Gold & Silver Cycle 2026: Where to Invest

Craig Hemke (00:00)
Hello again from Sprott Money News at SprottMoney.com. my goodness. We've already reached the end of January. Well, 2026 is almost 8 % behind us. What the heck is going on here? It's time to wrap up the month already. I'm your host, Craig Hempke. Joining me is my old friend, Bob Thompson, senior portfolio manager at Raymond James in Vancouver. I know everybody always looks forward to hearing from Bob and we got him here to wrap up the month. Bob, good to see you.

Bob Thompson (00:29)
Great to see you again, Craig. I just wanted to mention, what are you doing to me? You're putting me on after Eric's brawl last month. That's a tough act to follow,

Craig Hemke (00:35)
Hahaha!

well you guys, how long have you guys been friends? All right. There you go. Well then there you go. It only makes sense that you would follow him up. ⁓ Hey, before we get started, I, again, it's January, it's tax planning season. I don't even like to think about that, but I, is the reality of life. ⁓ you need to fund an RRSP or an IRA contacts, brought money, go to Sprottmoney.com or give them a call at 888.

Bob Thompson (00:41)
⁓ 15 years, 20 years, something like that, yeah.

There you go.

Craig Hemke (01:09)
8610775 and they will get your IRA, your retirement accounts into some physical metal, physical metal, um, doing great for a number of reasons that I don't see ending anytime soon, but nobody wants to know what I think. They want to know what Bob thinks. Bob is the year begins here. What are your macro views and, uh, do you see these runs in the metals persisting?

Bob Thompson (01:33)
Well, you know, I think our views, as well as Eric's views and other people that maybe were outside the box last year, are becoming a little more consensus. Interesting enough, know, BMO came out with a report yesterday, raised their silver bull case, not their base case, but their bull case target, raised their silver price to 150 for this year.

Craig Hemke (01:55)
Okay.

Bob Thompson (01:55)
So,

I I never thought I'd see that out of the banks. They raised their gold price to 6,300, bull case, and possibly over 8,000 for next year. Again, they're kind of most optimistic case, but I think that's important because I think people are starting to see what's happening here, right? This has all been driven from the East, as we know. Western investors were deer in the headlights saying, well, why is gold going up?

be happening. So obviously, all the metals draining east and I think Western investors are starting to see now that, you know, maybe there's some reasons for this, maybe we're in a transition time. think, you know, people are blinded a lot of times, you can't see the forest for the trees, right? And we're in this environment.

Craig Hemke (02:42)
Right.

Bob Thompson (02:43)
⁓ Ray Dalio talks about it a lot and I would highly recommend people just go and listen to some of his videos. He's kind of a ⁓ guy that ran a big hedge fund, but he talks about this fact that the credit cycle has been 75 years. It causes economic strife, causes civil strife. I think we can agree there's a lot of civil strife going on. Social, ⁓ economic, financial, ⁓ yield curve control, debt, all these things are all one in the same.

And we're in the transition time right now, right? And this transition time from maybe having the US dollar as a currency on central banks balance sheets, it's not gonna go away, but gold has overtaken that, right? So I think central banks are trying to say, hey, wow, maybe we gotta do something else in the US dollar. And I think this represents a 10 to 15 year, don't know when it started, don't know when it's gonna end, but it's probably about a 10 to 15 year transition time.

that

we're going through right now. And that's why people are starting to come to grips with this, starting to see it. And I think, know, ETF flows are coming into gold, ETF flows are coming into silver. But last year, as you may know, ⁓ most of those GDX, GDX, JX, et cetera, GLD were in net redemption. Every time it ticked up, people just sold it more. And here's some interesting news. You know, again, from a macro side is to, you know, that investors didn't see

Craig Hemke (04:04)
Right. Yep. Yep.

Bob Thompson (04:13)
this happening but I think they're starting to this year. The biggest and one of the best mutual funds here in Canada, Precious Metals Focused Mutual Fund, over a billion and a half dollars, all last year was in net redemptions. And he was up over 100%, right? Up over 140 every time up, net redemption. Sell, sell, sell.

