Unpacking a disappointing few months for the Jupiter Gold & Silver fund, silver has been weaker than gold since July (as one would expect in a market where flows continue to dribble to a near standstill) and the fund’s positioning (around 50:50 gold/silver) has led to relative underperformance, much in the same way that periods of relatively strong performance tend to be seen with a falling gold/silver ratio.


Q2 reporting from mining companies was stronger than in Q1 (which was a tough quarter) and we expect relatively robust reporting in Q3. Operating performance at mining company level is in contrast to the wider sentiment towards the precious metals, which remains weak after a period of retail capitulation that has gone on since the spring. Institutional and trend-following investors (hedge funds and long-only) left more or less as a group in late 2020 after a brief visit to the sector, but retail and strategic longs stayed in until around April/May this year when retail too started to throw the towel in. All of this has left mining equity valuations depressed, but also ready to move strongly higher given low trading volume.


The monetary metals themselves, as well as the fund, are and continue to be driven by the movement of real interest rate expectations. In the bond market the further emphasis on tightening measures (both tapering and market assumptions regarding future rate hikes) at Fed meetings and Jackson Hole have kept investors in a marginally hawkish mindset. In addition to that, the bond market continues to price inflation as ‘transitory’.


The assumptions necessary to justify the recent performance (of both gold/silver and the fund) are:


1. inflation is just transitory
2. tapering is coming soon, and
3. rate hikes are also coming.


If just one of these assumptions falls away, then the fund and sector should rally. Personally, my view is that it is more likely that all 3 assumptions are wrong than all 3 are right. The fund remains positioned mainly in FCF-positive gold and silver producers in better quality jurisdictions alongside some well-funded developers and explorers.


It has been a frustrating year – inflation seemingly everywhere, growing central bank balance sheets and geopolitical stress all making it look like the sector should benefit from a macro tailwind that has yet to be reflected in markets. While the global cash and bond market holds the above assumptions about policy and inflation to be true we will struggle to capture momentum. It is possible, of course, that inflation disappears rapidly, tapering is bigger and faster than expected, with larger and sooner rate hikes. My guess, however, is that these central bank promises of hawkishness and unwinding – and their protest that inflation is ‘just a blip’ – will end up being just ‘guidance’ that fell away in the face of the huge systemic issues that remain unresolved.

The value of Active Minds

The value of active minds: independent thinking


A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.


Risk factors 

Investment risk – there is no guarantee that the Fund will achieve its objective. A capital loss of some or all of the amount invested may occur.


Strategy risk – as the Fund invests in other collective investment schemes, which themselves invest in assets such as bonds, company shares, cash and currencies, it will be subject to the collective risks of these other funds.This may include emerging markets risk and smaller companies risk.


Sector concentration risk – the Fund’s investments are concentrated in natural resource companies, and may be subject to a greater degree of risk and volatility than a fund following a more diversified strategy. Silver tends to outperform gold in a rising gold price environment and it tends to underperform gold when sentiment moves against the sector.


Company shares (i.e. equities) risk – the value of Company shares (i.e. equities) and similar investments may go down as well as up in response to the performance of individual companies and can be affected by daily stock market movements and general market conditions. Other influential factors include political, economic news, company earnings and significant corporate events.


Concentration risk (number of investments) – the Fund may at times hold a smaller number of investments, and therefore a fall in the value of a single investment may have a greater impact on the Fund’s value than if it held a larger number of investments.


Smaller companies risk – smaller companies are subject to greater risk and reward potential. Investments may be volatile or difficult to buy or sell.


Liquidity risk – some investments may become hard to value or sell at a desired time and price. In extreme circumstances this may affect the Fund’s ability to meet
redemption requests upon demand.


Currency risk – the Fund can be exposed to different currencies. The value of your shares may rise and fall as a result of exchange rate movements.


Derivative risk – the Fund may use derivatives to generate returns as well as to reduce costs and/or the overall risk of the Fund. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment. Derivatives also involve counterparty risk where the institutions acting as counterparty to derivatives may not meet their contractual obligations.


For a more detailed explanation of risks, please refer to the “Risk Factors” section of the prospectus.


Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value of overseas investments to rise or fall. This document is intended for investment professionals* and is not for the use or benefit of other persons, including retail investors. On the 15 February 2021, the Merian Gold & Silver Fund changed its name to the Jupiter Gold & Silver Fund.
*In Hong Kong, investment professionals refer to Professional Investors as defined under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).and in Singapore, Institutional Investors as defined under Section 304 of the Securities and Futures Act, Chapter 289 of Singapore.

IN AUSTRIA, FRANCE, ITALY, LUXEMBOURG, PORTUGAL AND SWEDEN: This communication is issued by Jupiter Asset Management (Europe) Limited, The Wilde-Suite G01, The Wilde, 53 Merrion Square South, Dublin 2, D02 PR63, Ireland. Jupiter Asset Management (Europe) Limited is registered in Ireland (company number: 536049) and is authorised and regulated by the Central Bank of Ireland (number: C181816).


