The gold price remains well off last summer’s all-time high, but for veteran investor and speculator Rick Rule, the current malaise in the space is an opportunity, not a cause for dismay.
He previously thought gold and gold equities had gotten ahead of themselves, and he views the current levels as a sale — but not necessarily a sale that will last for very long.
“I think now that a recovery in the gold price occurs sooner rather than later,” he told the Investing News Network (INN). “I’m always fond of saying that I like things that are inevitable, but might not be imminent — I’m beginning to think that an upward move in the gold price is imminent too as a consequence of the expansion of the negative margin on the US 10 year Treasury.”
Rule, who retired recently from Sprott (TSX:SII,NYSE:SII), also spoke about inflation, which is a growing concern among investors. He noted that gold and “well-considered gold stocks” are an important portfolio element during inflationary times, but also suggested other outlets for market participants to consider, such as out-of-favor commodities where producers are generating strong real cash flow.
“I would encourage your Canadian constituents to look at the mid-cap Canadian oil and gas companies,” he said, pointing at entities that are generating strong free cash flow and have ability to redeploy it.
Aside from those topics, Rule shared his thoughts on uranium, a market that has failed to see much movement over the last several years despite widespread talk about its positive fundamentals.
Rule last spoke with INN about uranium in January 2020, and he said that the industry is still waiting for the same catalyst he mentioned then: Japanese restarts. “Everything else is in place,” he said.
For that reason and others he remains bullish on uranium, particularly now that the Sprott Physical Uranium Trust (TSX:U.UN) has launched and can begin to soak up excess supply. However, Rule did caution that the juniors have gotten ahead of themselves and are no longer the bargain they once were. He suggested looking at producers, saying his favorites are Kazatomprom (LSE:KAP), China General Nuclear (SZSE:003816) and Cameco (TSX:CCO,NYSE:CCJ).
Watch the interview above for more from Rule on gold, uranium and the resource sector.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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