In his The Global Analyst, resource expert Adrian Day reviews his outlook for the metals sector. He also sees potential opportunity in International Royalty (ASE: ROY). Here's his review.

"While the news about India's gold purchase is not new, but it should be emphasized just how significant this purchase was, and not only in the short term, in removing (half) the IMF overhang that was weighing on the gold market. 

"More significantly are the longer-term implications. India was able to buy 200 tonnes of gold, a not-inconsiderable amount, and move its gold reserves up from 4% to just under 6%. That’s still a fraction of the global average of 14%.

"The lesson is that such a large quantity of gold could be bought without any major effort. Along with other central bank buying—including China, Russia, and Mauritius, among others—central banks are on track for the first year of net buying in several decades, and back to their more traditional.

"Given that the countries with the largest reserves are for the most part also those with the small gold reserves—China, Korea, Russia, India—this bodes well for continued gold market support.

"Meanwhile, among our currently recommended metals and mining positions, we note that International Royalty sold off after its latest quarterly earnings report.

"This was not nexpected given the large decline in revenue-- less than half last year’s -- which was a result of lower nickel prices and lower production due to a strike at the Voisey’s Bay nickel mine, on which its holds its main royalty.

"Given ROY trades right around its net asset, that nickel royalty revenue will recover, and that it has a very strong pipeline of royalties coming on stream over the next couple of years, it is an attractive long-term investment. We continue to think that ROY could also be an interesting shorter-term speculation."