IN TAIWAN: This communication is intended only for Capital Gateway’s internal use, and should not be distributed externally. It is for educational purposes only and not an offer to invest.


IN THE UNITED KINGDOM AND ALL OTHER EEA COUNTRIES: This communication is issued by Jupiter Investment Management Limited, The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ, United Kingdom. Jupiter Investment Management Limited is registered in England and Wales (number: 02949554) and is authorised and regulated by the Financial Conduct Authority (FRN: 171847). This communication provides information relating to Jupiter Gold & Silver Fund (the “Fund”), which is a sub-fund of Jupiter Asset Management Series plc. Jupiter Asset Management Series plc is an investment company with variable capital established as an umbrella fund with segregated liability between sub-funds which is authorised and regulated by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as amended. Registered in Ireland under registration number 271517. Registered office: 33 Sir John Rogerson’s Quay, Dublin 2, Ireland. Jupiter Asset Management (Europe) Limited and Jupiter Investment Management Limited are collectively known as “Jupiter”. Certain paying and/or information agents have been appointed in connection with public distribution of the shares of Jupiter Asset Management Series plc in certain jurisdictions. Shares are sold by prospectus only. The prospectus, KIID and/or other relevant offering documentation is available free of charge at: Austria: Erste Bank der oesterreichischen Sparkassen AG, Belvedere 1, 1010 Wien, Austria. Belgium: CACEIS Belgium SA, B-1000 Brussels, Avenue du Port 86 C b320, Brussels. Germany: GerFIS – German Fund Information Service UG (Haftungsbeschränkt), Zum Eichhagen 4, 21382 Brietlingen, Germany. France: BNP Paribas Securities Services, Les Grands Moulins de Pantin, 9 rue du Debarcadère 93500 Pantin, France. Hong Kong: Jupiter Asset Management (Asia Pacific) Limited, Suite 1706, Alexandra House, 18, Chater Road,Central, Hong Kong. Italy: Allfunds Bank S.A.U., Milan Branch, Via Bocchetto, 6, 20123 Milano, Italia; Societe Generale Securities Services S.p.A, Via Benigno Crespi 19A – MAC2, Milan. Luxembourg: BNP Paribas Securities Services, Luxembourg Branch, 33 rue de Gasperich, L-5826, Grand Duchy of Luxembourg. Spain: Allfunds Bank, C/ La Estafeta 6, Edificio 3, 28109 Alcobendas, Madrid, Spain. Sweden: Skandinaviska Enskilda Banken AB (“SEB”), Kungsträdgårdsgatan 8, SE-106 40, Stockholm, Sweden. Switzerland: First Independent Fund Services Ltd, Klausstrasse 33, CH-8008 Zurich is the Swiss representative and BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, CH-8002 Zurich is the Swiss paying agent. Taiwan: Capital Gateway Securities Investment Consulting Enterprise, 9F/9F- 1, No. 171, Songde Road, Xinyi District, Taipei City, Taiwan, R.O.C. United Kingdom: Jupiter Investment Management Limited, The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ, United Kingdom. The Fund is recognised by the FCA. Other: Jupiter Asset Management Series plc, c/o Citibank Europe plc, 1 North Wall Quay, Dublin 1, Ireland. In Denmark, this material is only intended for the exclusive use of Danish eligible counterparties or professional investors. Danish retail investors may not invest in the sub-funds mentioned in the material. In Spain, Jupiter Asset Management Series plc is registered with the Comisión Nacional del Mercado de Valores under number 301. Jupiter Investment Management Limited is registered under number 2479. The prospectus, KIID and the latest economic reports can be obtained at no cost from registered distributors as per the list available on the CNMV web page. In the Republic of Finland, this communication is not intended to constitute a public offer or an advertisement of securities. In Italy, this material is for the exclusive use of “professional clients or professional investors” (as defined in Legislative Decree no 58/1998 by reference to Annex 3 of CONSOB Regulation no. 20307 of 2018) and its dissemination to retail investors/clients is prohibited. In Luxembourg, this information does not constitute, under any circumstances, an offer or an invitation to purchase or sell shares in Luxembourg and does not and is not intended to constitute an offer of shares in the Grand Duchy of Luxembourg. It does not constitute legal, accounting, or tax advice. Jupiter uses all reasonable skill and care in compiling the information in this communication which is accurate only on the date of this communication. You should not rely upon the information in this communication in making investment decisions. Nothing in this communication constitutes advice or personal recommendation. An investor should read the Key Investor Information Document(s) (“KIID”) before investing in the Fund. The KIID and the prospectus can be obtained from www.jupiteram.com in English and other required languages. The net asset value of the Fund may have high volatility due to the nature of the asset class invested. Your attention is drawn to the stated investment policy which is set out in the Fund’s prospectus.