Craig Hemke (04:30)
Isn't that crazy?

Bob Thompson (04:34)
That's not the top. That's not the top of a bull when that happens. And you've talked a lot about, you know, COT reports, right? Those aren't showing people that are overexcited about these metals.

Craig Hemke (04:36)
Right.

Right.

But you're told it's a bubble, Bob. You got to get out. It's about, mean, the, the, the Western analysts and media are either they're just out of their league trying to figure out, cause they, mean, most of them don't cover the precious metals anyway, right? They're just, they were talking about Nvidia last week. Now all of sudden they're writing articles about silver, like they're experts, but the macro situation, like you said, Bob, I mean, ultimately it's taking more and more dollars to buy the same ounce of gold and people can't seem to get that.

Bob Thompson (05:04)
Right.

Yeah.

Craig Hemke (05:19)
get that through their heads. It's a dollar that's weakening. It's the Canadian dollar that's weakening. It's the euro that's weakening. It's not the gold is the gold.

Bob Thompson (05:27)
You know, and that's the thing, and it's the same for oil, it's the same for copper, whatever the case is. You know, people say the dollar is the unit, and then gold goes up and down. The dollar stays constant. No, not at all. Gold's the unit, and the dollar goes up and down, right? Exactly, and you think of it that way, know, gold didn't go up 50%, the US dollar went down 50 % versus the currency, and I think that's important. And that reminds me, you know, I'm in Vancouver.

Craig Hemke (05:31)
Yeah, silver.

No, precisely.

Bob Thompson (05:54)
As you know, it's 55 degrees outside. might go golfing in my shorts later on, who knows? But the Vancouver Resource Investment Conference was here and this is a great time to be talking to you because it's probably one of the biggest resource conferences around. And I spent a few days just sitting down with mining executives, talking about their projects, talking about their stocks, listening to the tone. There's a lot of people there, a lot of positive tone. I don't think euphoric, but there was a lot of positivity.

But actually I stocked by the Sprott Money booth and I got myself a nice Now that's not gold. That would be nice if it was gold. It's silver gold plated, but it's it's beautiful sundial Got that from Sprott Money. So make sure you take a look at that. Also got the Sprott one, of course, so make sure

Craig Hemke (06:30)
Hey, look at that!

Nice job, Bob.

Bob Thompson (06:46)
Talked to Sprott Money about that. you know, was a great ⁓ conference, learned a lot. And why these conferences are really good is because they help to set the tone. You know, are people over-eating euphoric? Are people really, really negative? You know, I prefer it actually when people are really, really negative because that's where the value is. They certainly weren't after this last year, but I don't think there was a lot of euphoric people there. I think people were, you know, sitting down, these mining executives were not euphoric. They're putting their heads.

Craig Hemke (07:04)
sure.

Bob Thompson (07:17)
down, they're trying to build their companies where their gold's 5,000 or gold's 2,000 and they're just trying to come out of it alive at the other end, right? And I think Eric's talked about that a lot, you know, why are we investing in silver, gold? We're just trying to make it through all this, right? And that's one of the ways to do it.

Craig Hemke (07:34)
Right. I mean, did you sense, was it, were there bigger crowds than in past years, Bob? Was there, like you said, it wasn't necessarily euphoric, but was there at least some optimism in the room?

Bob Thompson (07:43)
Yeah, there was a lot of optimism. ⁓ The crowds were big. The crowds were bigger than I've seen. mean, they weren't, you know, people, there wasn't 10,000 people lined up down the street to get in, but there was a bit of a lineup to get in. ⁓ You know, I think the crowd that was there was still the kind of mining crowd. I didn't see a lot of generalists necessarily, and that's a good thing. You know, I have a, I think sentiment is so important, right? Jim Rogers often said, if you want to do well in the market, skip the green finance.

