John Feneck: Gold, Silver, "Special Situations" — 7 Stocks to Play These Metals

Here's a comprehensive summary of the YouTube video transcript:

Key Concepts

• Conferences: Upcoming investor conferences in Fort Lauderdale and Washington D.C.
• Gold and Silver Markets: Analysis of current support and resistance levels, price targets, and market sentiment.
• Economic Indicators: Impact of US economic data, Fed policy, and geopolitical events on precious metals.
• Federal Reserve (Fed): Discussion on recent Fed meetings, interest rate cut expectations, and potential future Fed chair appointments.
• Critical Minerals: Focus on the strategic importance and investment potential of critical minerals like tungsten.
• Precious Metals Companies: Identification and analysis of specific gold and silver mining companies with investment potential.
• Investment Strategies: Emphasis on value investing, buying pullbacks in bull markets, and understanding company fundamentals.
• Fenwick Consulting Services: Overview of email services, newsletters, and advisory services.

Upcoming Conferences

John Fenwick of Fenwick Consulting announced two upcoming conferences in May of the following year.

• Fort Lauderdale, Florida: The third annual conference will be held at the Four Seasons Oceanfront resort. This is a five-diamond, three-year-old resort, chosen for its quality and service. The conference is strategically timed to coincide with the opening of the resort's conference area. It is particularly accessible for individuals in the United States with direct flights to Fort Lauderdale or Miami.
• Washington D.C.: This conference will take place at the Grand Hyatt, located downtown near the White House. Fenwick, with over 20 years of experience in Washington D.C., anticipates a strong turnout from financial advisors, hedge funds, and private equity firms, who may not typically attend mining conferences but are part of his prior professional background. This event is a follow-up to a successful Precious Summit event in D.C. a year and a half prior.

Dates:

• Washington D.C.: May 17-19
• Fort Lauderdale: May 20-22

Gold and Silver Market Analysis

The discussion shifted to the current state of the gold market, noting its recent run to all-time highs followed by a pullback.

• Gold Support and Resistance:
  • Support: The consolidation area from earlier in the year, around $3500-$3600, is identified as major support.
  • Current Price: The recording occurred slightly under $4000.
  • Previous Peak: The peak was at much higher prices, described as a "parabolic move."
• Market Sentiment and Divergence:
  • The strong move in gold is interpreted as a signal that certain economic expectations (e.g., from the Fed or US-China relations) may not materialize as predicted.
  • A divergence in investor sentiment is observed:
    • Safety/Gold Camp: This group, influenced by figures like Ray Dalio, believes the world is less stable than portrayed by leaders and that the US consumer may not be as strong as anticipated (evidenced by Amazon layoffs before Christmas). They see gold as a safe haven.
    • Momentum/Risk-On Camp: This group focuses on assets like cryptocurrencies and tech stocks (e.g., the "Mag 7"). This sector has performed well year-to-date.
• The "Melt Up" Phenomenon: Gold and the S&P 500 have been rising together, which is historically rare. While the S&P has held up slightly better recently, the speaker believes this is temporary.
• S&P 500 Risk: A significant concern is the S&P 500's heavy overweight in technology stocks (45% as of August 31st). Historical parallels are drawn to the dot-com bubble (1999-2001) and the 2008-2009 period, where sector overweights led to bubble bursts. The current tech overweight is considered more extreme than in the late 1990s (25-30%).
• Algorithmic Trading and Velocity: The combination of sector overweight and increased algorithmic buying/selling is seen as dangerous, potentially leading to rapid and significant losses for investors.
• Example of Volatility: Apple's over 20% drop in five trading days during April is cited as an example of potential rapid declines, even though it has since recovered. The speaker suggests that future corrections might not have such quick snapback rallies.
• Economic Data Point: The August 1st non-farm payrolls miss in the US, coupled with a significant downward revision of previous months' data, is highlighted as a major event. This led to a strong bid in gold, silver, and gold miners (GDX, GDXJ), indicating "smart money" is positioning for safety.
• Gold Price Targets:
  • The year-end target of $3800 was exceeded.
  • A "buy by summer" target of $3500 was accurate.
  • The speaker anticipates gold will continue to rise.
• Silver Analysis:
  • Silver broke through $50, a significant level that had been resistance for 11 years.
  • It then found resistance around $35, eventually breaking through to $40.
  • The $42-$43 range was problematic, but after breaking it, the expectation of $50 was communicated to followers.
  • The ease with which silver cracked through $50 was surprising, as it had only briefly touched this level twice historically (in 1980).
  • Current Price: Recording occurred between $46-$47.
  • Year-End Target: Silver is expected to return to $50 by year-end.
  • Inflation-Adjusted Target: $50 in 2011-2012 prices is equivalent to $66-$70 today. The speaker's target for silver next year is in this range.

Federal Reserve Policy and Outlook

The recent Federal Reserve meeting and its implications were discussed.

• Interest Rate Cut: A 25 basis point interest rate cut was widely expected and delivered.
• Jerome Powell's Commentary: The key takeaway was Powell's emphasis on "dissension amongst voters" regarding policy decisions, a point he reiterated multiple times. This suggests a less unanimous Fed than in the past.
• December Rate Cut: Powell's commentary created uncertainty about a December rate cut. However, the CME Fed Watch tool indicated a high probability (initially 90.3%, later around 75% at the time of recording) of a cut.
• Impact of US Shutdown: The ongoing US shutdown has limited the availability of current economic data, forcing the Fed to rely on private data. This lack of official data (non-farm payrolls, CPI) makes forecasting more challenging.
• Bullish Outlook for Gold/Silver: The speaker believes a December 25 basis point cut is still likely. Furthermore, they anticipate that President Trump, whose term as Fed chair is up next year, will appoint someone who is "anti-rate cuts." This backdrop is considered "extremely bullish for gold and silver," contrasting with Powell's recent "hawkish tone."

