VIDEO - Michael Gentile: Gold Thesis is Simple, There’s Too Much Debt

Gold’s price activity so far in 2021 has left some market watchers concerned, but strategic investor Michael Gentile believes the long-term outlook for the yellow metal is clear.

Speaking to the Investing News Network, Gentile, who worked for nearly two decades as an institutional portfolio manager, said that for him it’s easy to see a bright future for gold.

“The thesis is pretty simple for me — it’s basically that there’s way too much debt in the world,” he said. “We had way too much debt before the pandemic, but the pandemic has (added) a triple charge.”

Gentile explained that given the high level of debt in the US, the country would be insolvent if interest rates were to rise — using round numbers, he said he expects the country’s debt to rise to US$30 trillion after President Joe Biden’s recently approved US$1.9 trillion stimulus plan.

“The governments have too much debt. They want to create inflation, but they can’t afford (to have) the rates go higher. So that’s a really exciting cocktail for gold that investors I think are missing right now. If you suppress rates at 1 or 2 percent, and inflation goes to 4 or 5 (percent), you’re going to have negative real rates of 3 percent, which is the most bullish thing you could possibly have for gold,” he continued.

“Right now, investors are really fixated on, ‘Rates are going up, so I should sell gold because gold doesn’t yield anything,'” added Gentile. “But they’re forgetting the fact that the government can’t afford to pay their bills, and therefore inflation is going to pick up and rates should stay low, which should be extremely positive for gold in the next couple of years.”

Aside from the outlook for gold, Gentile spoke about what he looks for in a junior miner, saying that there are six key characteristics he evaluates: grade, scale, location and exploration upside, along with the company’s management team and its capital markets expertise.

He has a particular interest in the capital markets, and as a significant investor and board member for a number of junior miners, Gentile is focused on helping them succeed financially.

“My rule for junior exploration companies is: Never run out of money. And rule number two is: Don’t forget rule number one. Because if you run out of money in the exploration space, you’re dead,” he said.

Watch the interview above for more from Gentile on gold and the junior 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.