A Brewing Supply Chain Crisis Raises The Stakes For The Sprott Critical Materials ETF

Author: JE Insights | November 19, 2025 08:37am

While individual innovations such as artificial intelligence have dominated business headlines, the enormous success and blistering demand imposed by tech juggernauts have forced a worldwide supply chain crisis. Essentially, both private enterprises and government agencies have been left scrambling for critical resources necessary to cleanly power next-generation systems and infrastructures.

It's not just flowery rhetoric. In October, the price of silver — a key conductive metal used in a variety of applications, including electronics and solar panels — reached a record high of more than $50 per ounce. What was more impressive was that gold (which usually features a direct relationship with silver) faltered during this ascendancy. This dynamic may be a subtle hint that the market recognizes the industrial component of silver's bullish narrative.

Just as significantly, European leaders are asking themselves how they will be able to secure their own critical resource needs amid the possibility of a geopolitical fracture. Amid shifting sands, the continent's mining sector is under a glaring spotlight, in particular because it must find a way to reduce reliance on imports.

Per a report by European Capital Insights, the European Union imports around 50% of its copper concentrate. That's a haphazard situation amid an ideological divide that's occurring among nations today, exacerbated by tensions between the U.S. and China. Making matters more complicated, Beijing has tightened export controls on rare earths and critical minerals this year, raising concerns about global accessibility.

One more wrinkle to add to the narrative is that other nations and regions are also seeing the writing on the wall. Previously, state agencies could simply rely on dominating commodity-producing markets. However, the explosive pace of technology — combined with the gargantuan power requirements of AI and other innovations — means that old assumptions no longer ring true.

Subsequently, Canada represents one example of a forward-thinking nation that is in the early stages of forging strategic alliances to secure the supply of critical resources. Given the rapid rate of digitalization, this is an initiative where arriving too late could be catastrophic.

The Sprott ETF: Still, despite the opportunity available in the resource space, it's not the easiest sector to invest in. Indeed, commodities tend to be some of the most volatile markets around, due to thinner participation, niche specialization and vulnerability to geopolitical dynamics. However, financial services provider Sprott Inc. (NYSE:SII) has introduced a relevant exchange-traded fund called the Sprott Critical Materials ETF (NASDAQ:SETM).

One of the main talking points about the SETM ETF is that it provides pure-play access to a range of critical materials that feed the global energy machinery. Also, according to Sprott's prospectus, global demand for electricity may rise 169% by 2050, thanks primarily to technological advancements gaining momentum, along with growth of the global middle class. On the political end, the pursuit of net-zero emissions may raise the profile of silver and copper miners.

From a practical perspective, the SETM ETF provides broad access to a range of leading resource and energy players, including MP Materials (NYSE:MP), Albemarle (NYSE:ALB) and Cameco (NYSE:CCJ). Not only does this provide diversification, if one name stumbles, another can help pick up the slack.

Of course, no investment is without risk. While the SETM ETF may broaden the canvas of exposure, the fund is still tied to relatively volatile names. For example, while MP Materials is a hot ticket, it also has a 60-month beta of 2.26, which is significantly more volatile than the benchmark equities index. Therefore, reasonable caution should be applied before considering SETM.

The SETM ETF: Since the start of the year, the SETM ETF gained almost 74%. In the trailing half-year period, the fund gained about 81%.

• Currently, the price action is fighting to stay above the 50-day moving average, along with the 20-day exponential moving average.
• Near-term accumulative volume peaked near mid-October, with SETM hitting a closing high on the same day. Since then, the commodities fund has eroded market value.
• Interestingly, the bears attempted to drive the price below $24 earlier this month, but the bulls shot the price action back above $26.

Featured image from Shutterstock

Posted In: ALB CCJ MP SETM SII