get a degree in psychology, philosophy and history. And I think that psychology is important. So I pay a lot of attention to it. You know, hedge fund that I know here in Vancouver, and I think this is interesting is this will probably we can get into this about when the stocks will start to move later on in the conversation. you know, he said he has so many meetings with generalists right now wanting to invest in this space. And I said, that's fantastic. You're working hard. How much?

business have you got how much money you've come in he said nothing he said they're all kicking tires they're kicking tires well this is maybe something we should be interested in should we take a look at it should we not but he said you know the money hasn't come in yet and and you know i think all these things are interesting there was a guy named carson block

of Muddy Waters. He did a talk in the SON Investment Conference in London recently and he was talking about a particular stock that had done extremely well. But forgetting about that stock, this is fascinating. He said, there's a little exchange in Canada called the TSX Venture Exchange. And he was talking to a lot of the best money managers in the world.

Right. And he said, this is an exchange where you can actually add alpha. If you do research, he said, it's really hard to add alpha by a stock in the New York stock exchange. Cause there's a hundred analysts follow it and you know, whatever it's pretty, it's price to perfection. But he said, you can actually add a lot of alpha on this little TSX venture. If you look into these companies and he says, you can get the five baggers and 10 baggers and things like that. And I thought that was fantastic. Cause I thought all these guys are writing it down. ⁓ TSX venture. What's that?

Craig Hemke (09:36)
Yeah.

never thought of that!

Bob Thompson (09:54)
Exactly, exactly. you know, we've said, you know, my associate and I have said in the past that

This macro climate is going to cause a lot of money to come into Canada and I expect the Canadian stock market to outperform the US over the next few years and especially the TSX venture, which is a lot of illiquidity. When the generalists start to come in, it's going to cause these prices to go up and it hasn't happened yet. TSX venture last year was up over 60%, but it's still down 65 % from its high many years ago.

Craig Hemke (10:28)
Yeah. Yeah.

Yeah. In the volumes.

Bob Thompson (10:31)
How many assets

in the world, how many places in the world can you invest in? And it's down 65 % from its high many years ago, not too many.

Craig Hemke (10:38)
Isn't it?

It's just, I know, and I know, and that's why I want to kind of wrap up with talk about the mining shares. Cause they've, you know, they've all had great years, right? They're kind of done what they're supposed to do. Right. I here's one for you, Bob. I remember it were the January, 2026. I believe it was January 19th of 2016, 10 years ago when the GDX bottomed out at $12 and 40 cents and the Whoy index bottomed out at 99 and change. now.

Bob Thompson (10:47)
Yeah.

Yeah.

Yeah.

Craig Hemke (11:08)
What's the GDX 110 or whatever it is. Nobody says that. Nobody says, look at that. Those mining shares have moved up to almost 10 fold over the last 10 years. Nobody, it's like nobody even. So Bob, where are we? Where on your, on your famous clock? Where are we?

Bob Thompson (11:14)
Yeah. Yeah.

Yeah.

Yeah, you know, the mining clocks on our site, definitely we've moved up. There's a lot more interest, a lot more exploration going on, and there's a lot of money been raised. So we're probably hitting around seven o'clock now for gold. For copper, we're still back maybe ⁓ at five, five thirty. But for gold and silver, we've probably moved up. We aren't seeing ridiculous things happening. We're not seeing these dramatic overpriced takeovers happen yet. You know, a stock that's getting taken over for two billion dollars when it was worth nothing six months ago. We aren't seeing that.

yet. So I still think we're we got lots to run here in the cycle. We're still relatively early, but we have moved ahead. Obviously, there's a lot more optimism than that than there was. I think on the on the mining stock side, it's, you know, I want to talk a little bit more about Eric too, because you talked to him last month, and skimmed a few topics. And I wanted to talk about, you know, what I learned from him. And this really applies to the mining stocks right now. You know, he wasn't always a mining guy, right? He ran a

Craig Hemke (12:25)
All right.

Bob Thompson (12:25)
⁓ He ran a regular

growth fund and did extraordinarily well over many, years owning lots of different stocks. But he said to me, says, the one rule that I use is I want to buy a stock for a dollar today that I think can cashflow a dollar per share in three years.

