John Feneck: US 'Back Against the Wall' on Tungsten, How To Beat The Market & Gold Miners

Key Concepts

Gold Bull Market: A sustained period of rising gold prices.
Pullback: A temporary decline in price within a larger upward trend.
Whipsaw: A sharp, short-term price reversal that can trap traders.
Weekly/Quarterly/Monthly Closes: Important price points used by traders to assess market trends.
Green Candle: A candlestick chart pattern indicating a price increase over a period.
Mainstream Thesis: The idea that gold is becoming a more widely accepted investment.
Annual Price Targets: Forecasts for commodity prices made by financial institutions.
Broad Market: Refers to major stock market indices like the NASDAQ and S&P 500.
GDX/GDXJ: Exchange Traded Funds (ETFs) that track gold miners (GDX) and junior gold miners (GDXJ).
All-Time High: The highest price a security has ever reached.
Producers vs. Juniors: Gold mining companies are categorized into established producers and smaller exploration/development companies (juniors).
Value Investing: An investment strategy focused on buying assets that appear to be trading for less than their intrinsic or book value.
Growth Investor: An investor who seeks to invest in companies that are expected to grow at an above-average rate.
Technical Analysis: The practice of forecasting future price movements based on an examination of past market data, primarily price and volume.
RSI (Relative Strength Index): A momentum oscillator used in technical analysis to evaluate overbought or oversold conditions.
Support/Resistance Levels: Price points on a chart where a trend is expected to pause or reverse.
PEA (Preliminary Economic Assessment): An early-stage study that provides a conceptual analysis of the economic viability of a mineral project.
Brokered Placement: A type of private placement where a broker facilitates the sale of securities.
Non-Brokered Placement: A private placement where the company directly raises capital from investors.
Life Financing: A recent trend in junior mining financing, often involving larger sums.
Alpha: Investment returns that exceed a benchmark index.
Defense Metals: Metals crucial for military applications, such as tungsten and antimony.
Critical Minerals: Minerals deemed essential for economic or national security.
Permitting/Construction: The regulatory and physical processes required to develop a mine.
Red Tape: Bureaucratic obstacles and regulations that can hinder business operations.
Tungsten: A hard, dense metal used in various industrial and defense applications.
Antimony: A metalloid used in flame retardants, alloys, and batteries.
Vanadium: A metal used in steel alloys and batteries.
Rare Earths: A group of 17 chemical elements with unique properties used in high-tech applications.
Lithium: A light metal crucial for battery production.
FC Consulting Group: The consulting firm founded by John Fak.
Newsletter: A periodic publication providing market insights.
Real-time Email Updates: Immediate notifications of market movements and portfolio changes.
Mining Report: A subscription service offering detailed analysis and holdings.
CEO Interviews: Discussions with chief executive officers of mining companies.

Gold and Gold Miners: A Bull Market Analysis

John Fak, CEO of FC Consulting Group, discusses the current state of the gold market and gold miners, drawing on his extensive experience in the financial industry. He notes the "unbelievable run" for gold and emphasizes that pullbacks are expected in any bull market.

Current Market Conditions and Bank Sentiment

Gold Price Performance: Gold has experienced a significant upward trend.
Bank Price Targets: Major banks, previously negative on gold and silver, now have bullish outlooks. Examples include:
- Goldman Sachs: $4,900 (next year)
- Bank of America: $5,000 (next year)
- HSBC: $5,000 (next year)
Technical Indicators: Fak highlights the importance of weekly, quarterly, and monthly closes. He notes that gold closed on a green candle on October 17th, indicating strength, despite recent volatility. A close with a red candle would be the first in approximately two and a half months.
Comparison to NASDAQ: The NASDAQ (QQQ) experienced a strong run in the preceding two years, followed by a significant crash in early April, and then a recovery. This illustrates the inherent volatility in strong bull markets.
Mainstream Adoption: Gold is increasingly becoming a part of mainstream investment portfolios, supported by the positive sentiment from major financial institutions.

