This Undervalued Gold Stock Is EXPLODING While Gold And Gold Stocks Are Crashing (Here's Why)
An update on the undervalued gold and silver stock Sprott (SII) and why their recent rally will continue
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Sprott Stock has rallied hard in the past month, from under $30 at the beginning of February to over $42 now. This comes at a time where Gold prices have tanked, and gold stocks have done poorly as well. Even though this may seem to not make sense, here are the reasons for the rally in Sprott stock:
Reason #1: Great quarterly and annual results. 2020 was an amazing year for Sprott, with record AUM, net inflows, and earnings. The increased demand in silver is helping with the silver trust, and precious metal ETFs like PSLV and PHYS have a great outlook for 2021 and beyond.
Reason #2: Commodities are booming. The bloomberg commodity index is up 25% over the past year. Even though Sprott's main products are the metals ETFs, sprott also has a number of ETFs and funds that are invested in commodity and natural resource companies. These will benefit as long as increased demand/money printing/ inflation cases the bull market in commodities to continue.
Reason #3: Stock buybacks. Sprott recently announced they would buy back 2.5% of outstanding shares. This is a huge development in my opinion, because management has a proven record of being frugal with cash and would only buyback stock if it appeared to be extremely undervalued. The parabolic action in the past few days is likely due to buybacks starting, and it is for this reason I believe the run could continue.
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