Right. And if you're going to, if you do that, you're going to be getting lots of five baggers, 10 baggers, et cetera. Right. Cause that's all these interests and this is things that can do that. Now you got to think outside the box. You got to think differently than everybody. If, if, you're going to make that happen and, and, and a lot of that is, is, you know, if the consensus says that silver is going to be 50, you know, and Eric says it's going to be 200 in his mind. Well, what's the stock going to be at 150 or 200? And that's how you're going to get some. Now you got to be right. Right. Sooner or later, but, um,

That's obviously thinking outside the box and and that's why the title in my book on Eric was called hitting home runs right because you shooting for those big those big wins kind of outside the box wins and You know I want the listeners to remember that if you can buy a stock for a dollar that you think in cash flow a dollar per share in three years You're gonna do really well and that kind of gets into the optionality Again that you talked to him about and I just want to come up with some numbers here because I think it's important for people to remember at a bull market

how

much leverage you have in these shares. Let's say silver is $10 just for fun. Or let's just say that your cost of production is $10. And let's say silver is $11. So you're making a dollar per ounce. So let's say silver now goes to $12. It went up 10%.

Now you're making $2. So your profit went up 100 % even though the price of silver went up $1. So these stocks that are way out of the money that look ridiculous when silver prices are low, you get this massive leverage on the upside. And again, I'll just say, if silver went to $15, you're making $5 now, which is 500 % more than you were before. So that's how these stocks can just do extremely well in a bull market. Now,

Craig Hemke (14:10)
doubled.

Bob Thompson (14:35)
we all learned during the bear market that could happen the other way too. You get leverage on the downside too, right? So if you're in a bull market, you can take advantage of that leverage on the upside and do well. I don't think these stocks are reflecting that yet. And here's the big reason why.

The big reason why the stocks are not reflecting this ⁓ environment is because we haven't had a capital rotation yet. Everybody's still looking at the tech stocks. Everybody's still looking at what worked in the last few years, and they're still trying to get an extra 10 % out of one of those tech stocks or whatever the case is. They keep going back to the trough, right? So the gold stocks have rallied a lot, but we haven't had that capital rotation event where people say,

text stocks or whatever they were making money in AI, cetera.

it's not working anymore. I have to look at something that's working. Then they'll come into the into this sector. And I think we're only a few months, you know, to a year off from that, right. But it's going to be, ⁓ you know, I think a pretty interesting time for this capital rotation event when this happens, because there's actually tens of trillions of dollars parked in those stocks. Right. I mean, all we need is, I mean, what, 2 % of it to come out? What if if if 100 billion dollars came out?

Craig Hemke (15:42)
Yes.

Oh, good heavens.

Bob, I talk about that all the time. mean, the top five stocks have 20 trillion, 22 trillion, whatever it is in market cap. You take 1 % of that market cap, it would buy you about seven GDXs. Seven of the whole fund.

Bob Thompson (16:09)
absorbs it. It's absolutely incredible when you look at that. That's right. Now that brings up a great point. Goldman Sachs, it was brought up at ⁓ the resource conference. Goldman Sachs did a study, I guess, of their ultra high net worth clients, people with over $100 million accounts with Goldman Sachs. And you know what they found? They found that their allocation to gold in those ultra high net worth accounts was 0.2%.

Craig Hemke (16:11)
Right.

Isn't

that amazing? Yeah.

Bob Thompson (16:39)
Quit

2. Crazy.

Craig Hemke (16:42)
So when that goes to two, or like the Morgan Stanley thing, you know, that the new allocation instead of 60-40 should be 60-20-20 with 20 % into the precious metals. I mean, Bob, it's like the classic definition of inflation, right? Too much money or too much cash and too few goods. We start getting this cash into our sector. There's a finite amount of investment opportunities.

Bob Thompson (16:46)
Right.

Sure.