Long-Term Vision and Market Overvaluation

Annual Price Targets: Fak's firm provides annual price targets, acknowledging that his target of $2,800 for 2024 was missed by $800, and his high-side target of $3,800 for the current year has been surpassed by approximately $300.
Bull Market Dynamics: Bull markets, whether in real estate, crypto, or commodities, tend to "run hotter than people think."
Broad Market Exposure: Fak's firm has zero exposure to the broad market (NASDAQ, S&P, Russell), which he describes as "floating on air" based on charts since March 2009 (a 15.5+ year run).
Real Estate Divestment: He has sold four out of five houses in the last two and a half years, indicating a personal conviction about market tops.

Gold Miners: GDX and Junior Miners

GDX Performance: The GDX ETF, a barometer for gold miners, has broken out to a new all-time high, surpassing its 2011 and 2012 levels. This is often overlooked by investors focused on smaller junior companies.
Producer Performance: Producing gold miners like Agnico Eagle (AEM) and Alamos Gold (AGI) have performed exceptionally well.
Newmont (NEM): Fak and his partner Don Durrett were discussing Newmont at $35-$38, and it has since risen to $88, with Don predicting $100 by year-end.
GDXJ (Junior Miners): The GDXJ ETF is trading around $95, having previously hit a high of $17.91 in 2011-2012. While GDX has surpassed its all-time high, GDXJ still represents "tremendous value" and is a focus for their firm.
Resistance Levels: Fak believes the 2011 high in GDXJ is not a major resistance and can be eclipsed, though likely not this year, but rather in the next one or two. He draws a parallel to silver, which touched $50 in 1980 and 2011-2012 and has recently seen strength over $50.

Investment Strategy and Portfolio Management

Fak outlines his firm's approach to investing, emphasizing value investing and active management.

Core Investment Philosophy

Value Investing: The primary strategy is value investing; they do not chase stocks that have already experienced significant gains.
Patience: A 1-to-3-year hold bias is common, with patience being a key differentiator.
Decisiveness: The ability to take risks and then decisively move on when market conditions change is crucial.
Active Management: Fak stresses the need to be active in the sector, identifying tops and bottoms.

Methodology and Tools

Combination of Technicals and Fundamentals:
- Technicals: RSI (Relative Strength Index), support/resistance levels, long-term charts. For example, silver reaching an RSI of 84 indicated a sell signal.
- Fundamentals: Direct communication with CEOs and management teams to understand company news, project economics (PEAs), and potential revenue streams (e.g., byproducts like antimony and copper).
Focus on Short-Term Game Plan: More interested in the 3-to-6-month outlook than long-term projections, believing that a strong short-term performance will benefit the long term.
Due Diligence on Negatives: Seeks to understand the potential downsides of a company, not just the positives presented in reports.

Company Stage and Financing Analysis

Junior Miners' Challenges: Juniors often have less cash, higher debt levels, or limited cash balances, necessitating financings.
Financing Types:
- Brokered Placement: Typically dilutive and can lead to selling pressure after the hold period expires.
- Non-Brokered Placement: Less dilutive, often involving friends and family or insiders.
- Life Financing: Larger raises that can put significant pressure on stock prices.
Strategic Financing Advice: Fak advises CEOs to consider smaller bridge raises to reach milestones and then larger raises when market conditions are more favorable (e.g., when banks predict higher gold prices).

Portfolio Construction and Risk Management

Portfolio Size: Typically holds between 50 and 70 stocks, contrasting with peers who may hold only 5-10.
Volatility Mitigation: A larger portfolio helps spread volatility. On a day when GDXJ was down 8-9%, their portfolio was only down 3.5%.
Performance: They have handily beaten GDX and GDXJ over their track record due to this diversified and active approach.
RSI as a Sell Signal: When RSI reaches 75-85, they consider reducing positions (e.g., selling a quarter of their Barrick position when it hit a 91 RSI).
Constant Optimization: The portfolio is continuously optimized to achieve the best possible track record.
Active Trading: They are active every single day, not adopting a "set it and forget it" approach.

