Why gold’s moves are ‘extremely bullish’ – John Feneck
Access to capital will be a challenge for junior resource companies, and some sector consolidation would be a good thing, said Feneck Consulting’s John Feneck.
In mid-November Feneck spoke to Kitco Mining at the 2023 Precious Metals Summit Zurich event.
“We’ll just see how things play out, but hopefully [sector] consolidations are done in a prudent manner, meaning that the shareholders of these companies are going to get a payday, because it’s been a really rough run here— let’s be honest—for three and a half years,” he said, adding that “…investors don’t invest in the junior space for 10% to 20% gains.”
In 2024 Feneck said gold will be a bright spot.
“Next year we’re going to see some love in the gold sector within the commodities world…gold will make a new all-time high,” he said. “We’ve been very guarded on gold…for at least the last couple of years. We have said this year that the price being above $1,900 an ounce for months in a row with no down days below $1,900 is extremely bullish.
“You’ve seen a new floor put in on gold because of the financial crisis we saw in March, and because of the Israel conflict.”
Feneck has some advice for investors who have seen losses in their portfolio. Many are holding onto stocks whose investment theses may no longer be valid.
“Take some losses in the portfolio and redeploy that capital into names that have a better chance for success the next year.”
It’s also important to construct a portfolio with a mix of metals, to limit risk exposure and to maximize returns, he added.
Feneck noted the gold-silver ratio is approaching 90, which is historically a buy signal for silver and silver equities.
“We have been buying more silver juniors over the last couple of weeks, because silver hasn’t broken down. If you look at the chart, it doesn’t look pretty, but it has hasn’t broken and…gold and silver equities next year should do very well.”
Special coverage of the 2023 Precious Metals Summit Zurich is brought to you by Vizsla Copper Corp. (TSXV:VCU).
0:00 – What is Feneck Consulting?
1:18 – Financing challenges for juniors
3:08 – Stay on the sidelines or enter the market?
3:50 – Junior rebound and gold prices are headed higher
5:20 – Capitulation in the junior space
7:00 – What do you want to see in management teams at a junior resource company?
8:40 – Learning from investment failures
10:10 – M&A
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