With inflation-led volatility taking hold of markets, gold needs to be considered in portfolios as a hedge. Gold equities are trading at deeply discounted values and the gold-oil ratio is trading at extreme levels at ~15x, an elastic band that will snap back at some point. Regis Resources (RRL) is our pick of the mid-cap gold stocks. They recently upgraded their resource and will likely continue to do so with ongoing drilling programs that will extend the life of their mines. They are also edging closer to final approvals for a new gold mine in NSW as well as growth options at sites in WA. Production guidance is somewhat of a concern given a slow start to the year, but momentum in the March quarter is expected to carry over into the end of the financial year to meet expectations here. Overall, its trading at a deep discount to NTA, has solid growth options and is one of the cheapest gold stocks on the ASX.
Even if we see inflation concerns peak out over the coming months RRL remains very cheap in our opinion and will attract some bargain hunters into current weakness, as long as the $US tracks lower.
MM is bullish RRL
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