fund

NINEPOINT SILVER BULLION FUND - COMPOUNDED RETURNS¹ AS OF MARCH 31, 2025 (SERIES F NPP326) | INCEPTION DATE: MAY 9, 2011

	MTD	YTD	3M	6M	1YR	3YR	5YR	10YR	Inception
Fund	8.71%	17.60%	17.60%	15.90%	43.34%	14.95%	18.32%	6.89%	0.20%

NINEPOINT SILVER EQUITIES FUND - COMPOUNDED RETURNS¹ AS OF MARCH 31, 2025 (SERIES F NPP866) | INCEPTION DATE: FEBRUARY 28, 2012

	MTD	YTD	3M	6M	1YR	3YR	5YR	10YR	Inception
Fund	11.54%	23.17%	23.17%	13.61%	43.31%	-2.77%	13.26%	7.59%	-0.26%

¹All returns and fund details are a) based on Series F shares; b) net of fees; c) annualized if period is greater than one year; d) as at 3/31/2025.

The Ninepoint Silver Equities Fund is generally exposed to the following risks: borrowing risk; commodity risk; concentration risk; currency risk; cybersecurity risk; derivatives risk; exchange traded funds risk; foreign investment risk; inflation risk; liquidity risk; market risk; performance fee risk; Rule 144A and other exempted securities risk; securities lending, repurchase and reverse repurchase transactions risk; series risk; short selling risk; small capitalization natural resource company risk; specific issuer risk; sub-adviser risk; substantial securityholder risk; tax risk; uninsured losses risk.

The Ninepoint Silver Bullion Fund is generally exposed to the following risks: commodity risk; concentration risk; credit risk; currency risk; cybersecurity risk; derivatives risk; inflation risk; interest rate risk; market risk; series risk; sub-adviser risk; substantial securityholder risk; tax risk; uninsured losses risk.

Ninepoint Partners LP is the investment manager to the Ninepoint Funds (collectively, the “Funds”). Commissions, trailing commissions, management fees, performance fees (if any), and other expenses all may be associated with investing in the Funds. Please read the prospectus carefully before investing. The indicated rate of return for series F shares of the Fund for the period ended 3/31/2025 is based on the historical annual compounded total return including changes in share value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The information contained herein does not constitute an offer or solicitation by anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should contact their financial advisor to determine whether securities of the Fund may be lawfully sold in their jurisdiction.

The opinions, estimates and projections (“information”) contained within this report are solely those of Ninepoint Partners LP and are subject to change without notice. Ninepoint Partners makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, Ninepoint Partners assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. Ninepoint Partners is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Please contact your own personal advisor on your particular circumstances.

Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Ninepoint Partners LP. Any reference to a particular company is for illustrative purposes only and should not to be considered as investment advice or a recommendation to buy or sell nor should it be considered as an indication of how the portfolio of any investment fund managed by Ninepoint Partners LP is or will be invested.

Ninepoint Partners LP and/ or its affiliates may collectively beneficially own/control 1% or more of any class of the equity securities of the issuers mentioned in this report. Ninepoint Partners LP and/or its affiliates may hold short position in any class of the equity securities of the issuers mentioned in this report. During the preceding 12 months, Ninepoint Partners LP and/or its affiliates may have received remuneration other than normal course investment advisory or trade execution services from the issuers mentioned in this report.