Letting Winners Ride vs. Reinvesting Profits

Mixed Approach: Fak admits to a tendency to sell winners too early due to technical indicators, citing an example with Agnico Eagle (AEM).
Defense Metals as an Exception: He has let his top tungsten stock, Guardian Metals (GMTF/GME.L), run significantly. He got in at 17.5 cents and it's now trading at $1.40.
Tungsten Market Dynamics: The tungsten market is driven by China's dominance (91% production) and the US's lack of domestic solutions. Tungsten is a critical "defense metal."
Capital Allocation: Even after a large $21 million raise by Guardian Metals, the stock powered through, demonstrating strong fundamentals.

Focus on Defense Metals and Critical Minerals

Fak highlights the strategic importance of defense metals and critical minerals, driven by geopolitical shifts and government initiatives.

Tungsten and Antimony Opportunities

Guardian Metals (GMTF/GME.L): A top holding, driven by the rising tungsten price and its use in defense applications.
Triumph Gold (TIGCF/TIG): A new investment with exposure to antimony and tungsten in the Yukon. The company's conservative approach and recent decision to re-engage with exploration and news flow are key drivers.
PEA Re-evaluation: The economics of projects like Triumph Gold's are significantly improved by current metal prices compared to older PEAs.
Geopolitical Drivers: The US's reliance on China for critical minerals like tungsten (91% imported) is a major concern, prompting government action.
Government Initiatives: President Trump's executive orders and fast-tracking of projects aim to bolster domestic critical mineral production.
Permitting Challenges: The lengthy and complex permitting process in the US is a significant hurdle to increasing domestic production.

Identifying Future Opportunities

Researching Critical Minerals: Fak suggests researching critical minerals and their uses to identify potential investment themes.
Focus on Small-Cap Companies: He prefers smaller companies heavily focused on critical minerals, as they are more likely to generate significant news flow and see substantial stock price appreciation.
Caution with Speculative Sectors: While acknowledging the recent surge in Rare Earths, he warns against investing in companies without thorough due diligence, citing the "lifestyle companies" that emerged during the lithium boom.

FC Consulting Group Services

Fak details the services offered by FC Consulting Group, designed to provide investors with an edge in the market.

Service Offerings

Newsletter: A bi-weekly to monthly publication for investors with less capital.
Mining Report (Real-time Email Updates): The core subscription service, including:
- All current holdings within 24 hours.
- Transcriptions of interviews, allowing users to quickly find relevant information.
- Access to CEO interviews conducted by Fak and his partner Don Durrett.
Educational Component: Teaching clients how to implement trades, not directing them, which is a legal distinction. This includes strategies like placing multiple orders at different price points to capitalize on market volatility.

Value Proposition

Competitive Edge: The services aim to provide a "legal edge" in a complex market.
Performance Justification: The subscription cost is justified by the firm's strong performance (e.g., 118% gain in the current year).
Active Engagement: The firm's active approach and daily engagement are key to their success.

Conclusion and Key Takeaways

John Fak presents a compelling case for gold and gold miners, underpinned by a strong bull market thesis, supportive bank sentiment, and strategic investment in critical minerals. His firm's value-oriented, active management approach, combined with a deep understanding of technicals and fundamentals, has yielded exceptional returns. The focus on defense metals like tungsten and antimony, driven by geopolitical realities and government initiatives, represents a significant opportunity. FC Consulting Group's services aim to equip investors with the knowledge and tools to navigate this dynamic market, emphasizing due diligence, risk management, and decisive action. The current market environment, characterized by high commodity prices and a push for domestic resource security, offers the potential for life-changing gains for those who are well-informed and strategically positioned.