There absolutely is. And, you know, and that'll bring in more money, which will bring out more opportunities. And at the end of the cycle, you'll start to see all these things that don't make sense. But we're not there. We're a long way from that. And, know, and Canada is the place, right? That's where these things list. And as more more money starts to come into Canada, I think it's going to surprise people because a lot of people think Canada is a basket case, you know, with our economic environment, et cetera. But this is the mining hub of

of

the world and the commodity hub of the world. So as money starts to come in here, I think people will be surprised at the Canadian market, maybe the Canadian dollar. ⁓ And you know what, I can tell you, Canadian investors basically don't care about resources either.

They don't like the sector more than international investors. I don't get it. I don't get it. And the money managers in Canada here. So what's going to happen is as money comes in, the gold stocks become a bigger percentage of the index. All these Canadian money managers are going to be underperforming their benchmark. And then they're going to have to dive into the mining stocks to catch up. And when that happens, you get another influx of capital.

Craig Hemke (17:58)
This is crazy. Well.

Again, this notion that it's a bubble, ⁓ you know, that we've reached some kind of peak. I mean, it's not supported by the macro for metal prices, which is straight up supply demand of the physical precious metal. And it certainly isn't support. I mean, Bob Silver, the silver miners in particular, mean, they had an average selling price in the third quarter of thirty nine dollars and an average selling price. And we're going to get the results on the fourth quarter of about fifty five dollars. We're now one month.

into the first quarter and it's a, you know, we're over a hundred, but yet all these silver miners are acting like silver is still 40.

Bob Thompson (18:57)
Right, and you know what, the reason for that I think is it's not logical, but there's a reason for it. mean, again, when I did my book Rohit Sehgal is a great money manager. He told me it was really interesting the time he said, commodity stocks will not move.

until the analysts who analyze them raise their price decks for the underlying. So the other day I went and I looked at the price, actually yesterday, the price decks that price expectations for silver that all the analysts are basically factoring in and it's around 45 to $50. Right. So the generalists look and they go, ⁓ well, the analyst says it's going to be 50 and, and, and their cost of production is 30.

Craig Hemke (19:19)
Right.

Bob Thompson (19:44)
It

doesn't make much sense. So what we have to see is we have to see this over $100 price elevated, stay here, and then the analysts will play catch up and the analysts will start to raise their targets up to these, you know, 100 or whatever they raise their targets up and then people say, oh wow, these stocks are really undervalued and then the money will come in. So that's probably the little lag that we're seeing right now, but we'll see.

Craig Hemke (20:07)
Bob, you do great work. And like we discussed, you're an old friend of Eric's and you've got your finger on the pulse up there in Vancouver. There are multiple ways for people to follow your work or get in touch with you. As we exit this, why don't you share some of that if people want to know more or get to know you.

Bob Thompson (20:24)
Sure, know, a popular publication we do monthly. It's simple. I usually put all my videos in there. You know, the one stop shop is the gold digger it's called. So feel free to get on that list. There's no charge for it. It's, if you go to miningwealth.ca, miningwealth.ca, it'll take you right to that page and you can get on that list. I think that's important. Or just Google my name and it'll come up and you'll be able to find it. But yeah.

look forward to conversing because I do like to have interactions with lots of people that listen to our show. get sentiment, you get all kinds of interesting ideas.

Craig Hemke (21:06)
Bob thank you, it's always fun to pick your brain brother and by the time we do this again in a few months, well we'll see where we are then. ⁓ my gosh, you never know. All right, thank you Bob and thank you everybody for watching. ⁓ It has been a crazy month and we'll see what February brings but I know for sure February is gonna bring more content from Sprott Money so hit the subscribe button on whatever channel you've been watching so that you're notified.

Bob Thompson (21:14)
We'll see. It'll be a surprise.

Craig Hemke (21:34)
as ⁓ more videos, more great content from Sprott Money continues as 2026 continues. Again, thank you to Bob Thompson of Raymond James in Vancouver. Thanks everybody for watching. And again, we'll look forward to a very exciting February and a great 2026.