In a recent analysis, Feneck, the founder of Fenwick Consulting, drew attention to the undervalued state of the gold mining sector, especially when compared to the 2011-2012 rally. Reflecting on that period, he noted, “Gold surged to $1,570 per ounce back then… while Newmont was generating substantial profits, its stock price was significantly higher than it is today, yet their margins were worse.” He believes that despite the current underperformance in gold stocks, many large-cap miners are now starting to improve their capital allocation strategies.
For Feneck, the current market sentiment—largely dismissive of the gold mining sector—presents a valuable opportunity for discerning investors. “I’m taking small positions during the downturns,” he explained, referencing his focus on the largest holdings within GDX, the prominent gold mining ETF. He also pointed to other valuable sectors, such as silver, highlighting a specific stock that’s a top-five holding across major silver ETFs. “As fund flows into these ETFs, these stocks will inevitably be purchased,” he added.
Beyond large-cap mining stocks, Feneck sees substantial upside potential in the exploration and development sectors. He specifically mentioned 1911 Gold, which has seen its market cap plummet from a billion dollars to under $20 million, a stark contrast to the gold price at $1,575 per ounce. “Even if it never reaches its former market cap, a jump from $20 million to $60 million could yield massive returns,” he emphasized.
Feneck’s bullish outlook extends to silver as well, where he predicts a narrowing of the gold-to-silver ratio in 2025. Drawing parallels to 2021, he believes that when markets experience a downturn, investor enthusiasm for silver will reignite. He singled out Pan American Silver (PAAS) and Aftermath Silver (AAG) as potential beneficiaries of a silver market rally.
In addition to commodity trends, Feneck discussed the growing geopolitical risks associated with a potential “Commodities War” between China and the West, particularly regarding critical minerals like tungsten. He observed that, while these risks are largely overlooked by analysts, certain companies—unnoticed by many—are being backed by significant investors. “These stocks, despite lacking analyst coverage, are receiving attention from billionaires and major mutual funds, and could become valuable assets as the geopolitical situation unfolds.”
Finally, Feneck underscored his disciplined approach to investing, emphasizing the importance of strategy and risk management. “Mistakes are part of the process,” he confessed, highlighting the value of understanding entry points and dollar-cost averaging to reduce average costs and position oneself for future gains. Fenwick Consulting, through its newsletter and trade updates, offers real-time insights to help investors navigate these challenges.
This approach, combining a keen eye for emerging opportunities with a steady focus on disciplined investing, may help savvy investors capitalize on underperforming sectors poised for growth.
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