Resource World Magazine

j u n e / j u l y 2 0 1 5 www.resourceworld.com 41 will lead to acceptance of the many. In 2002, the leaders broke from the pack and demonstrated outstanding financial per- formance. That performance first added credibility and then luster to a sector that had been written off in the late 1990s. I think a couple of discoveries will kick-off the sector. There will also be a continuation of the current mergers and acquisi- tions trend. M&As add both cash and courage to the sector. Junior mining is in desperate need of both. Rw: Are the fundamentals in place for a significant rise in the price of gold? RR: I believe that is true for many reasons. Despite the many reasons given for the lackluster performance of gold, the most important thing has been the strength of the US dollar. For investors that hold gold in currencies other than the US dollar, gold has been in a bull market for 13 or 14 months. The period we are in now looks like 2001 where the gold price began to rise in conjunction with the US dollar. I don't believe in the demise of the US dollar. I also don't believe that gold has to win the war against the US dollar – gold needs to lose the war less badly. There are two other factors that are important – both have to do with US treasury securities which enjoy virtual hege- mony worldwide as savings vehicles. First, there are about $4 trillion in sovereign obligations, including US dollar obliga- tions worldwide that have a negative real yield after inflation. Now, think about that. Financial analyst, Jim Grant, calls it return-free risk. How attractive do you find it to give the US government money for ten years and have it promise to give you back less purchasing power than you gave them? The truth is that gold is locked arithmetically in a war that it is unlikely to lose over the next ten years. Second, six or seven years ago when the US ten-year trea- sury yielded 6% your cost of holding gold was the avoided yield or 6 or 7% in imputed, or attributable, savings that you could have got from a savings product. Now, that imputed yield is 1.8%. So, gold is not only more attractive relative to competing investment products, the holding costs associ- ated with owning gold are also lower. Will this arithmetic advantage take place next month or in six months? I don't know. However, math always generates markets and will this time too. Rw: What is your opinion of gold ETFs? RR: That is a loaded question since Sprott is a sponsor of gold trusts which I consider to be superior vehicles, as least for US investors. If you are talking about the physical gold ETFs like GLD, my problem as an American is that if I enjoy a large capi- tal gain (which I would hope to do), I am taxed at the ordinary income tax rate. If I own an instrument like the Sprott Physical Gold Trust, I am taxed at the capital gains rate. I would, of course, prefer to be taxed at the lower rate. n Cameco to sell uranium to india for electricity generation Cameco Corp. [CCO-TSX; CCJ-NYSE] has signed a supply agree- ment with the Department of Atomic Energy of India to provide 7.1 million pounds of uranium concentrate under a long-term contract through 2020. Based in Saskatoon, Saskatchewan, Cameco is the world's second biggest uranium producer with mines in the Athabasca Basin of northern Saskatchewan, the United States and Kazakhstan. On April 15, Canadian Prime Minister Stephen Harper and Indian Prime Minister Narendra Modi announced the $350 million agreement. Brad Wall, Premier of Saskatchewan, was involved in arranging the agreement. The contract is Cameco's first with India which is the world's second fastest growing market for nuclear fuel. India has plans to increase nuclear-powered electricity, which today provides about 3% of the country's electric power, to 25% by 2050. India oper- ates 21 nuclear reactors providing 6,000 megawatts of nuclear capacity. Another six reactors totaling 4,300 megawatts are under construction and scheduled to come online by 2017. By 2032, India expects to have 45,000 megawatts of nuclear capacity. "This contract opens the door to a dynamic and expanding uranium market," said Tim Gitzel, Cameco's President and CEO. "Much of the long-term growth we see coming in our industry will happen in India and this emerging market is key to our strategy." Export of Canadian uranium to India for the generation of elec- tricity is authorized by the Canada-India Nuclear Co-operation Agreement which came into force in September 2013. "We thank Prime Minister Stephen Harper and Saskatchewan Premier Brad Wall whose strong support laid the groundwork for this agreement," said Gitzel. "We expect it will lead to growing trade in nuclear products and services between our nations for the generation of clean nuclear electricity." n Cameco's Cigar Lake uranium mine in northern Saskatchewan. Photo courtesy Cameco Corp.

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