Potential Fed Chair and Impact

• Trump's Influence: The speaker believes Trump will appoint a Fed chair who aligns with his desire for lower interest rates, given his background as a real estate mogul and the rate sensitivity of his portfolio.
• Shift in Strategy: The speaker recalls advising a portfolio repositioning towards US assets after a perceived negative debate performance by Biden, anticipating a Trump win and support for the mining business.
• Trump's Executive Orders: Trump's executive order in March and subsequent actions in April to fast-track mining projects are highlighted as significant but often overlooked by the average investor. This represents a shift from a non-permitting stance to a more constructive approach, which is bullish for mining stocks.

Critical Minerals Investment Opportunities

The discussion turned to specific companies in the critical minerals sector.

• American Tungsten (TU NGF, TUNG):
  • A past producer in Idaho.
  • Management (Ali Haji) has been communicative and provided construction updates.
  • The price of tungsten is rising, and geopolitical tensions between China (the largest producer) and the US are a factor.
  • Stock Performance: The stock pulled back from around $3.50 to $1.36. Despite a financing round, the share structure is considered sound.
  • Investment Thesis: The company is advancing its project, plans to release a 43-101 report, and is drilling. The financing was upsized, indicating strong interest. The speaker would be a buyer on dips.
• Triumph Gold (TIGCF, TIG):
  • Has significant tungsten deposits on its Yukon property, in addition to 1.5 million ounces of gold.
  • Valuation: The property is considered undervalued.
  • 43-101 and PEA: A Preliminary Economic Assessment (PEA) was done 12-13 years ago, and an update is planned.
  • Strategy: The company recently acquired a silver property in Utah for a low cost ($150,000 plus stock), diversifying its assets.
  • Investment Thesis: The speaker sees potential in updating the PEA and drilling the Utah property. They are buyers on dips.

Precious Metals Company Updates

The conversation moved to specific precious metals companies.

• Aftermath Silver (AFF, AG):
  • Track Record: Previously discussed at much lower prices (14-21 cents), now trading at 53 cents.
  • Recent Performance: Hit 81 cents on heavy volume, then pulled back significantly to 52 cents.
  • Investment Thesis: The speaker views this pullback as a "gift" in a bull market and has been buying more. The company has 140 million ounces of silver. The strategy is to buy undervalued small companies with significant ounces in the ground, anticipating future acquisition by larger companies.
• Blackrock Silver (BKRRF, BKRF):
  • Project Advancement: The company has made good progress in advancing its project.
  • Silver Holdings: Claims approximately 100 million ounces of silver.
  • Jurisdiction: Considered to be in a better jurisdiction (Nevada) than some other projects.
  • Analyst Coverage: A recent analyst upgrade to a much higher price target is noted. The speaker believes analysts are often "asleep at the wheel" regarding undervalued stocks in this sector.
• Pneumont (NEM) and Agnico (AEM):
  • Earnings: Pneumont beat earnings estimates but the stock initially dropped 7.5% before rebounding. Agnico also had a strong earnings beat and was rewarded.
  • Cost Structure: Agnico's all-in sustaining cost per ounce was $1373, while gold is around $4000, indicating "killer margins."
  • Investor Perception: The speaker notes that many investors are hesitant to buy gold stocks despite strong fundamentals, often preferring other sectors.

Mexican Mining Sector

The Mexican mining sector is showing signs of improvement.

• Permitting: Several mines have been permitted this year, particularly underground operations. Open-pit permitting is expected to be considered next year.
• Job Creation: This trend is expected to create significant employment.
• Mentioned Companies:
  • Sonoro Gold (SM OFF, SGO):
    • Valuation: Considered very undervalued by the chairman and CEO.
    • Capex: Low capital expenditure (capex) required to build the project, potentially financed with debt, making it less dilutive.
    • All-in Sustaining Costs: Already low, and expected to improve further with an updated PEA next year.
    • Catalyst: The planned PEA update is a key catalyst.
  • Gold Group (GG AF, GGA):
    • Performance: One of the best-performing gold stocks year-to-date with significant volume increase.
    • Acquisition: Acquired the San Francisco mine with 1.4 million ounces of gold after a multi-year negotiation and competitive bidding process.
    • Notable Investor: Eric Sprott recently took a significant stake (12-14%).
  • Quest Core (QQQMF, QQQ):
    • Drilling Strategy: Plans to raise money and drill more holes in the current hot market, a decisive strategy.
    • Geology: Trust in the geologists and the property is key.

Fenwick Consulting Services

John Fenwick outlined the services offered by Fenwick Consulting.

• Real-Time Email Service:
  • Provides immediate summaries of market events (e.g., Fed announcements) within minutes of their release.
  • Offers a contrarian perspective compared to some competitors.
  • Includes transcribed interviews and detailed holdings.
  • Known as "The Mining Report" on their website.
• Newsletter: A lower-priced option compared to the real-time service.
• Advisory Services: While not licensed advisors, they can share their conviction on specific investments (e.g., buying American Tungsten at $1.36). This helps clients who feel their financial advisors don't understand their holdings.

Conclusion and Final Thoughts

The speaker reiterated the importance of looking at company fundamentals and metrics, regardless of the sector. They expressed a strong conviction in gold and silver, with their portfolio heavily overweighted in these assets. The current market environment, particularly the government's focus on critical minerals and the potential for lower interest rates, is seen as highly favorable for the mining sector. The speaker encourages investors to be decisive and committed to their shareholder base, as exemplified by the companies actively pursuing exploration and development.